Arizona’s hemp industry has a year to save itself after federal ban

Nestled into the bill that Congress passed to end the longest government shutdown in history are a few pages that will ban “intoxicating” hemp-derived products that contain traces of THC. 

That ban begins in a year and could very well tank the industry nationwide. Hemp professionals thus have a 365-day runway to convince federal and state lawmakers to regulate the products instead of simply banning them so the $28 billion industry can survive.

Sully Sullivan, the executive director of the Arizona chapter of the Hemp Industry Trade Association, said the year window provides time to formalize “responsible oversight” for Arizona’s $700 million hemp industry. For seven years, the industry’s businesses have operated outside marijuana’s more stringent legal framework as a result of a 2018 federal law that allowed for hemp to be cultivated and sold commercially without regulation. 

But over the past year, political leaders across the country soured on how easily accessible the products are. Among them was Attorney General Kris Mayes, who expressed outrage over several hemp-based THC products — specifically, Snoop Dogg-themed THC products like “Snooper Doodle” THC-infused cookies, a “Sex on the Sandbar” cannabis cocktail and Delta-5 “Dogg Lbs Dogg Treats” — that her staff purchased at a Total Wine. Other hemp products from brands like Cornbread and Charlotte’s Web are light on THC and are marketed for their calming effects, mitigating anxiety and helping people sleep.

Mayes has since cracked down on hemp-derived THC products being sold in stores, claiming that under Arizona law, they are illegal if sold outside dispensaries.

But Dr. Jeffrey Singer, a senior fellow at the libertarian-leaning Cato Institute and a practicing surgeon in Phoenix, finds it a bit ridiculous that hemp products are facing the chopping block when alcohol and dispensary THC products tend to be more harmful to health. He also pointed out an irony: Some members of Congress who supported the passage of the hemp ban also support marijuana legalization or decriminalization.

“There’s a little cognitive dissonance,” he told Phoenix New Times. “Now we’ve got this situation where you’re going to be able to get higher-THC marijuana in 24 states, but you can’t get something that’s not as potent.”

All signs point to the likelihood that the major players in the weed industry want to keep it that way. In a blog post, Singer wrote that cannabis trade groups such as the US Cannabis Council and the American Trade Association for Cannabis and Hemp — which represent the country’s powerful marijuana dispensaries — have lobbied for closing the federal loophole that allowed hemp THC products to be sold legally.

“Part of me can understand it,” Singer said on the phone. “They’re like, ‘Wait a minute, I had to jump through all these hoops and pay all these licensing fees to get a cannabis dispensary and meanwhile, people can just buy a cannabis-infused seltzer and they don’t need to come see me anymore?’ I can understand their resentment. It doesn’t make it right, though.“

He added that while some alcohol distributors have pushed for the loophole to be closed, some are starting to distribute hemp-derived drinks. Notably, U.S. booze sales fell by 8% from August 2023 to August 2024, in part because of a recent generational awakening about the health risks associated with drinking. Yet one of the essential arguments against hemp-derived products is the danger they pose, especially to minors who take edibles or drink infused beverages with typically small amounts of THC.

“That’s an easy fix — just like with alcohol and tobacco, you put age restrictions on these things,” Singer said. “I mean, you don’t pass laws for adults based on concerns about what kids will do with it.”

A legislative fix

In Arizona, the impending federal hemp ban may require a separate legislative solution.

One ongoing court case may be a dead end. When Mayes cracked down on hemp products earlier this year, HITA sued. But in June, Maricopa County Superior Court Judge Randall Warner sided with the attorney general. While Arizona’s 2018 Hemp Act legalizes the manufacture and sale of “industrial hemp,” he wrote, the term applies only to the cannabis plant itself and not the consumable products derived from it. Those products are covered under the state’s drug laws and rightfully regulated by the Arizona Department of Health Services, which licenses dispensaries.

Sullivan believes that during the year-long sunset period instituted by Congress, hemp THC products can continue to be sold as they had been before. Mayes spokesperson Richie Taylor told New Times in an email that “Arizona law requires THC products to be sold only in licensed dispensaries, and the temporary extension of federal status quo does not change the state’s enforcement of Arizona law.

Sullivan said that “it remains to be seen” how the development in Congress would affect HITA’s lawsuit against Mayes, which is in the appeal process.

If a judge says it’s against the law, then an obvious fix is to change the law. With the federal ban a year away from taking effect, Sullivan said conversations are already underway to change lawmakers’ minds.

“It’s basically like, here’s a shot clock for the federal government and the different industry stakeholders to come together, have talks and pass regulations,” Sullivan told New Times in a phone interview. “The appetite from folks we’ve talked to at the Capitol is to get regulations passed first.”

That includes lawmakers at the state level. Sullivan said Republicans and Democrats, including state GOP Sen. David Gowan and progressive Sen. Analise Ortiz, have expressed interest in regulating hemp before the federal ban takes effect. Arizona lawmakers proposed regulations for the hemp industry during the past three legislative sessions, but none was approved.

Ortiz told New Times that the federal government’s decision to create a one-year hemp product sundown makes it harder for lawmakers to create a state framework that complies with federal law. Among her foremost goals are setting age limits for purchasing products, determining how much can be sold in one particular setting and learning from the marijuana industry’s bungled attempt to establish social equity during the rollout of recreational weed.

“It’s going to be an ongoing legal and policy battle for the next year,” Ortiz said. “That’s going to set us back, because we had a bill ready and now we’re going to have to revisit it and see what we need to change.”

Feeling the pain

If lawmakers don’t create a regulatory system for hemp, a full-out prohibition could cause a stir not only among businesses but also among consumers who rely on the products for health reasons. 

In October, New Times reported on consumers in Prescott who said they had bought the hemp-derived products from a mom-and-pop store and would prefer not to visit a dispensary. One said she was left feeling “very uncomfortable” by her experience in a dispensary and didn’t feel like the staff knew what she was asking for.

“A lot of people are benefitting from this — whether it’s helping them with anxiety, depression, PTSD or pain, this is something that’s helping them,” Singer said, adding that the hemp products that contain trace amounts of THC allow some people to avoid having to use opioids. “These products are now so widely used by so many people who are going to be very upset to learn that they can’t get them any longer.”

Ortiz said that she had spoken with constituents like veterans who use hemp because they feel it helps them manage their PTSD, especially compared to THC products, or others who had given up alcohol entirely and begun to consistently use the hemp-derived products sold in liquor stores. But after Mayes’ crackdown, “they now feel that they don’t have an alternative to alcohol,” she said.

“Ultimately, there is a big question about competition in the market,” Ortiz said, noting her GOP colleagues philosophically espouse support for free market economics. “Consumers deserve more choices when it comes to hemp or THC. If they do not want to use THC, there are alternatives that many consumers have found to work for them.” 

Sullivan claims that the popularity of the products — which are often used for pseudo-medicinal reasons — means they won’t go away with a ban. “Prohibition isn’t going to stop Arizonans from getting these products,” he said. “They’re just going to get them from other states or get them from the black market, which will have no testing or age dating.” That’s why he and other hemp advocates are focused on creating a regulatory framework that separates industrial hemp — which is used to make textiles, rope, paper and other products — from cannabinoid hemp, which is used to create hemp THC products. 

“Hemp is too vital to agriculture, business, and consumer access to be shut down overnight,” Sullivan wrote in a press release of the $28 billion nationwide industry.

Start the shot clock.