With each passing year the number of Americans participating in “Dry January” grows, with roughly 25% of Americans over age 21 participating in 2024. An increasing number of Americans are filling that void with cannabis drinks. In 2024, roughly 19% of those participating in “Dry January” replaced alcohol with some sort of cannabis beverage. These trends may gain traction each January, but the sector saw growth throughout 2024. According to BDSA and Arcview Market Research, the U.S. cannabis-infused beverage market is projected to hit $1.4 billion by 2025.
Comparing the regulated market to the hemp-derived market
It is important to note and distinguish that the numbers above are inclusive of both cannabis drinks sold within the regulated marijuana system existing in some states as well as hemp-derived cannabis beverages that are widely available in retail outlets in many jurisdictions, most prevalently in states that do not have a medical or adult-use cannabis regulatory framework. A critical data point is that 2024 was the first year that intoxicating hemp-derived beverage sales in the U.S. began to outpace the sale of cannabis beverages in state-regulated dispensaries, and that trend is only projected to accelerate.
Critics of the availability of hemp-derived products cite safety concerns, however, many advocates for the state-regulated marijuana industries specifically express dissatisfaction at unregulated competitors extracting market share while they shoulder excessive tax and regulatory burdens. That may be true when hemp-derived products are viewed collectively with smokeable hemp containing high-THCA concentrations and other edible products like gummies. However, the reality is that beverages have traditionally performed poorly in dispensaries for a number of reasons, most of them logistical. In 2023, sales of cannabis beverages sold in regulated dispensaries comprised approximately 3% of the total cannabis market. Hemp beverage advocates argue that retail availability of hemp beverages only impacts this small sector of the market and more accessibility at general outlets will potentially appeal to a demographic of consumers that otherwise may not have exposure to these products which could help the regulated marijuana and hemp industries as a whole. This debate continues into 2025 with lawmakers weighing both sides along with other public policy concerns in determining what place hemp-derived beverages should have in our society.
Current regulatory framework
The 2018 Farm Bill effectively legalized “hemp,” defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis,” by removing it, and all derivatives thereof, from the definition of marijuana in the Controlled Substances Act. Subsequent case law such as AK Futures LLC v. Boyd St. Distro, LLC (9th Cir. May 19, 2022) affirmed that indeed psychoactive cannabinoids are lawful pursuant to the 2018 Farm Bill so long as they are derived from hemp. What the 2018 Farm Bill and subsequent case law did not do was make it lawful under federal or state law to add hemp derivatives to products intended for human consumption.
Pursuant to sections 201(s) and 409 of the Federal Food, Drug and Cosmetics Act, “any substance that is intentionally added to food is a food additive, and is therefore subject to premarket review and approval by FDA, unless the substance is generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use, or unless the use of the substance is otherwise excepted from the definition of a food additive,” or Generally Recognized as Safe (GRAS). The U.S. Food and Drug Administration has responded to GRAS notices for hemp seed derived ingredients, however, this is not the case for hemp-derived cannabinoids. The FDA has specifically opined CBD may not be used as a food additive or dietary supplement. Most states have enacted a version of the Federal Food, Drug and Cosmetics Act on a state level and have the ability to issue additional regulations related to food safety that may be more stringent. Most risk of enforcement against hemp-derived products is rooted in state-specific food safety laws which states have a significant degree of latitude in both making and enforcing.
States have taken a variety of positions. To allow for the addition of hemp to products intended for human consumption, many states have amended current legislation to allow for hemp and hemp derivatives to be added to food without it deeming the food adulterated and in most cases those changes were coupled with a regulatory framework to regulate hemp production and hemp-derived cannabinoids. In some cases this was historically done to accommodate CBD products only, as was the case in California and the governor later implemented an emergency ban in September 2024, in response to intoxicating hemp. Some states, including Colorado, Connecticut, Virgina, Georgia and Minnesota among others, have not only amended general food safety laws to allow for hemp additives but have also enacted legislation specific to intoxicating hemp which include each have included concentration limits as well as a regulatory framework for such products. A substantial number of states have opted not to alter their current laws or regulations and have issued guidance in lockstep with, or reliant on changes from, the FDA. Nebraska and Michigan among other have adopted this approach. Some states like Alaska have issued outright bans of hemp-derived delta-9 THC and any synthetic cannabinoids. Missouri attempted to do so and eventually scaled back the enforcement strategy due to legal challenges.
As 2024 concluded, state regulation regarding hemp-derived cannabinoids formed a complex patchwork of varied approaches and uncertainty with a number of states that either had not directly addressed the issue or were in the process of doing so. Texas had conducted legislative hearings on the issue and the lieutenant governor had stated an objective and support for restrictive legislation in December. The governor of Illinois voiced support for a bill that would have incorporated hemp products into the current regulated marijuana system in Illinois. Florida had attempted to enact legislation limiting hemp derived cannabinoid use in March 2024, which was ultimately vetoed by Governor Ron DeSantis, meanwhile the adult-use marijuana ballot initiative failed and the market for hemp products has continued to expand in the state. The central theme of these arguments in each case seems to be the vested interest of the states in protecting the safety of their citizens balanced against fostering small businesses within the respective state.
Trends and expectations for 2025
Absent restrictive federal regulations with respect to hemp-derived cannabinoids, what is certain is that the inconsistency of regulations across states with respect to hemp beverages will persist to at least some degree. When alcohol prohibition was repealed, that did not mean that states had to agree to lift the restrictions, and each state had its own approach. Some legalized only certain types of alcohol, some implemented restrictive time or place restrictions on the sale of alcohol, and in some states, alcohol remained illegal for decades. The lack of prohibition of hemp derived cannabinoids has created a similar pattern. However, some trends are emerging:
– Overly restrictive measures or complete bans are highly criticized and are often challenged. The emergency ban in California will expire in March 2025, and new proposed legislation is currently being negotiated. The bill supported by the Illinois governor, which would include hemp products in the regulated marijuana system, was defeated. Missouri had to scale their enforcement measures back as a result of a lawsuit. These are just a few examples.
– Concentration caps of 3-5 milligrams of delta-9 THC seem to represent what is becoming the generally accepted “low-dose” hemp beverage concentrations. Anything much lower seems to be objectionable to the hemp industry and concentrations higher seems to be objectionable to the regulated marijuana industry. A majority of the few states that are implementing such a cap have chosen a cap in this range. This level is yet to be decided in most states.
– Synthetic Cannabinoids will not likely be a permissible part of a hemp beverage regulatory framework. The majority of states that have enacted any regulations regarding hemp-derived products have proposed to prohibit synthetic cannabinoids like delta-8 THC or converted delta-9 THC.
As more states begin to address these issues, trends will begin to solidify with respect to how hemp-derived cannabinoids, specifically hemp-derived beverages, are meant to fit into our food and beverage regulatory systems. 2025 should bring more clarity, even if only on a state-by-state basis. Who knows how “Dry January” will look next year?
Alyssa B. Samuel is senior counsel at Husch Blackwell. She divides her practice between cannabis, food and hospitality clients with a keen focus on the alternative protein industry.