On Sunday night, eight Democratic-aligned U.S. senators joined Republicans to fund the federal government through January without extending health care subsidies, the Democrats’ key demand throughout the longest shutdown in history.
By Wednesday, President Donald Trump had signed the bill. The government got up and running again.
Somewhat lost amid the ensuing liberal recriminations and Trumpworld gloating was a last-minute addition to the 394-page bill Congress passed, pushed by Republican Sen. Mitch McConnell of Kentucky, that could devastate a fast-growing sector of North Carolina’s economy.
A six-page provision, sandwiched between a rollback of food regulations and a $2 million grant to catfish processors, criminalizes many hemp-derived products—and all intoxicating hemp products. That could mean the end of the edibles, vapes, and drinks that have proliferated throughout North Carolina’s convenience stores, dispensaries, and bars in recent years.
McConnell has argued that, in Kentucky, cannabis-related calls to the Poison Control Center have doubled in the last five years. He blamed “malicious actors” who marketed intoxicating products to kids.
North Carolina has seen a similar phenomenon. Business N.C. reported last month that cannabis-related calls to Poison Control doubled between 2000 and 2024.
But critics say McConnell’s fix employed a chainsaw instead of a scalpel.
The restrictions are so sweeping that they’ll make many non-intoxicating CBD products illegal, said Phil Dixon Jr., a professor at the University of North Carolina School of Government and an expert on cannabis law.
“It’s going to radically rework the hemp industry at a bare minimum,” Dixon said. “I’m not sure it will completely snuff it out of existence, but my expectation would be that, yes, you would see stores close and people let go, and the market would take an enormous hit.”
Rod Kight, an Asheville-based cannabis-industry attorney, had a more dire outlook. “I think it’s important that people know that this will kill the hemp industry completely,” he said.
Marijuana is illegal under federal law, though more than half of Americans live in states where it can be legally purchased. North Carolina is not one of them. In 2018, however, the federal Farm Bill legalized hemp, which comes from the same plant species as marijuana but has only trace amounts of the psychoactive delta-9-THC.
Depending on your perspective, Congress’ definition created either a loophole or an opportunity. Companies found that they could easily turn legal hemp into intoxicating products. That quickly gave rise to a nearly $30 billion industry that supports the jobs of more than 300,000 people nationally, according to a 2023 report from a hemp industry-aligned economist. (For comparison, that’s about the same size as the craft beer industry.)
The 2023 report estimated that annual sales of hemp-derived products in North Carolina were between $759 million and $1.1 billion. The industry supported nearly 9,000 jobs here at the time, the report said.
Other estimates differ. Industry sources put sales closer to $2.5 billion, owing in part to the surging popularity of cannabis-infused beverages. On the other hand, in 2024, as the General Assembly considered regulating hemp products, its Fiscal Research Division predicted about $1.1 billion in hemp-related sales over five years, or an average of about $220 million per year.
Regardless, the industry’s foothold is undeniably significant in North Carolina—and it’s growing quickly.
“I think it’s not widely known outside the industry, but North Carolina is considered to be one of the, if not the very top state for hemp,” Kight said. “Several of the largest and most well-known cannabis brands in the world have specifically located their hemp divisions in North Carolina.”
North Carolina hasn’t legalized medical or recreational marijuana, so there’s less competition. No less important, the state’s hemp marketplace is almost entirely unregulated. There are no age restrictions, dosage limits, licensing requirements, or required tests for hemp-derived products.
“If you’re a business that’s looking for a friendly place to relocate, one that doesn’t have any regulations looks pretty damn friendly,” Kight said.
He and many other insiders think it’s too friendly. State Rep. John Bell, a Goldsboro Republican and, until recently, the president of hemp company Asterra Labs, has frequently called the market “the Wild, Wild West.”
(Bell, who became Asterra’s president in 2023, said he left several weeks ago, after improving Asterra’s operations and hiring his replacement. He still works for Asterra’s parent company, Rise Capital.)
Most state lawmakers agree that the hemp industry needs guardrails. But they haven’t agreed on what they should look like.
In 2023, Bell—then the House majority leader—backed a bill that would have required hemp buyers to be at least 18 years old and required all hemp products to be tested, among other things. The House unanimously passed it, but it died after the Senate added a provision allowing medical marijuana.
This year, Bell supported similar hemp legislation. Instead, the state Senate passed a regulatory bill that Bell said would have destroyed the industry. It has languished in the House’s rules committee, which Bell chairs.
Now, the existential threat comes from Congress.
“I’ve been a voice for regulation for years,” Bell told The Assembly. “I’m disappointed that the federal government had a chance to put solid regulations in place, and instead they chose to kill an industry, which now puts everything back in the black market and does not prevent the harmful products from being sold to kids.”
Hemp products won’t come off store shelves immediately. The provision doesn’t take effect for a year, and the industry will almost certainly mount an aggressive lobbying campaign to convince Congress to change its mind.
Even if that doesn’t work, the General Assembly will still get to weigh in.
The federal legislation doesn’t change state law, and North Carolina’s law is “a barebones statute that says hemp is legal, and that’s that,” Kight said. In that sense, it’s like marijuana law: illegal at the federal level, but legal, to some degree, in 45 states.
North Carolina’s law will stay that way unless the legislature acts.
“I presume many states will amend their laws to fit with the new federal definition and use this as an opportunity to shut down the intoxicating hemp market,” Dixon said. “But to the extent a state didn’t want to do that, they would be free to say, ‘We’re not changing our law.’ And under state law, these are still legal products.”
But friendlier state legislation—or even a continued General Assembly stalemate—might not save North Carolina’s hemp businesses, Kight said.
The federal ban creates tax and banking problems, as well as difficulties in luring investors. More importantly, it’s a national industry; companies source and sell across state lines. Under the new law, what is today routine interstate commerce could be considered felony drug trafficking.
“The silver lining is that the hemp industry in the United States has been somewhat fragmented, and I think this really unites the industry and lights a fire to educate our lawmakers as to why you can’t pull the rug out from underneath a multi-billion-dollar industry,” Kight said.