A looming federal crackdown on hemp-derived THC products could force more than two-thirds of U.S. hemp businesses to shut down, according to new economic research examining the potential impact of the restrictions.
The 2026 U.S. Hemp Cannabinoid Report from Whitney Economics estimates that 68.1% of hemp-related businesses could close if the proposed federal restrictions are implemented without changes.
The findings come as the hemp industry faces a December deadline for new federal restrictions that would dramatically reduce the amount of THC permitted in hemp-derived products.
Report Projects Widespread Business Closures and Job Losses
Whitney Economics surveyed 496 hemp businesses across 35 states to assess how companies expect to respond to the incoming federal restrictions.
While 68.1% indicated that they would close, another 15.5% said they would need to lay off workers. Approximately 6.9% expect to remain operational but generate less revenue, while 3.2% indicated they would relocate.
The potential consequences extend beyond individual hemp businesses. Whitney Economics estimates that implementation of the new rules could reduce industry-wide revenue by between $35.1 billion and $41.3 billion.
The report also projects the loss of between 29,523 and 36,744 employers, while an estimated 188,961 to 225,861 workers could be displaced. Those employees currently account for between $7.5 billion and $8.9 billion in wages, according to the analysis.
States could also experience a significant drop in tax collections. The report estimates potential state tax revenue losses of between $1.2 billion and $1.5 billion, alongside $46.6 billion to $59.6 billion in lost retail potential.
Texas, Florida, and California are among the states identified as having the largest numbers of hemp businesses.
Federal Rules Would Dramatically Reduce Permitted THC Levels
The dispute centers on changes to the federal definition and treatment of hemp products following the expansion of the cannabinoid market under the 2018 Farm Bill.
That legislation defined hemp using a threshold of no more than 0.3% delta-9 THC, creating the legal foundation for a large national hemp industry. Businesses subsequently developed a wide range of cannabinoid products, including products capable of producing intoxicating effects.
Congress approved new hemp restrictions in November 2025 as part of legislation used to fund the federal government following a 43-day shutdown.
Under the new language, hemp products would be limited to 0.4 milligrams of total hemp-derived THC per container. The restrictions are intended to address intoxicating hemp products that have become widely available outside state-regulated cannabis markets, including through convenience stores and other mainstream retailers.
Industry representatives argue that the threshold goes substantially further than targeting high-potency intoxicating products.
U.S. Hemp Cannabinoid Market Has Grown Since 2023
The new findings also provide an updated estimate of the size of the U.S. hemp cannabinoid industry.
Whitney Economics valued the sector at approximately $28 billion in 2023, an estimate that became an important reference point during subsequent discussions about federal hemp policy.
Its 2026 analysis now values the industry at between $30.2 billion and $38.7 billion.
That growth means the economic consequences of significantly restricting the market could be greater than earlier estimates suggested.
The American Healthy Alternatives Association commissioned the latest Whitney Economics research. According to reporting on the study, the analysis was also peer-reviewed by four individuals, including academics affiliated with the University of Kentucky and Johnson & Wales University.
Hemp Ban Delayed as Industry Pushes for Alternative Regulations
Businesses have received additional time to challenge the new federal framework after Congress delayed implementation of the restrictions by approximately four weeks.
The rules were originally scheduled to take effect on November 11, 2026. Following congressional action, implementation has been pushed into December 2026, giving hemp businesses and industry organizations additional time to lobby for changes.
A bipartisan proposal from Representatives Andy Barr of Kentucky and Angie Craig of Minnesota has emerged as one possible alternative. The legislation would reverse the hemp provisions approved in November 2025 while introducing a different federal regulatory framework for hemp-derived products.
Supporters of an alternative approach argue that Congress can address concerns surrounding intoxicating hemp products without effectively dismantling the wider cannabinoid industry.
Advocates of tighter restrictions, meanwhile, contend that products capable of producing intoxicating effects have exploited gaps created by the 2018 Farm Bill. They have raised concerns about products being sold through retail channels that do not operate under the same controls as state-licensed marijuana businesses.
The disagreement leaves Congress balancing two competing concerns: limiting access to potentially intoxicating hemp products while avoiding widespread disruption to businesses that have developed around the federal hemp framework.
With Whitney Economics estimating that more than two-thirds of hemp businesses could disappear under the incoming rules, the final weeks before implementation could prove critical for an industry now valued at tens of billions of dollars.
Rita Ferreira
Rita is a seasoned writer with over five years of experience, having worked with globally renowned platforms, including Forbes and Miister CBD. Her deep knowledge of hemp-related businesses and passion for delivering accurate and concise information distinguish her in the industry. Rita's contributions empower individuals and companies to navigate the complexities of the cannabis world, and her work remains a valuable resource for those seeking a deeper understanding of its potential.
