Dive Brief:
- A looming federal ban on intoxicating hemp drinks appears likely to remain in place after lawmakers declined to delay or overturn the restrictions set to take effect in November.
- The House last week voted to keep the ban as part of the long-delayed Farm Bill. The restrictions close a loophole that allowed producers to manufacture the buzzy products even in states with stringent marijuana regulations.
- The bill now goes to the Senate, where lawmakers could still consider changes to the restrictions. A proposal from Sen. Rand Paul would allow states to "opt -out" of the ban and legalize hemp-based products.
Dive Insight:
A federal ban presents an existential threat to the burgeoning hemp THC beverage industry, which has grown quickly among consumers who are limiting their alcohol intake but still looking for a buzz.
Major retailers have begun carving out more shelf space for hemp-based THC beverages as the category grows, including Target and DoorDash. The intoxicating hemp beverages market alone is estimated at $1 billion, according to an estimate from Diana Eberlein, chair of the Coalition for Adult Beverage Alternatives.
Hemp-based beverages tend to have lower doses of THC, which producers say make them ideal for socializing without a hangover. Companies have pushed Congress to set federal age restrictions, in addition to regulations around third-party testing and caps on how much hemp-based THC can be in a product.
The alcohol industry is closely watching how a potential ban unfolds, especially as the category remains poised to steal sales. Last week, Boston Beer CEO Jim Koch said the intact ban on THC products will deplete "a fair amount of the excitement" around the future of the category.
"It's an uncertain legislative landscape, but things look much more difficult for hemp-based THC replacing beer," Koch said on an earnings call.
