Federal shutdown deal could kill Minnesota’s hemp-derived THC market

Update: The bill to end the federal government shutdown was passed and signed into law by President Trump on Wednesday.

Minnesota’s pioneering hemp-derived THC industry could collapse if a provision included in the deal to end the federal government shutdown becomes law.

The bill that passed the U.S. Senate on Monday and now is before the House includes language that would effectively ban hemp products containing more than 0.4 milligrams of THC, the psychoactive ingredient in cannabis. That limit would outlaw intoxicating hemp-based products in Minnesota, which allows edibles containing up to 5 milligrams of THC per serving and beverages containing up to 10 milligrams.

The federal ban, if passed, would take effect one year after enactment.

“This is an industry-killing change,” said Carol Moss, a Minnesota attorney who represents several hemp businesses. “Unless something happens in that one year, we will not have a hemp industry in Minnesota. The beverages, the edibles, the full spectrum of CBD. This is a killer.”

Minnesota was a national leader in creating a legal hemp-derived THC market before legalizing recreational marijuana. THC products have been legal and regulated in the state since the Legislature authorized the sale and possession of lower-potency THC edibles and beverages for adults 21 and older in 2022.

In Minnesota, hemp-derived products can be found everywhere from liquor and convenience stores to breweries and restaurants. Last month, Target announced it had started carrying THC drinks at a handful of its Minnesota stores.

Bob Galligan of the Minnesota Craft Brewers Association said the ban could be devastating for breweries, which have benefited from the THC seltzer boom as beer sales have declined. He said there would be little incentive for brewers to keep making seltzers that contain only trace amounts of THC.

“This has definitely been keeping the lights on for a fair amount of folks,” Galligan said.

The Minnesota Office of Cannabis Management said in a statement that it is monitoring the situation and would work with the Attorney General’s Office and Legislature to address any effects the federal legislation may have on the state’s hemp-derived THC industry.

The language in the federal spending bill was championed by Sen. Mitch McConnell, R-Ky, who was the longest-serving Senate leader in U.S. history.

McConnell, who helped legalize hemp through the 2018 Farm Bill, has been pushing to close a so-called loophole that allows unregulated and intoxicating hemp products to be sold across the country. He’s argued that children have been hospitalized after ingesting hemp-based THC products that resemble candy.

President Donald Trump has said he supports the shutdown deal, and a White House official told NBC News that Trump “supports the current language in the bill on hemp.”

Minnesota Attorney General Keith Ellison last month signed a letter with 38 other state and territory attorneys general calling on Congress to effectively ban intoxicating hemp products. After receiving backlash, Ellison clarified in a social media post that his office did not intend to shut down Minnesota’s state-regulated hemp industry.

Maine U.S. Sen. Susan Collins made reference to the letter from the attorneys general when speaking to reporters in Washington on Monday, saying there is “strong support” for the proposed hemp restrictions.

A spokesman for Ellison did not immediately respond to a request for comment Wednesday.

Moss said the move reflects frustration among some federal lawmakers over unregulated products and underage access, but she argued that Minnesota’s regulatory structure could have been used as a model. She hopes the one-year delay before the changes take effect will give Minnesota businesses time to adapt, or for lawmakers to reconsider.

For Minnesota business owners, frustration is running deep. Some see the move as political maneuvering from McConnell, who once hailed hemp as a crop for Kentucky farmers.

Jon Halper, owner of Top Ten Liquors, said he believes McConnell inserted the provision strategically during the government funding negotiations.

“Who’s going to keep the government shut down to keep hemp alive?” Halper said. “It was very creatively and strategically done in the way that it was.”

Minnesota House DFL Leader Zack Stephenson, who sponsored the bill legalizing recreational marijuana in 2023, said the possible federal ban on hemp-derived THC products is a “disaster” for the state.

“I really am fearful that if this ban actually goes into effect, some big-named breweries in Minnesota that are institutions that we value may disappear, may go out of business,” he said.

State Rep. Nolan West, R-Blaine, said he would like to see Minnesota figure out a way to aid affected businesses. He said the proposed federal restriction “is bad for everyone except for the alcohol industry.”

People are going to be angry, West said.

“Nobody’s going to understand why this happened, and they shouldn’t. It’s idiotic. I really hope our congressional delegation does what they can in the year’s time they have to do something that can protect Minnesota.”

Kam Talebi, owner of the hemp beverage brand Gigli in Minneapolis, said the way the hemp measure advanced through the Senate left business owners blindsided. Talebi is hopeful the one-year delay before its possible implementation will give the industry a chance to work with lawmakers on “reasonable regulations.”