Faculty member Phil Dixon discusses how federal restrictions on THC pose a threat to the growing hemp economy in North Carolina—and nationwide

North Carolina’s burgeoning hemp industry could face obstacles to its continued growth with the recent passage of federal legislation, set to take effect in November 2026.

An amendment to the November 2025 continuing resolution to fund the federal government drastically changes the federal definition of hemp. Under current state and federal law, hemp is defined by reference to the levels of delta-9 tetrahydrocannabinol (“THC”) only. As long as a hemp-derived product contains a concentration of no more than 0.3 percent delta-9 THC on a dry-weight basis, it is considered legal hemp. By this time next year, a hemp product cannot contain more than 0.3 % total THC under federal law, effectively shutting down the market for popular hemp-derived cannabinoids like THCa, delta-8 THC, and many others.

The new federal definition of hemp excludes many common hemp products and manufacturing methods. Any cannabinoids not naturally occurring in cannabis (such as THC-O) will no longer count as hemp, nor will any naturally occurring cannabinoids that are “manufactured or synthesized” outside of the plant, such as hexahydrocannabiol (“HHC”). Further, all other cannabinoids not specifically listed that have effects on humans or animals similar to THC, or that are marketed to have similar effects, will be excluded from the definition of hemp. Hemp products that still meet the new federal definition of hemp cannot have more than 0.4 milligrams of any form of THC per container. By way of contrast, there are no limits on the amount THC and THC-like products other than the limit on delta-9 THC concentration.

This new provision could shutter the growing hemp marketplace in North Carolina, which has annual sales of up to $1 billion annually, according to reports.

Faculty member Phil Dixon has been following the changing landscape of the hemp marketplace in North Carolina. In 2022, state lawmakers passed permanent legislation that declassified hemp as a controlled substance—creating a largely unregulated market in the state. What happens now that federal law could come into conflict with its state counterpart? Dixon explains.

“Most hemp products—if not all—that we see on the market today would become illegal under federal law. We have gone from an expansive definition of hemp to a very restrictive one on the federal level. It’s like going from essentially zero regulation to a near-total ban.”

For the highly lucrative hemp industry that has sprung up in recent years, this pending legislation creates much uncertainty about its future viability. Dixon said the level of federal enforcement will determine whether there is a future for the hemp economy.

“This creates a lot of uncertainty for the industry. What is unclear is whether the federal law will be enforced against state businesses operating within state law, or instead enforced only on federal property. If it is strictly enforced across the board, I expect this could kill the hemp industry. You would see sellers beginning to wrap up their hemp businesses in 2026.”

Because the sale of hemp has an interstate commerce component, federal law supersedes state law on the matter. In North Carolina—where marijuana consumption is illegal but not hemp consumption—Dixon said the hemp market could continue to exist but would run the risk of facing federal prosecution for continued operation. Sales from hemp could be considered drug money; banks would also be legally prohibited from accepting any proceeds from hemp sales.

As the hemp industry prepares for the ramifications of the 2026 ban, many actors are lobbying for efforts to mediate the legislation, including fighting for age restrictions on the sale of hemp products so that the industry is not seen as entirely unregulated.

“In general, my sense is that the industry supports reasonable regulations like age limits and quality assurance measures. As of now, we don't even have an age limit to possess, purchase, or use this stuff,” Dixon said. “Industry  advocates would be first to agree that some of these products should only be available to adults.” Through further efforts to fight for reasonable regulation of hemp products, lobbyists are hopeful to find a compromise that would mitigate a near-entire loss of the hemp industry.

The fate of the industry will come into clearer focus in 2026.

“It will be interesting to see whether Congress revisits this issue before next November. Absent a change to the current legislation, the biggest question in my mind is whether, and to what extent, federal authorities try and enforce the new federal rules in states with more permissive rules around hemp and hemp products, like North Carolina. It remains to be seen if the federal government will come into states and enforce the federal law.”

Published December 17, 2025