GUEST COMMENTARY
By Jeffrey Steiner & Jeffrey Reimer
America’s industrial hemp industry faces many challenges, but one of its greatest obstacles today is regulatory uncertainty.
Federal policy has not adequately distinguished industrial hemp and legitimate non-intoxicating cannabinoid products from intoxicating cannabinoids manufactured from hemp-derived cannabidiol (CBD). Recent legislation attempts to correct that problem but risks creating another: restricting legitimate non-intoxicating cannabinoid products while disrupting the farmers, processors, and manufacturers who produce them.
Oregon’s trail
Oregon illustrates both the problem and a better approach.
Industrial hemp is a remarkably versatile agricultural commodity. Its fiber can be used in textiles, paper, construction materials, and automotive composites. Its grain provides food ingredients, oil, and animal feed. Hemp also produces naturally occurring, non-intoxicating cannabinoids such as CBD and CBG, which continue to show promise in wellness and pharmaceutical applications. Together, these markets offer new opportunities for agricultural diversification, rural manufacturing, and creation of domestic supply chains.
Yet much of today’s public discussion about hemp is not about agriculture. It is about psychoactive gummies, vape cartridges, and other intoxicating products sold in gas stations and smoke shops.
Identity problems
Many of these products emerged after the 2018 Farm Bill defined hemp primarily by its concentration of delta-9 THC. Manufacturers discovered that abundant CBD extracted from legally grown hemp could be chemically converted into intoxicating cannabinoids such as delta-8 THC. That created a legitimate regulatory problem and an identity problem for an entire agricultural sector.
Most consumers do not distinguish among a hemp crop grown for fiber, CBD naturally extracted from hemp flowers, and an intoxicating cannabinoid manufactured by chemically converting that CBD. Increasingly, all three are simply called “hemp.”
Oregon has developed a more sophisticated approach. Its regulatory system distinguishes industrial hemp and naturally extracted cannabinoids from artificially derived cannabinoids while establishing THC limits, age restrictions, testing, labeling, and other consumer protections. The principle is straightforward: regulate a finished product according to what it is and what it does.
Oversize net
A provision enacted as part of the FY2026 federal appropriations package attempts to close the intoxicating-cannabinoid loophole and is scheduled to take effect in November 2026. But its 0.4-milligram threshold illustrates the danger of casting too wide a regulatory net. Final hemp-derived cannabinoid products containing more than 0.4 milligrams per container of total THC, including THCA, combined with other cannabinoids determined to have THC-like effects will no longer qualify as hemp under federal law. That threshold can potentially capture legitimate, non-intoxicating cannabinoid products containing only trace amounts of naturally occurring THC—products that do not contain an intoxicating dose.
Consider what that means in practice.
An Oregon farmer grows federally compliant hemp for CBD. A processor extracts the cannabinoids naturally present in the flower without chemically converting them into an intoxicating compound. The extraction concentrates CBD but can also concentrate the trace amounts of THC naturally present in the plant.
Nothing synthetic has been manufactured. No delta-8 THC has been created. No one has attempted to exploit an intoxicating-product loophole.
Yet the resulting finished product may face a fundamentally different federal regulatory future after November 2026.
Threat of disruptions
The Oregon Department of Agriculture has already warned that the federal changes could cause market disruption and that additional federal guidance will determine how several provisions are implemented.
Agricultural markets cannot wait for that uncertainty to be resolved.
Farmers decide what to plant months before harvest. Processors have invested millions of dollars in specialized extraction equipment and facilities without knowing whether there will be a viable market for their products. Manufacturers develop formulations, build brands, and establish distribution networks without knowing whether those products will continue to be legal to sell. Banks and investors must decide whether these businesses will remain commercially viable years into the future.
Knock-on effects
The consequences of regulatory uncertainty travel backward through the supply chain: uncertainty for manufacturers reduces demand from processors; uncertainty for processors reduces purchasing commitments to farmers; and farmers respond by planting fewer acres or abandoning cannabinoid hemp altogether.
The greatest damage from regulatory uncertainty often occurs long before a regulation takes effect. Markets react immediately, while agricultural operators must make decisions months or years in advance. That is how legislation aimed at intoxicating products can unintentionally harm producers who never entered the intoxicant business.
Risk and regulation
The broader inconsistency becomes apparent when considering other psychoactive products sold in many of the same retail outlets. Kratom, for example, continues to be sold despite longstanding public-health concerns involving dependence, withdrawal, and adverse health effects, while its regulation remains fragmented. Whether kratom presents greater or lesser risks than a particular cannabinoid is not the central issue. Psychoactive consumer products should be regulated consistently according to their characteristics and actual risks.
The same principle should apply to hemp.
This is not an argument for reopening the delta-8 loophole. Chemically converting CBD into intoxicating cannabinoids should not provide a pathway around appropriate product-safety requirements.
Three distinct things
This is not an argument against regulation. It is an argument for legislation precise enough to distinguish three different things: industrial hemp grown for non-cannabinoid agricultural and manufacturing uses, including fiber and grain; naturally occurring, non-intoxicating cannabinoids extracted from hemp; and cannabinoids manufactured or chemically converted for intoxicating purposes.
Fiber and grain hemp should no more be defined by the controversy over intoxicating cannabinoids than corn should be defined by distilled spirits. Regulation should address each according to what it is, what it does, and the risks it presents.
Oregon demonstrates the value of making those distinctions.
‘Strategic agricultural resource’
At a time when the United States is seeking to strengthen domestic manufacturing, reduce dependence on imported industrial materials, and expand markets for American farmers, industrial hemp should be viewed as a strategic agricultural resource—not simply through the lens of intoxicating consumer products.
The United States needs more crop choices, more renewable industrial feedstocks, stronger domestic manufacturing supply chains, and new economic opportunities for rural communities. Hemp can contribute to all four.
Clear federal legislation can close the intoxicating-cannabinoid loophole without closing legitimate markets for farmers, processors, and manufacturers who never exploited it.
Regulate intoxicating products according to their actual risks. But don’t make industrial hemp, American farmers, and domestic manufacturers pay the price.
About the authors: Jeffrey Steiner is director of Oregon State University’s Global Hemp Innovation Center. Jeffrey Reimer is professor and head of OSU’s Department of Applied Economics.