Nipped in the Bud

Read “Barely Legal,” The Assembly’s three-part investigation into North Carolina hemp, here.  

Update 08/04: House Republicans decided in an internal meeting Tuesday not to bring the Senate-passed hemp ban to the floor for a vote, a spokesperson said. House Speaker Destin Hall said he hoped to consider new hemp legislation after the November election.

Until last Monday, North Carolina’s $3.2 billion intoxicating hemp industry seemed likely to live to fight another day. 

Sure, businesses faced a federal ban on most of their products that is due to take effect in November. And in early July, the N.C. Senate passed legislation to ban those products under state law, too. 

But while the federal ban would create significant obstacles for hemp companies, it wouldn’t necessarily run them out of business—and hemp advocates think it might be delayed or repealed. The state ban was the potential industry killer, but House Republicans declined to vote on it before the legislature’s July 4 recess. 

Many insiders believed the bill would continue to languish when lawmakers reconvened this week for the General Assembly’s likely final votes before the November election. There was too much dissent within the House GOP. 

That dynamic changed when the N.C. Sheriffs Association, the State Bureau of Investigation, and other law enforcement organizations sent a memo to House members last week endorsing the Senate-passed legislation, according to legislative and industry sources. With many lawmakers wary of defying law enforcement, the House could approve it as early as Tuesday afternoon.  

“We’re hearing from the Republican side that it’s really the law enforcement thing,” said Reilly Dunn, a cofounder of the hemp beverage company Groovewagon and a leading critic of the bill. “It’s making it a lot tougher for Republicans to have the cover to not do something.”

A spokesperson for House Speaker Destin Hall said he wants the House to vote on the bill, but that decision ultimately lies with a majority of the Republican caucus. 

Hemp supporters scrambled to respond to the law enforcement groups. Cultivating Breakthroughs in Healthy Development (CBHD), an industry advocacy group, sent House members a dense, six-page memo urging them to vote against the bill. State members of the Hemp Beverage Alliance planned a rally at Tap Yard, a Raleigh beer garden, on Monday afternoon, followed by a lobbying event at the General Assembly on Tuesday morning. Apotheca Cannabis Dispensaries announced that it would close its more than 50 North Carolina stores on Tuesday so employees could make their case to lawmakers. 

“This is not a choice between allowing shady gas station vape weirdos to make a bunch of money versus child safety,” Dunn said. “That is a false dichotomy.”

The law enforcement memo framed the decision exactly that way. It accused those who oppose the state Senate bill of wanting to sell drugs to children and said that failing to pass it would mean that “anyone, no matter their age, will continue to buy intoxicating THC products from any retailer that wishes to sell them without legal consequence.”

As The Assembly detailed in its recent investigation, North Carolina currently allows sales of cannabis products with 0.3% or less of the psychoactive compound delta-9 tetrahydrocannabinol (THC) with no regulation or oversight. It doesn’t prohibit the sale of hemp products to children, require child-resistant packaging, mandate lab testing, or monitor products for contaminants. Public health officials have linked this free-for-all to a spike in cannabis-related hospital visits. 

“The only people and businesses who would oppose this [bill] are those who are profiting from, and promoting a business model that thrives on, selling intoxicating substances to North Carolina’s children,” the memo continued. 

At best, that’s hyperbolic. Many hemp retailers voluntarily limit sales to those over 21, and the industry has been lobbying lawmakers for age restrictions and other regulations for years—in part to avoid a crackdown. 

The law enforcement memo also misleadingly assured House members that bills containing “very similar” language have already passed both chambers.

In 2023, the state House unanimously passed an industry-supported bill that included age restrictions and testing requirements, but it died after the Senate tacked on a provision creating a medical marijuana program in North Carolina. House conservatives couldn’t stomach it. 

But the current proposal—which can’t be amended because it emerged from a conference committee of lawmakers from both chambers—does not regulate hemp. It bans almost all hemp products, including many that aren’t intoxicating, from being manufactured or sold to adults in North Carolina. It could also leave many of the hemp industry’s 16,000 workers unemployed. 

Its language mimics the federal ban, with both prohibitions scheduled to take effect on November 12. But in late June, Russell Vought, director of the White House Office of Management and Budget, asked Congress to postpone or revise the law “to ensure the fair treatment of hemp products.” On July 22, U.S. Reps. Andy Barr of Kentucky and Angie Craig of Minnesota introduced bipartisan legislation to rescind the federal ban and instead regulate hemp; the White House has endorsed similar proposals. 

That means North Carolina might pass a law modeled on a federal ban that never takes effect. If that happens, North Carolina would have one of the most restrictive cannabis positions in the country, despite public opinion moving in the opposite direction. It’s already one of only seven states that completely ban both recreational and medical marijuana. Of those, only Idaho bans hemp products, according to the Baker Institute for Public Policy at Rice University.  

Gov. Josh Stein’s Advisory Council on Cannabis reported in April that North Carolina has the country’s second-largest illicit marijuana market, worth more than $3 billion. The council recommended regulating cannabis without distinguishing between hemp and marijuana and suggested that an “adult-use” market offered the best way to address regulatory gaps. Its final report is due in December. 

Stein acknowledged in a June interview with The Assembly that the legislature is unlikely to legalize marijuana. “What I’m trying to do is advance the conversation,” he said. 

The hemp ban’s prospects this week aren’t clear. Some House Republicans support the industry, and others worry that language in the Senate-passed bill could create a backdoor way to legalize medical marijuana if the federal government approves it as a prescription drug.

Two industry sources told The Assembly last week that they thought Hall might try to pass the legislation with Democratic support if he can’t get enough Republicans on board. Demi Dowdy, a Hall spokesperson, said he would not bring the bill to the floor without the support of a majority of Republicans. 

A source close to House Minority Leader Robert Reives II said Hall’s office hadn’t reached out about the bill, and Democrats planned to caucus on the issue on Tuesday morning. 

Internal emails obtained by The Assembly indicate that the industry believes Stein will sign the bill if the House passes it, though a spokesperson said the governor has not made a decision.

As a potential vote nears, the fast-growing hemp beverage sector has ramped up its last-minute lobbying blitz. Dunn sought out friendly law enforcement groups to counter the Sheriffs’ Association. On Friday, Law Enforcement Action Partnership (LEAP), a national organization that promotes drug reform policies, responded to the Sheriffs’ Association in a letter to Hall, which Dunn said he hopes to get to the speaker on Tuesday.  

The letter pointed out that the state House overwhelmingly passed a bill last year that restricted hemp purchases to those age 21 and up. The Senate’s rules committee—chaired by Sen. Bill Rabon, who was also a member of the conference that authored the proposed state ban—has not brought it up for a vote. 

“Law enforcement experience has taught us that prohibition is not an effective public safety strategy,” the letter said. “Instead, it creates new enforcement burdens that divert resources without reducing harm.”

In addition, about 80 THC beverage makers, retailers, and other business owners signed a separate letter asking the legislature to reject the bill, arguing that THC drink sales have skyrocketed while alcohol’s popularity is falling. It noted that almost half of the state’s craft brewers make THC drinks, and national grocers like Lowes Foods and The Fresh Market sell them. 

“Our strategy has really been not so much to separate ourselves from the broader hemp folks as much as it is to make it really, really clear that we are only speaking to the people who are using drinks in 21-and-up environments already,” Dunn said. “You’re not just banning the sketchy vape shops or the gas station gummies. You’re banning the Total Wines, the DoorDashes, the Fresh Markets, and all of the local brands who’ve been doing this.”