Guest Commentary
By Jeffrey Steiner & Jeffrey Reimer
The industrial hemp industry in America faces many challenges. However, regulatory uncertainty is one of them.
The federal policy does not distinguish between industrial hemp, legitimate non-intoxicating products and intoxicating cannabinoids made from cannabidiol derived from hemp. Recent legislation attempts to fix that problem but creates another one: restricting non-intoxicating hemp cannabinoid product while disrupting the producers, processors, manufacturers, and farmers who produce them.
Oregon’s Trail
Oregon illustrates the problem as well as a better solution.
Industrial hemp has an incredibly versatile use as a commodity. The fiber of industrial hemp can be used to make textiles, construction materials, automotive composites, and paper. Its grain can be used as a food ingredient, animal feed, or oil. Hemp produces non-intoxicating, naturally occurring cannabinoids, such as CBD and CBG. These continue to show promise for wellness and pharmaceutical applications. Together, these markets present new opportunities for agricultural diversity, rural manufacturing and the creation domestic supply chains.
The majority of the current public debate about hemp does not concern agriculture. Intoxicating products like gummies and vape cartridges are sold at gas stations and smokeshops.
Identity issues
These products were created after the 2018 Farm Bill, which defined hemp as primarily based on its delta-9 THC concentration. The manufacturers discovered that the abundant CBD extracted legally from hemp could be chemically transformed into intoxicating cannabis cannabinoids, such as delta-8-THC. It created both a legitimate legal problem and a problem of identity for an agricultural sector.
The majority of consumers don’t know the difference between a hemp plant grown for fiber and CBD, which is naturally extracted from hemp flower, or an intoxicating cannabis cannabinoid that is manufactured by chemically converting CBD. These days, they are all referred to simply as “hemp.”
Oregon has developed an approach that is more sophisticated. Its regulatory system differentiates between industrial hemp, naturally extracted cannabinoids, and artificially derived synthetic cannabinoids, while also establishing THC limitations, age restrictions and testing, as well as other consumer protections. The principle is simple: regulate the finished product based on what it is.
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. Its 0.4 milligram threshold shows the dangers of too wide a regulatory web. Federal law will not allow hemp-derived cannabinoid product that contains more than 0.4 mg of THC per container, including THCA and other cannabinoids with THC-like properties. 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.
Take a moment to consider what this means in reality.
Oregon’s hemp is grown in compliance with federal law. The cannabinoids are extracted from the flower by a processor without converting the compounds into intoxicating substances. The extraction can concentrate CBD, but also trace amounts of THC that are naturally present in plants.
No synthetics have been created. Delta-8 THC was not created. There has been no attempt to exploit a loophole for intoxicating products.
But the finished product could face a fundamentally new federal regulatory future in 2026.
Threats of disruption
Oregon Department of Agriculture already warned about the potential market disruption that federal changes may cause. Additional federal guidance will determine how certain provisions are implemented.
Agriculture markets cannot wait to resolve this uncertainty.
Farmers choose what to plant several months in advance of harvest. Processors invested millions of dollars into specialized extraction facilities and equipment without knowing if their products would be viable. Manufacturers build brands and develop distribution networks before they know if the products will be sold legally. Investors and banks must determine whether the businesses are viable for years to come.
Knock-on effects
The effects of regulatory uncertainty are felt throughout the supply chain. Uncertainty for manufacturers leads to a reduction in demand for processors, and uncertainty for processors results in a reduction in purchasing commitments from farmers. Farmers respond by either planting fewer acres or giving up on cannabinoid-hemp altogether.
Regulator uncertainty can cause the greatest harm long before it takes effect. While the markets react instantly to changes, agricultural operators need to plan months or years ahead. This is how legislation that targets intoxicating products may unintentionally hurt producers who have never been in the intoxicant industry.
Risk and regulation
Consider other psychoactive products that are sold in the same retail outlets. Kratom is sold despite public health concerns about dependence, withdrawal and adverse effects. Its regulation is also fragmented. It is not important whether kratom has more or less risk than cannabinoids. Psychoactive consumer goods should be regulated according to their properties and risks.
The same principle applies to hemp.
This is not a reason to reopen the delta-8 loophole. It is not acceptable to circumvent product safety requirements by chemically converting CBD intoxicating cannabinoids.
Three distinct things
This isn’t an argument against regulations. It is a call for legislation that distinguishes between three things: hemp for industrial uses and non-intoxicating, naturally occurring cannabinoids derived from hemp, and cannabinoids produced or chemically transformed for intoxication purposes.
The controversy surrounding intoxicating cannabinoids should not define fiber and grain hemp any more than distilled spirits should define corn. Regulations should take into account what each product is, how it works, and the potential risks.
Oregon is an example of how important it is to make these 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 to increase the number of crop options, renewable industrial feedstocks and strengthen domestic manufacturing supply chains. It also needs to create new economic opportunities in rural communities. Hemp can be a part of 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 substances according to the actual risks. Industrial hemp, American farmers and domestic manufacturers shouldn’t be made to pay for the harm caused by intoxicating products.
The authors: Jeffrey Steiner, director of the Global Hemp Innovation Center at Oregon State University. Jeffrey Reimer is a professor at Oregon State University and the head of its Department of Applied Economics.
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