When the dust settled after the record-setting 43-day federal government shutdown earlier this month, many Americans were quick to celebrate the reopening of agencies and the return of normalcy in Washington. But for those in the hemp industry—especially in states like Indiana and North Carolina—a quiet provision tucked into the bill ending the shutdown spelled the beginning of a new era of uncertainty and upheaval. The language, slipped into the federal funding bill, will ban nearly all hemp-derived THC products starting November 2026, sending shockwaves through a sector that has rapidly matured into a billion-dollar industry.
For Indiana, the stakes are enormous. According to the Indianapolis Business Journal, the state’s hemp industry generated over $1 billion in economic impact in 2023. Retailers have relied heavily on products containing delta-8 and delta-9 THC, which, thanks to a loophole in the 2018 Farm Bill, have been legally sold as long as they contained less than 0.3% delta-9 THC by weight. This distinction allowed hemp-derived products—often indistinguishable in effect from marijuana—to flourish, particularly in states where recreational cannabis remains illegal.
But the new federal law, which outlaws any product containing more than 0.4 milligrams of total THC per container (regardless of whether it’s delta-8 or delta-9), is poised to wipe out about 95% of the current market, including popular items like drinks, disposables, and gummies. "I would expect maybe 95% of the products will be banned. That’s including drinks, disposables, gummies because the potency that they want now is going to be almost like a CBD isolate," said Brandon Howard, owner of Higher Life dispensary in Indianapolis, in an interview with the Indianapolis Business Journal.
The impact of this change isn’t just economic—it’s cultural. In recent years, hemp-derived THC products have become a social alternative to alcohol, especially in places like Charlotte, North Carolina. According to Axios Charlotte, THC-infused dining events like the recent "Danksgiving" dinner at The Goodyear House have become increasingly popular, offering a communal, alcohol-free way to celebrate and connect. The four-course meal, infused with a total of 50mg of hemp-derived THC, was designed to mirror a wine-tasting experience—minus the hangover. "These dinners are a great alternative to alcohol. None of us are going to be hungover tomorrow—but we’ll probably be hungry when we get home," said Michael Sims, owner of Crowntown Cannabis, who helped organize the event.
This surge in popularity isn’t limited to the dinner table. Across the nation, hemp-derived THC beverages have exploded into a billion-dollar industry, with large-scale production and distribution networks rivaling those of craft breweries. Axios reports that, as of September 2025, THC beverages were legal in 28 states, legal with restrictions in nine, banned in six, and restricted to marijuana stores in seven others. The appeal is clear: consumers who might be wary of traditional cannabis dispensaries can now grab a low-dose THC drink at their neighborhood store, much like picking up a six-pack of beer.
But the rapid growth of the industry—and the legal gray area it occupies—has led to mounting concerns among lawmakers and law enforcement. Dozens of state attorneys general issued a letter warning of the risks posed by an unregulated hemp THC market, particularly the potential for children to access intoxicating products. The recent federal crackdown is, in part, a response to these concerns, but it’s also left business owners and consumers in a state of limbo.
For retailers like Howard and Alex Ostrovsky, owner of Higher Grade smoke shop in Indianapolis, the uncertainty is palpable. Both have experienced inconsistent enforcement from state agencies. Howard recounted how the Indiana Alcohol and Tobacco Commission raided his store in October, seizing products under a 2019 state law about hemp flower derivatives. "That was the first time we ever seen that type of enforcement in a long time," Howard noted. Ostrovsky echoed the sentiment, saying the ATC has been uncommunicative about what it does and doesn’t enforce.
Industry advocates argue that the one-year delay before the federal ban takes effect is both a challenge and an opportunity. Justin Swanson, chair of Bose McKinney & Evans LLP’s cannabis practice group and president of the Midwest Hemp Council, told the Indianapolis Business Journal, "It’s going to continue to be kind of a culture of chaos in the hemp industry. But I think a lot of people are used to it and are confident that something better than prohibition is going to come out of Congress." Swanson suspects the delay signals Congress’s openness to revisiting the prohibitions: "I think the one-year delay is again proof that we are going to figure something out on a federal level."
In Indiana, efforts to bring clarity to the market have so far fallen short. Senate Bill 478, which would have required testing, packaging, and age restrictions for THC products, failed in the 2025 legislative session after last-minute fears from Attorney General Todd Rokita that regulation might amount to de facto legalization of marijuana. Rep. Jake Teshka, who sponsored the bill in the House, told the Indianapolis Business Journal that "the status quo is not acceptable" and supports setting up rules around delta-8 products. Whether state lawmakers will try again in 2026 remains to be seen.
The uncertainty isn’t just a local issue. Nationally, the hemp industry is scrambling to adapt. At a recent cannabis industry summit in Washington, lawmakers from both parties discussed the need for a bipartisan solution. Some, like a Republican congresswoman who introduced a bill to repeal the new restrictions, are pushing for a rollback. Others advocate for standardizing testing and monitoring of hemp products, as well as requiring ID checks at liquor stores selling THC drinks. The goal, industry leaders say, is to reach a fair compromise that allows adults to enjoy these products safely while keeping them out of children’s hands.
Despite the regulatory storm clouds, consumer demand remains strong. After news of the federal clampdown broke, distributors rushed to fulfill large orders, signaling that Americans’ appetite for hemp-derived THC products is far from waning. As one supplier told Axios, the industry is "on a countdown to find a way to survive."
For now, the future of the hemp-derived THC market hangs in the balance. If states like Indiana don’t act before the federal law takes effect in November 2026, local businesses fear they’ll lose out as consumers simply travel to neighboring states with more permissive laws—Michigan, for example, where recreational marijuana is legal. As Ostrovsky put it, "It’ll mean more folks traveling to Michigan."
With just a year left before the ban takes effect, the clock is ticking for lawmakers, business owners, and consumers alike to find a path forward that balances safety, economic opportunity, and personal freedom.
