Could Marijuana Rescheduling Hurt Hemp Operators? Here’s What Experts Think

The rescheduling of marijuana is viewed as a step in the right direction for US cannabis policy. This change represents a progressive shift towards a more scientific, rational, and practical regulatory regime. It is expected to advance medical science, fight stigma, and improve conditions for licensed cannabis enterprises.

The scenario is more complex for the hemp industry, however. Experts warn that marijuana rescheduling—combined with tightening hemp definitions—could create serious risks for hemp operators, particularly those selling delta-8 products, THC gummies, and smokable hemp. Instead of clarity, rescheduling may accelerate regulatory pressure on products that already sit in a legal gray area.

Understanding Hemp vs. Marijuana: The Legal Framework Today

To grasp the potential impact of rescheduling, it’s crucial first to understand how hemp and marijuana are currently treated under U.S. law. The 2018 Farm Bill removed hemp from the definition of marijuana in the CSA, defining hemp as Cannabis sativa with not more than 0.3% delta-9 THC on a dry weight basis. This distinction allows hemp and many of its derivatives to be produced and sold legally across the country; hence, the creation of a legal market for CBD products. Additionally, intoxicating derivatives like delta-8 THC fall below the delta-9 threshold.

That 2018 definition created a loophole that entrepreneurs used to develop a booming sector of products, gummies, vapes, tinctures, and smokeables containing cannabinoids like delta-8 or delta-10 THC. These products managed to comply with the strict marijuana laws due to their hemp definition, technically allowing them to be sold even in states without legal marijuana markets.

What Rescheduling Marijuana Would Actually Do?

If marijuana were to be rescheduled, for example, moving it from Schedule I to Schedule III, it would change how marijuana is regulated under federal law. The proposal will decrease penalties for possession and distribution, acknowledge accepted medical use of cannabis by doctors, and allow cannabis businesses access to banking and normal tax treatment. The proposal also repeals the tax code’s Section 280E penalty.

If cannabis were to be reclassified at the federal level, cannabis markets would probably become subject to greater federal oversight. Furthermore, the difference between hemp and marijuana products could become even more blurred by a federal-level agency reunification of regulation. This would be possible by granting greater authority to the Drug Enforcement Administration (DEA) and the Food and Drug Administration (FDA). 

Simply moving marijuana to a different schedule would not legalize it federally for adult use across the nation. In addition to rescheduling, states would continue to regulate their own markets, and a federal rescheduling would not overrule a state prohibition.

Redefining Hemp: A Parallel Shift That Matters

At the same time that rescheduling is on the table, Congress has already moved to redefine what qualifies as legal hemp, and this shift has direct consequences for hemp operators. A new federal law — tucked into a large spending package rewrites the definition of hemp to include a total THC limit on a dry-weight basis and excludes synthetically derived cannabinoids from the scope of hemp entirely.

Under the updated standard, total THC, including delta-9, delta-8, THCA, and other isomers, must remain below very low levels (as little as 0.3% total THC or even 0.4 mg of THC per container, depending on interpretation), or the product is classified as marijuana under federal law. Cannabinoids synthesized or manufactured outside the plant, including most delta-8 THC products on the market today, are specifically excluded from the definition of hemp.

This effectively closes the so-called “hemp loophole,” which has allowed delta-8 gummies and similar intoxicating products to flourish. Many such products will no longer be considered legal hemp after enforcement begins — currently slated for late 2026.

Why Hemp Operators Could Face Business Risks

Rescheduling cannabis, along with a new limiting definition of hemp, increases several business risks for hemp industry operators.

1.   Product Reclassification to Controlled Substances

Products that had been legally sold as hemp, including particularly delta-8 THC edibles, vapes, and smokeables, because they conformed with the old definition, could suddenly be treated as marijuana under federal law. If this happens, these products will be subject to strict CSA controls. This means the product will have licensing and reporting requirements. Further, if operators do not comply, they may face criminal liability.

2.   Regulatory Fragmentation and Compliance Costs

Operators that once relied on simplified hemp compliance will find themselves navigating the same complex regulatory landscape that state-legal marijuana businesses already face. This includes tracking systems, testing protocols, and distribution controls that many small- or mid-size hemp firms are neither ready for nor financially able to implement.

3.   Market Squeeze and Competitive Disadvantage

With the loss of legal status of hemp CBD-derived intoxicating products, consumers seeking psychoactive cannabinoid products are increasingly likely to turn to the legal marijuana market, where products are regulated and taxed. Hemp operators may get completely squeezed out of this market unless they switch to non-intoxicating products such as CBD isolate or industrial fiber.

4.   Loss of Interstate Commerce Freedom

As per the 2018 Farm Bill, the shipping of hemp and its derivatives across state lines is allowed. When substances are put under the CSA due to rescheduling and redefinition, interstate commerce becomes vastly more limited, like marijuana. Business models built on e-commerce and national distribution could be disrupted by this alone.  To know more about job and market risks for hemp operators, read this article: New Hemp Law Sparks Job Loss Concerns.

Can Hemp Operators Survive the Shift? What Experts Think

According to industry analysts and legal experts, the situation is a cause for concern. On one hand, they stress that non-intoxicating aspects of the hemp industry, such as industrial hemp fiber, seed, and basic CBD products, are likely to remain unaffected. Hemp businesses focused exclusively on these sectors should continue to thrive so long as their goods comply with the new regulations.

However, the future looks uncertain for operators with heavy investments in psychoactive cannabinoids like delta-8 THC, which previously generated billions in retail sales. These experts say that the companies will have to change quickly or eventually consolidate. Many could be laid off, have their revenue impacted, or even be shut down if they do not significantly adapt their product lines to restrictions and outright bans that the CSA will enforce.

Federal reclassification could help large-scale companies in the cannabis industry that can easily adopt compliance costs. Small hemp operators may find it hard to compete. The flexibility that allowed the hemp industry to flourish under the old definition could become its weakness under a tighter regulatory regime. To know more about federal enforcement trends, read this article: FDA Hemp Crackdown 2025.

Conclusion

Simply rescheduling marijuana would come with a set of benefits for the cannabis sector – including tax breaks and further normalization of cannabinoid products. Despite this, the new federal definition of hemp and lower THC limits, however, create real risks for hemp operators who can’t produce intoxicating cannabinoids, such as delta-8 THC, gummies, smokeables, and so on.

The industry is currently at a crossroads. Hemp operators should make a complete review of their products. Opportunities for some people may be found in non-intoxicating markets or by becoming a licensed participant. Some businesses may have to shrink or close due to newfound legal restrictions and regulations with respect to hemp and marijuana.

Misclassification of marijuana has far-reaching implications that go far beyond the direct target of that change. For many hemp businesses, those consequences will shape their future for years to come. 

For more in‑depth news and updates on hemp, cannabis, and federal regulations, subscribe to the CBHD News newsletter.