Key points:
- Despite a 29-day reprieve from a federal ban now due to take effect Dec. 11, the estimated $38.7 billion hemp industry is already unwinding.
- Hemp operators are cutting production, rethinking inventory and preparing to exit parts of the market.
- Industry leaders interpret the delay as a signal that momentum in Congress is shifting from prohibition toward regulation.
- Should a ban still come, hemp operators are pivoting by launching non-hemp products such as functional beverages.
For operators in the estimated $38.7 billion hemp sector like Dylan Raap, new federal rules set to take Dec. 11 are forcing difficult decisions about how much product to make and hold.
Raap is the founder and CEO of Vermont-based hemp business Upstate Elevator, which moves on long timelines.
So while Congress and President Donald Trump offered temporary relief to the hemp sector by pushing a federal redefinition of hemp that promises to ban most products currently on the shelves from Nov. 12 to Dec. 11, the relief is limited.
Raw materials are ordered months in advance. Booking a co-packer’s manufacturing line for his beverages requires 90 days. Packaging also takes months.
And the new rules as-is will still force Raap out of business, he told MJBizDaily.
“We’re grateful for the extension – 29 days is time, but it’s not certainty,” Raap said. “Nothing operates on a 29-day cycle.”
“You’re seeing the supply chain begin to unwind,” he added. “Even though there’s this extension, the effects of the ban are already being felt.”
Did President Donald Trump save the hemp industry?
The monthlong extension offers a bit of breathing room, but it doesn’t erase the existential pressures on the U.S. hemp sector, which is on track for an estimated $38.7 billion in sales this year, according to a recent Whitney Economics estimate.
Dec. 11 is when the federal definition of hemp changes in a way that renders most products now sold nationwide at small businesses and major retailers like Target as “marijuana” under federal law.
Finished products can have no more than 0.4 milligrams of THC per container.
For hemp business owners, staying legal could mean reformulating products, losing key revenue lines, pulling inventory off shelves or facing closure if large parts of their catalogs are no longer compliant.
Some companies are managing the risk by slowing production and rationalizing SKUs – or evaluating each product down to specific sizes, colors, flavors or packaging types – to determine whether each item should be retained, modified or discontinued, MJBizDaily has learned.
But for others, like Florida-based beverage company Torch Drinks, the greater problem is planning, which the company is doing in 30-day increments.
What are hemp companies doing ahead of a federal ban?
Torch Chief Marketing Officer Ryan Bouton said the uncertainty makes planning for the next six months challenging.
“No one can produce or stock up on inventory that long in advance,” Bouton said.
“It’s hurting the consumer at the far end of that.”
In response, Torch is slowing production of its hemp products and reducing inventory, Bouton said.
It’s also gearing up to produce a line of functional beverages that use no hemp at all.
Such diversification has always been part of the company’s plan, Bouton told MJBizDaily.
Are functional beverages a viable backup plan for hemp operators?
For Raap, the new rules mean quitting the hemp THC sector entirely – an industry Whitney Economics estimates supports 225,000 U.S. jobs.
“Compliance doesn’t mean we make the product differently,” he said. “It means we don’t make it at all.”
“It’s not just intoxicating beverages; it’s the whole wellness category that’s being taken out.”
While enforcement is still an open question – as is the possibility of federal lawmakers carving out exemptions for beverages or for hemp-derived CBD products like those a new federal reimbursement program is covering – Raap isn’t waiting to find out what happens on Dec. 11.
Instead, he’s diversifying away from hemp entirely.
Upstate Elevator recently launched a line of functional gummies and beverages made with botanicals like kava and kanna. And he’s finding success.
“We’re building around moods we’re trying to achieve, which is a departure from the world of intoxicating beverages,” he said.
“Botanicals are not intoxicating but create a mood. People seem to be liking it.”
Is it business as usual for hemp companies?
In contrast, Kick Beverage Co., which launched a direct-to-consumer line of low-dose hemp THC beverages in March 2025, isn’t letting the looming ban hinder its operations.
Rather than pulling back, the Las Vegas-based company is expanding its offerings. This includes launching Little Kicker, an 8-ounce, 10 mg hemp THC beverage expected to launch in October, Chief Operating Officer Julie Rhodes said.
But as a small player, Kick Beverage can rely on co-packing partners to handle smaller production runs on request, Rhodes said.
“I’m not sitting on $5 million of inventory,” she said.
Like Upstate Elevator, if intoxicating hemp beverages are prohibited, Kick Beverage’s backup plan is to add functional beverages to its lineup so it can continue operating.
“We decided to do that last November when the ban came out,” Rhodes said.
The challenge Kick has encountered is with distributors, rather than suppliers, Rhodes said.
“Retailers also are not super crazy about getting into the category because they feel like it’s unpredictable,” she said.
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Will Congress regulate rather than ban hemp?
Some operators and industry experts see the delay as a sign of hope – the possibility of a regulatory path forward rather than outright prohibition.
“We still have hope that some kind of regulatory pathway can be achieved here,” Raap said.
“I’ll take hope over the alternative.”
Christopher Lackner, founder and president of the Hemp Beverage Alliance, echoed Raap’s optimism, saying he views the delay as a shift in momentum toward regulation rather than prohibition.
Lackner said he’s been talking with lawmakers in Congress. He claimed they believe the ban is unfair, and encouraged businesses to ask their congressional representatives not to implement it.
“This extension is huge,” Lackner said. “It sends a signal that Congress and the White House want to regulate, not prohibit.”
Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.
