The Federal Hemp Beverage Ban and Options for Your Brand

What is changing

The amended federal definition of hemp excludes finished hemp-derived cannabinoid products containing more than 0.4 milligrams per container of combined total THC, including THCA, and other cannabinoids determined by the Secretary of Health and Human Services to have, or be marketed as having, similar effects. A beverage containing 2 or 5 milligrams of THC would exceed that limit. The restriction applies per container, not per serving. See the amended federal definition.

Most of the changes are currently scheduled to take effect on December 11, 2026. Exclusions for products containing cannabinoids that cannot be naturally produced by the cannabis plant remain scheduled for November 12, 2026. See the effective-date extension in Section 2019.

The phrase “hemp beverage ban” describes the impact on many THC beverages, but it does not mean every hemp ingredient or beverage is prohibited. The product’s composition matters. Brand owners also need to distinguish legislation that has become law from proposals that may never take effect.

Evaluating a transition to minor cannabinoids

Some beverage owners are considering ingredients such as CBG or CBN as alternatives to THC. That possibility deserves careful review before a brand orders ingredients or prints new packaging.

Removing THC does not automatically make a beverage lawful. Meeting the federal definition of hemp and satisfying food-ingredient requirements are separate questions. FDA has stated that no cannabinoid is approved as a food additive and that it knows of no basis for concluding that an intended use of a cannabinoid in food qualifies as generally recognized as safe, or GRAS. CBD also faces a separate federal restriction on its addition to food. See FDA’s cannabinoid warning letter and its cannabis and CBD guidance.

How an ingredient is made matters, too. The amended hemp definition excludes certain products containing cannabinoids that occur naturally in cannabis but were synthesized or manufactured outside the plant. A supplier’s description of an ingredient as “hemp-derived” is not enough to resolve that issue.

A reformulation review should examine the specific ingredient, its production process, supplier documentation, certificates of analysis, proposed dose, intended claims, and the laws of each target state. A certificate of analysis can help establish what a sample contains; it does not establish that the ingredient may lawfully be used in a beverage.

The review should also consider the product itself. A new ingredient may require changes to taste, processing, stability testing, shelf-life support, and labeling. For some brands, a formulation without cannabinoids may be worth evaluating alongside cannabinoid options.

Exploring the regulated dispensary market

A brand that wants to continue offering a THC beverage may consider entering a state-regulated cannabis market. Depending on the state, potential arrangements could include working with a licensed manufacturer, licensing a brand and formula to an operator, or pursuing the licenses needed to conduct the business directly.

This requires a new operating plan. Existing hemp inventory cannot simply be assumed eligible for dispensary sale, and an ordinary beverage co-packer cannot be assumed authorized to produce cannabis products. For example, California separately licenses cannabis manufacturing, distribution, testing, and retail activities. See California’s license categories.

Before committing to a market or partner, a brand should evaluate:

• Whether the proposed beverage and ingredients are permitted, and which licenses and approvals the arrangement requires.
• How manufacturing, sourcing, testing, packaging, tracking, and distribution will work under that state’s rules.
• Whether production costs, taxes, distributor and retailer margins, and expected sales support the business model.
• Who owns the formula and branding, who controls quality, and what happens if the relationship ends.

A state license does not, by itself, resolve federal-law issues or authorize interstate cannabis shipments. Federal restrictions and the target state’s requirements need to be considered together. Minnesota’s cannabis regulator, for example, identifies federal compliance, banking, and interstate-commerce concerns as businesses evaluate their options. See its transition guidance.

Managing inventory and existing commitments

A transition plan should account for the business already in motion. That includes finished goods, cannabinoid ingredients, printed packaging, production deposits, purchase orders, and distributor commitments.

Review the agreements to determine who bears the cost of unsold product, whether orders can be changed or canceled, and what notice or termination provisions apply. Do not assume a change in law automatically cancels a contract or creates a sell-through period.

If a brand is moving to a new formulation or partner, the agreements should also address access to formulas, specifications, testing records, artwork, and other materials needed to continue the business. Resolving those questions early can help avoid paying for inventory or production that no longer fits the plan.

How CPG Regs can help

My perspective comes from legal practice and more than a decade in beverage manufacturing and operations. I have testified multiple times before legislatures and met with legislators and regulatory decision makers. That experience informs how I approach regulatory changes and the practical decisions beverage businesses face.

Through CPG Regs, I help brands evaluate proposed formulations and markets, review supplier documentation and COAs, assess labeling and claims, and address manufacturing, distribution, and brand-licensing agreements. For matters involving another state’s licensing or legal requirements, that work can include coordination with appropriately licensed local counsel.

The goal is to understand the available options and their costs before committing to a new ingredient, production run, or business relationship.

If your beverage brand is evaluating a transition, let’s talk about your product, your current commitments, and where you want the business to go.