An inside look at Congress' hemp-derived THC death sentence

Earlier this month, in its legislation to reopen the federal government, Congress issued a de facto death sentence on hemp-derived tetrahydrocannabinol (THC) products. It all happened so fast that even portions of the industry—a $28-billion-dollar menagerie of moonlighting craft brewers, hippie-dippie true believers, and LinkedIn-brained entrepreneurs, and more across the country—were caught off guard as its many foes went for the kill. By the time the threat of the ban became clear in late October, the powerful Consumer Brands Association had already come out in support of it, as had 39 attorneys general. Major beverage-alcohol industry groups would do likewise leading up to the November weekend of Capitol Hill wheeling and dealing that would ultimately end the longest government shutdown in American history and put the hemp-derived THC industry on the clock. 

If it seemed like the booming trade got rolled in the frenzy, that’s because it did. “This is a time-honored strategy for getting something done in Congress when you don’t want to get a lot of attention,” Senator Tina Smith of Minnesota, tells me in a phone interview. Though the Democratic lawmaker sits on the Senate Agriculture Committee, she only caught wind of the scheme to smuggle prohibitionary language into the so-called “minibus” package at “the last minute.” As the industry panicked, its bipartisan supporters in the Senate, including Sen. Smith and Sen. Rand Paul (R-Ky.), scrambled to block the maneuver, a longstanding priority of Kentucky’s senior senator and notorious hemp-derived THC hater, Republican Mitch McConnell. But the ban made it through the upper chamber, and sailed through the House of Representatives. When Trump signed the bills reopening the federal government on the evening of November 12th, he started a 365-day countdown to shut down the business in its current form.

Can hemp-derived THC win a stay of execution in the coming year? How can the industry fight back against its deep-pocketed foes in Washington D.C., and the powerful lawmakers in both chambers of Congress that categorically view the industry as a cancer? And where does Minnesota, with the most robust hemp-derived THC industry and regulatory framework in the country — and myriad craft brewers that have come to rely on it as traditional beer sales have slowed — fit into all this? On Thursday morning, I spoke with Sen. Smith to get her perspective on all of the above, and more. 

Editor’s note: This interview has been lightly edited for length and clarity. It was co-published with VinePair.

Dave Infante: Hi Senator, thanks for taking the time to speak with me about this. I saw your comments on social media last week about the ban and its impact on the Minnesota economy and specifically its brewers. You posted on Bluesky that the ban “needlessly screws up everything while hurting our breweries.” What are you hearing from Minnesota's breweries right now?

Senator Tina Smith (D-MN): I’m a huge fan of Minnesota's breweries. I love what they're doing, and this is a big blow to them. They are constantly adapting to changing markets and changing consumer interests, they've done a really good job of building these THC seltzers and other drinks into their product lines. The state of Minnesota has done a really good job of establishing, you know, a legal and a regulatory framework [for THC] that works. It’s really bad to see this federal ban snuck into this big appropriations bill at the last minute that will have a really negative impact on the businesses of these great Minnesotan entrepreneurs.

I’m glad you mentioned Minnesota’s model regulatory and legal frameworks for THC industry. I think that’s why a lot of my sources were shocked to see Minnesota Attorney General Keith Ellison sign on to a letter with 38 other attorneys general calling on Congress to “shut down this industry before it metastasizes further into an even greater threat to public safety than it already is.” Now, he later walked that back, but the open letter obviously gets at a tension between law enforcement that is saying these products are categorically a danger to the market and need to be excised from it, and boosters who say it's an economic boon that can be regulated more or less like alcohol. Can you speak a little bit to the concerns that Ellison and his colleagues put words to in that letter?

It's important to note that Keith walked back from what was in that letter. He clarified his position, which I really appreciated. And I take what Keith is now saying as the place where he is. I know he appreciates this industry, and I know he appreciates the strength of Minnesota's regulatory framework. Keith has long been an advocate for legalization of cannabis for a whole range of reasons, including social justice and personal freedom. I take where he had landed on this in that broader context. I think [the open letter] goes to show how — I'm on the Ag Committee, and I pay attention to issues that are important to Minnesota craft brewers, because I've been a long time advocate for them. I wasn't even aware of this legislation, and what Senator McConnell was working on, until the very last minute. So I think there was a lot of confusion leading up to the vote. This is exactly how legislation like this shouldn't be passed. So here you have this thing in the bill. Now we've got a year before it goes into effect as I understand it, and so we have a year to try to fix it. That’s what I'm going to be focused on as we move forward.

I first caught wind of this when all of a sudden there was a flurry of activity when all the major trade groups in the beverage-alcohol and CPG industries started filing letters with congressional leadership, coming out in favor of the ban. That happened in late October and early November, in the run-up to the appropriations rodeo that went down two weekends ago. When did this first come across the transom for you?

This is a time-honored strategy for getting something done in Congress when you don't want to get a lot of attention. Imagine how frustrating this is for Minnesota craft brewers to get wind of this, and then are trying to figure out what to do about it, and are trying to get word to their congressional delegation. They’re basically saying, “Hold the phone. This is going to be a devastating blow to our businesses.” Here they find a new line of business that is allowing them to reach new customers, and they are suddenly worried about this being at risk now. It’s important to put into context—my first concern is Minnesota, and Minnesota will probably be able to continue with intra-state commerce. But of course, the Big Kahuna here is that when you have this patchwork of local- or state-based rules and regulations, [businesses] struggle to be able to really build market share. Maybe Minnesota’s good, strong, robust regulatory structure will still work in Minnesota, but you continue to have problems with finding distributors and figuring out how to get your banking done when you have this patchwork of state laws and this uncertainty at the federal level. 

Obviously, a patchwork approach also poses the issue of cross-border commerce, with noncompliant products potentially coming into or out of Minnesota illegally.

Just like with any [adult] product, you want to make sure that kids can't get a hold of it, that you don't have situations where kids are hurting themselves because they're drinking something that they shouldn't be drinking. Minnesota is really clear about that. We've got strong rules to make sure that you can't buy this if you're under 21, which I support. But you’d still have that patchwork issue. Trust me, if you live in Hudson, Wisconsin, or you live in Stillwater, Minnesota, you're going to go, you're going back and forth. Fargo [South Dakota] and Moorhead [MN], all of our border cities deal with these border issues on a whole range of products all the time. 

What’s actually possible for the industry to accomplish in the next year? A year is a long time for some things, but that’s not that long to get something done in Congress. 

You’re absolutely right: it takes too damn long to get anything done in Congress. You gotta keep trying, you gotta keep looking for the avenues to get it done. That’s what I’ll be doing. But I think there are two ways of looking at this. One is, as I understand it, the path that [Minnesota] Representative [Ilhan] Omar is looking at which is: is there a way to do a carveout for states like Minnesota that have good rules and regulations in place? That would be one path forward. Another path would be to—and I'm quite interested in this—I've been working at very early stages with the Minnesota craft brewers on legislation that would try to find a way to bring the framework that we feel works in Minnesota to the federal level. Now, that's obviously going to take a long time, I'm not naive about that. But I do, at this early stage, think that would be a really good approach. If you’ve got a framework that's working so well in Minnesota, is there a way to write that into federal law?

I’m glad you mentioned Rep. Omar’s effort with the Cannabis Caucus to potentially carve out Minnesota and other states from the ban. What’s your dialogue with them at this point? Do you support that approach in principle?

I'm very interested in working with Rep. Omar on this. We work together on many things. It’s early stages, it’s just happened, but I'm looking forward to working with her on that and exploring that possibility.

I had written recently that THC industry, and especially the edibles business, has a bit of a “shithead problem.” There are bad actors who are not marketing THC-infused products in good faith. They’re ripping off the branding of Sour Patch Kids, or Oreos, or whatever to sell THC edibles. What would you say to the good actors in the THC industry that are trying to work towards legitimacy? What’s their responsibility for getting their own house in order, so to speak? 

I would say, “Stop with this bullshit.” You can make good products that are targeted at adults, that people are going to want to buy. So don't be foolish about and don't do illegal stuff if you're trying to what could be a good market. 

Sure, sure. What about the bad actors, though? The ones that are giving THC a bad name?

I have colleagues who voted differently from me on this bill, because they've seen the impact of what those bad actors have done in their states where there is less of a regulatory framework. When you hear stories of little kids getting extremely sick because they have been consuming THC products that are bad for them, of course you're going to want to protect kids. My message [to good actors] is basically you're hurting everybody, and you're hurting your own sector, by not coming down hard on these bad actors that are trying to make a quick buck without thinking about the long term health of the sector. 

Do you partake in any THC drinks yourself, Senator?

You know, I actually haven’t. I’m a big fan of beer, so I guess I'm still part of the legacy product line. 

You have good taste. You’re a traditionalist, like me.

Exactly.

✍️ Further Fingers reading…

Some pieces from the archive that pair well with this interview:

• The counterintuitive tale of two big-time THC bans

• The THC business has a shithead problem

• How the THC industry got rolled in Congress

Sorry about the formatting on some of these older pieces, the migration messed them up. But the words are still in order!

🗣️ Previously on The Fingers Interview…

Since starting The Fingers Interview series back up, I’ve spoken with:

• Ned Resnikoff (PUBLIC COMMENT) on optimizing cities for fewer cars and more corner bars

• Bourcard Nesin (Rabobank) on the myth that Gen Z isn’t drinking

• Kate Bernot (Sightlines) on the battles the wine industry should and shouldn’t be fighting

Before I wound it down, I spoke with a bunch of very interesting folks from inside the booze business, and beyond it. Including:

• Michael Graham (Austin Beerworks) on running a brewery in a boomtown

• Jerard Fagerberg (journalist-at-large) on on Minnesota's THC seltzer "gold rush"

• Mary Guiver (Whole Foods) on hard milk, good stories, and scouting booze trends

• Dan Ozzi (Sellout) on the music industry, the stigma of “selling out,” and more

• Allyson Brantley, Ph.D., (University of La Verne) on the historic Coors boycott, the pitfalls of consumer activism without endpoints, and more

• Benjamin Lorr (The Secret Life of Groceries, Hell-Bent) on supermarkets, marketing, fearsome power of commodity, and more

• Jason Diamond (The Sprawl, Searching for John Hughes) on “The Swimmer” and getting drunk in the suburbs

And probably a few more that I missed as I navigated the depths of the archives.