Cannabis Musings - November 6, 2025
Hemp just got even more interesting.
Friends – don’t forget to into This Week in Cannabis LIVE, every Friday at Noon ET, where I get to schmooze all things cannabis with Jeremy Berke and Jay Rosenthal of Cultivated Media and AnnaRae Grabstein and Ben Larson of the High Spirits Podcast. You can access the livestream and recordings of past chats here.
First, a mazel tov! to friend of Cannabis Musings, Nicole Elliott, who announced that she’s stepping down at the end of this year from her post as Director of the California Department of Cannabis Control. Although we’ve criticized state governments for failing to position the licensed cannabis industry for success, we only have respect for the regulators who are trying to implement these generally flawed legislative policies. That includes Nicole Elliott, who has always been a consummate professional, and has been willing to work with the industry in creative ways like California’s work on interstate commerce compacts. We’re always better off with good people in charge of overseeing our business, and Nicole is definitely one of the good ones. Best of luck, Nicole, with your next endeavor.
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We’ve talked for years about the confluence of cannabis and alcohol, for both its potential and its risk. This has recently come to the fore particularly with the Wine and Spirits Wholesalers of America’s lobbying efforts over the past few years to direct the narrative about potential federal (non-hemp) cannabis legalization and regulation, and more recently in the Congressional debate over whether to close the hemp loophole. It’s no surprise that the WSWA is in favor of keeping the loophole open for hemp-derived THC drinks (or intentionally legalizing them) – alcohol beverage distributors are deep in the game providing the logistics for to supply big box alcohol retailers with product. They’ve apparently gotten comfortable with the risk that these products violate the U.S. Food, Drug, and Cosmetic Act (probably because there’s been nearly zero enforcement by the FDA), the business risk that the long-term depth of the market is still unknown (having lived through the relatively recent boom and bust of hard seltzer), and the existential risk that the federal government and/or a state legislature could cut off the legs of the market entirely at any time.
This is all probably because, for now, the investment involved in adding these products to their portfolios is fairly small. If the hemp industry’s cheerleading is right, and these drinks are the killer product that will replace booze, then the bet pays off. If it turns out to be just hype, or it all goes away, then the loss of the product category is chopped liver. From a business perspective, that bet makes total sense for the distributors.
Contrast that with the letter just issued on Tuesday by a consortium of the major trade groups representing alcohol beverage producers (beer, wine, and spirits) calling on Congress to close the hemp loophole. They come out swinging in their short, direct missive:
“The ambiguous language contained in the 2018 Farm Bill has been manipulated and exploited by certain actors, fueling the rapid growth of a largely unregulated market that is knowingly and willfully ignoring the Federal Drug Administration’s (FDA’s) position that the addition of intoxicating cannabinoids (like delta-8 THC and delta-8 THC) to food is illegal.”
Them’s fightin’ words. They also point to a recent letter from 39 state Attorneys General similarly calling for Congressional action, and decry the “rhetoric” coming from the hemp space that “any effort to rein in the sale of highly intoxicating hemp THC products is tantamount to ‘prohibition’ or a ‘ban’ that will adversely impact industrial hemp farmers or even products that contain” CBD. This echoes a point made by many in the licensed cannabis industry that it’s not a ‘ban’ when you prohibit something that wasn’t intentionally allowed in the first place (sort of like that Seinfeld episode where Kramer was fired from a job he didn’t have). Whether you, dear reader, agree with that logic or not, the alcohol producers have picked up on that line of argument.
What’s most interesting, though, about the letter is the closer. They ask Congress to act to stop the sale of hemp-derived THC products:
“until a robust federal regulatory framework is established. We stand ready to work with Congress and the Administration to enact regulations that protect consumers and ensure a safe, orderly marketplace for these intoxicating products.”
This gets to the point we talked about a few months ago, that the alcohol industry can’t be all too happy about hemp-derived THC beverages being sold alongside their own products without being subjected all of the same federal licensing, labelling, manufacturing, and marketing regulations, and taxation, that their products endure. Which are extensive. This is a point hammered home by my cannabis law co-professor and friend, Rebecca Stamey-White, who, as one of the best alcohol and cannabis regulatory lawyers in the business, understands the tension at play. From the alcohol producers’ perspective, why should hemp-derived THC beverages get a free ride while they (the alcohol industry) have to play ball?
This could of course also be read to be a sort of delay tactic in the vein of Senator Rand Paul’s (R-KY) proposal to not close the loophole but instead to “study” it (presumably with a ‘Blue-Ribbon Committee’), knowing that it would take a fair amount of time for Congress to actually pass legislative affirmatively legalizing hemp-derived THC, and then for the FDA to issue implementing regulations (which, you may recall, studied hemp-derived CBD for years before giving up). Either way, this lobbying fight just got escalated to Defcon 1.
And where is the licensed (non-hemp) cannabis industry in all of this? According to some, they’re putting money into lobbying for the loophole to be closed. Whether that’s true or not, it should similarly be no surprise that licensed cannabis generally wants to cut off its competition (since getting rid of the competition from the unlicensed/legacy/illicit cannabis trade has proven to be unattainable). It’s argued that licensed cannabis ought to back federal regulation of hemp-derived THC in some form, which has merit, but that potentially only goes so far, and doesn’t really solve the macro problem facing licensed cannabis (i.e., it’s still illegal) – it only mitigates the impact of competition.
There’s a lot at stake here, and it’s getting to the point where you need a scorecard just to keep track of the interests involved. Predicting how this will play out in the end is still a mostly pointless endeavor, because the federal government remains closed, and Congress has been sitting on this issue for years. On the one hand, geshvint iz nor gut floy tsu khapn (“haste is only good for catching fleas”), but with the entry of the alcohol beverage trade groups and the majority of state Attorneys General into the debate, and Sen. Rand Paul threatening to hold up the reopening of the federal government over the issue, it feels like the fate of hemp-derived cannabinoids may finally get resolved. Then again, they said that about cannabis banking.
Be seeing you.
© 2025 Marc Hauser. None of the foregoing is legal, investment, or any other sort of advice, and it may not be relied upon in any manner, shape, or form. The foregoing represents my own views and not those of Jardín, B&Y Ventures, or anyone else who employs/hires me.