Hemp THC Recriminalization: A Blow to a Blooming Industry

Consequences for hemp businesses and consumers

Market participants predict that most hemp businesses could be forced to close or radically change their business models due to these restrictions.

“What began as an effort to clarify regulation has turned into language that would effectively wipe out nearly every hemp product on the market by late 2026,” Chris Karazin, founder and CEO of Carolindica, told the Investing News Network in an email, adding that the change is a blow to consumers as well.

“Millions of people across the country use hemp products as part of their wellness routine,” Karazin said. “They rely on them to feel balanced and manage day-to-day stress in a safe, legal way.

If regulated hemp products sold by trustworthy companies are pulled from the shelves, Karazin argues that consumers may turn to unregulated markets. “Eliminating them entirely doesn’t protect consumers, it only forces them to look for alternatives in unregulated markets where safety isn’t guaranteed.”

In his view, less stringent measures would be prudent.

“A smarter path would be to let states continue setting and enforcing safety standards while Congress works with the industry to establish long-term clarity instead of another cycle of uncertainty," Karazin said.

Investment implications

Market participants predict that most hemp businesses could be forced to close or radically change their business models due to these restrictions.

“What began as an effort to clarify regulation has turned into language that would effectively wipe out nearly every hemp product on the market by late 2026,” Chris Karazin, founder and CEO of Carolindica, told the Investing News Network in an email, adding that the change is a blow to consumers as well.

“Millions of people across the country use hemp products as part of their wellness routine,” Karazin said. “They rely on them to feel balanced and manage day-to-day stress in a safe, legal way.

If regulated hemp products sold by trustworthy companies are pulled from the shelves, Karazin argues that consumers may turn to unregulated markets. “Eliminating them entirely doesn’t protect consumers, it only forces them to look for alternatives in unregulated markets where safety isn’t guaranteed.”

He advocates for less stringent measures.“A smarter path would be to let states continue setting and enforcing safety standards while Congress works with the industry to establish long-term clarity instead of another cycle of uncertainty.”

Investment implications and the medical market

For investors, this development introduces considerable uncertainty and risk. Companies currently operating in the hemp-derived cannabinoid space will face regulatory challenges, potential loss of market access and pressure to innovate or pivot their product lines.

Investors should closely monitor how companies respond strategically, including compliance efforts and legal challenges, and stay informed about ongoing legislative efforts to introduce balanced, science-based regulatory frameworks before the ban takes effect.

Careful due diligence on regulatory exposure and adaptability will be critical for evaluating hemp-related investments moving forward.

While US President Donald Trump, who signed off on the 2018 legislation that decriminalized hemp, has not commented on the repeal, a White House spokesperson reportedly told Marijuana Moment that the federal rescheduling process for cannabis is “ongoing”.

At the same time, the US Attorney’s Office for the District of Wyoming said in a press release on Thursday (November 13) that the Justice Department has “rescinded previous guidance concerning the prosecution of simple marijuana possession” in a memo to prosecutors on September 29.

The memo states the office will now begin “rigorously” prosecuting people over possession or use of cannabis on federal lands.

Meanwhile, the outlook for the medical cannabis market is more optimistic, supported by expanding legalization across states, innovations in product formats such as oils, capsules and topicals; delivery mechanisms and emerging digital health platforms enabling patient access and insurer reimbursements.

CannaLnx, launched by EM2P2, is widely regarded as a major breakthrough in the medical cannabis industry. It is the first digital health platform to enable insurers and employers to reimburse patients for medical cannabis purchases and doctor visits in the U.S., providing critical infrastructure for integrating cannabis care into mainstream health benefits. The platform, developed in collaboration with the American Council of Cannabis Medicine (ACCM), The platform ensures HIPAA compliance and integrates with 8 registries and dispensary systems, supporting the Elevated States national health-benefit rollout.

In an interview with INN, EM2P2 CEO Gennaro Luce and COO David Speaker explained that the program’s wellness stipend structure operates as a non-insurance reimbursement model administered by third-party administrators rather than traditional insurance companies.

This approach allows the program to offer medical cannabis cost reimbursements directly to patients, up to US$175 per month, without the legal and regulatory complexities that an insurance plan would face, particularly given cannabis’s current Schedule I status at the federal level.

“We expect Schedule I to change to Schedule III for medical cannabis in the very near future, probably within 12 months,” explained Luce. “As that change occurs, we believe that the insurance industry will step into this medical cannabis space. We've set the stage for that to happen by procuring relationships with (these) third-party administrators.

“If the schedule doesn't change, we also anticipate that these reimbursed benefits will continue in the form that we've built them for now, and we think that it's going to stir a great deal of additional demand within the medical cannabis patient class.”