The “Shutdown Fairness Act,” signed in November 2025 to end the government shutdown, included a provision banning the sale of most hemp-based THC products. Going forward, under federal law, hemp-derived products cannot have a THC content greater than 0.4 mg. It is expected that this action will severely diminish–if not outright eliminate–much of the existing hemp-derived beverage market.The swift growth of hemp-derived CBD and THC beverages has introduced a wave of innovation to the beverage industry, along with a fair amount of legal confusion.
These products are showing up everywhere: on retail shelves, in tasting rooms and in the hands of curious consumers looking for functional alternatives to traditional alcohol or cannabis products. And yet, their legal status remains anything but straightforward.
In a Sovos ShipCompliant webinar, Emily Harris Gant, principal at Foster Garvey and chair of its alcohol beverage and cannabis practices, shared insights into the complex legal and regulatory landscape shaping this emerging category.
What are Hemp-Derived Beverages?
The federal government’s definition of hemp is any part of the Cannabis sativa L. plant, including all derivatives, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3% on a dry weight basis.
In practical terms, hemp-derived beverages typically contain CBD. Different states have different rules about whether you need a hemp-specific license to produce or process these beverages.
Federal Legal Framework for Hemp Beverages
The 2018 Farm Bill removed hemp (defined as cannabis with no more than 0.3% delta-9 THC by dry weight) from the federal definition of marijuana. However, this change introduced new regulatory challenges, particularly for beverage producers.
Under the Federal Food, Drug, and Cosmetic Act, the FDA prohibits the interstate sale of beverages infused with hemp-derived ingredients, as it deems those products to be “adulterated.” This includes most CBD- and THC-infused products. However, ingredients classified as Generally Recognized as Safe (GRAS), such as hulled hemp seeds, hemp seed protein powder and hemp seed oil, are permitted in food and beverages sold across state lines.
For alcoholic hemp-infused beverages, the Alcohol and Tobacco Tax and Trade Bureau (TTB) requires formula approval, which includes lab analysis. However, that approval is only granted for products containing GRAS-listed hemp ingredients. Labeling is tightly regulated: terms like “hemp” are only allowed in a TTB-approved statement of composition (e.g., “ale brewed with hemp seeds”) and must not reference marijuana or psychoactive effects. Products containing federally controlled substances, including cannabis, are ineligible for formula or label approval—regardless of whether they are sold interstate or intrastate.
State-by-State Legal Overview
Like producers of wine, beer and spirits, producers of hemp-derived beverages must contend with state-specific laws and federal regulations. These laws are constantly changing, so check with your state.
As of February 14, 2025:
- 24 states explicitly allow the sale of hemp-derived delta-9 THC beverages
- 10 states impose restrictive potency limitations, such as 1 mg THC per serving
- 5 states have no clear rules on retail sales
- 11 states prohibit the retail sale of these products entirely
The states that currently allow the sale of hemp-derived beverages include:
- Arizona
- California
- Colorado
- Florida
- Illinois
- Kentucky
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Nevada
- New Jersey
- New York
- Oregon
- Tennessee
- Texas
- Vermont
- Washington
- Washington D.C.
- Wisconsin
Key Compliance Challenges
Licensing challenges are another major concern for operators entering the hemp beverage space. Those operating under TTB permits or state alcohol licenses may risk those licenses by producing hemp-derived beverages on the same premises. Producers need to consider:
- Whether producing hemp beverages violates federal or state alcohol license restrictions
- Whether a separate hemp processor license is required
- Whether holding both a liquor and hemp (or cannabis) license on the same premises is allowed or prohibited in a given state
In some jurisdictions, dual licensing is possible; in others, it’s expressly prohibited. These rules differ widely and are evolving quickly, making it essential to consult legal counsel before launching or expanding a hemp-infused beverage program.
Conclusion
The hemp beverage market is growing fast, but the legal frameworks governing it remain unsettled. At the federal level, while parts of the 2018 Farm Bill were extended, they were set to expire at the end of September 2025. However, further disagreements between the parties in Congress over other spending bills has resulted in a government shutdown that has delayed any new legislation that could reshape the landscape either by restricting ingestible hemp products or creating a more unified regulatory structure.
Meanwhile, state-level regulation is accelerating, with new rules on potency, packaging, labeling and age restrictions emerging regularly. For producers, this means navigating a fragmented and fast-changing environment where missteps can lead to serious legal and financial consequences.
To succeed in this space, businesses must prioritize:
- Operational diligence
- Proactive regulatory monitoring
These steps are critical to building a compliant and sustainable hemp beverage program.
Access the full webinar recording here.
FAQ
Are hemp-derived beverages federally legal?
Not entirely. While the 2018 Farm Bill legalized hemp with ≤0.3% delta-9 THC, the FDA still prohibits interstate sales of most hemp-infused beverages unless they contain GRAS-listed ingredients.
Which states allow hemp-derived beverages?
As of February 2025, 24 states allow retail sales of hemp-derived delta-9 THC beverages. However, rules vary widely by state, and some impose potency limits or outright bans.
What are the licensing requirements for producers?
Licensing depends on the state. Some require separate hemp processor licenses, while others prohibit dual licensing with alcohol permits. Always consult local regulations.
How can producers stay compliant?
Stay informed, consult legal experts and monitor both federal and state-level changes. Compliance requires ongoing diligence and a tailored strategy for each jurisdiction.
Stay Informed
Keep an eye out for fresh webinar announcements from the Sovos ShipCompliant LinkedIn feed. Learn more about Emily Harris Gant and Foster Garvey here.