Shutdown Fallout: How the Federal Budget Deal Threatens NC’s Hemp Future

The 2025 federal budget deal ended the government shutdown and restored funding, but it included a hidden provision that could heavily impact the hemp industry. This new rule threatens small businesses, family farms, and workers, putting an industry worth billions at risk. North Carolina could face particularly severe consequences, and many see the change as a quiet “shutdown backlash” slipped into the rushed agreement.

In this article, we break down how the new law may affect North Carolina’s hemp sector, why it is causing so much concern, and what it could mean for the future of the state’s cannabis economy.

Hemp Legalization and the 2018 Farm Bill

According to the 2018 Farm Bill, hemp was taken off the federal list of controlled substances. This move opened the door to a legal hemp industry nationwide. It also allowed businesses to produce and sell hemp-derived products as long as they contained no more than 0.3% delta-9 THC by dry weight. 

Over the past few years, legalization has sparked a fast-growing industry. From industrial hemp and CBD oils to edibles and low-dose THC products, each category helped fuel what many now consider a multi-billion-dollar hemp economy.

States could set their own rules, but federal law gave hemp a broad green light. This meant farmers and businesses across most of the U.S. could legally grow hemp and sell many hemp-derived products. North Carolina embraced this opportunity, and the state ended up with more than 1,500 licensed hemp producers.

As a result, the industry continued to grow. It created new opportunities for farmers. It also gave small businesses a much-needed boost. Many rural and urban communities in North Carolina benefited from this expanding hemp economy.

The Shutdown-Ending Bill and New Hemp Restrictions

In November 2025, Congress passed a major funding bill called the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veteran Affairs, and Extensions Act (H.R. 5371). This bill ended the 43-day government shutdown, which became the longest in U.S. history.

But the bill included a last-minute amendment targeting the hemp industry. This amendment redefines “legal hemp” at the federal level and imposes much stricter limits on hemp-derived products.

Key changes include:

• Under the new rule, hemp-derived products can only include cannabinoids naturally produced by Cannabis sativa L., and synthetic or chemically altered cannabinoids are now prohibited.

• Finished consumer products such as edibles, drinks, topicals, and tinctures must not contain more than 0.4 milligrams of total THC per container. For context, many current hemp-derived products contain far more THC than that.

• The 0.3% THC limit by dry weight from the 2018 Farm Bill is no longer enough. The new rule sets a per-container limit that applies to all THC-class cannabinoids, not just delta-9.

Why Is North Carolina Particularly Vulnerable?

A Large, Distributed Hemp Economy

North Carolina, with more than 1,500 licensed hemp producers, had built a strong hemp industry and a vibrant retail market for products like gummies, tinctures, topicals, and low-dose THC items. 

Many small businesses depend heavily on hemp products. A Raleigh shop owner said the new bill could make “99% of the products I sell” illegal. North Carolina’s hemp industry relies on small farms, local stores, regional processors, and independent retailers rather than big corporations. This makes it highly vulnerable, as the loss of core products would create widespread negative effects throughout the local economy.

Jobs, Tax Revenue, and Community Impact

The U.S. hemp industry supports over 300,000 jobs, contributes billions to the economy, and generates substantial state tax revenue. The NC hemp shutdown impact is very real. Small businesses, family farms, and local retailers rely on hemp for income and employment. If the new restrictions remain, many worry about business closures, job losses, and a severe decline in local hemp-based economies.

A CBD shop owner warned that hundreds of products might shrink to just a few legally sellable items. For rural communities depending on hemp as a profitable alternative to traditional crops, this change could be devastating, putting jobs, local tax revenue, and long-term economic growth at risk.

The Loophole and Legislative Battle

The fierce legislative pushback against a new provision highlights an underlying conflict between regulatory intent and market reality in the hemp industry. Senator Mitch McConnell justifies the measure by arguing that companies have been "exploiting loopholes" in the 2018 Farm Bill to sell intoxicating products, which created an unregulated recreational market that affects minors.

 On the other hand, Rep. Thomas Massie and Sen. Rand Paul argue against the ban by characterizing the provision as a return to "prohibition" that will have devastating economic consequences for rural communities. Furthermore, critics warn that the provision's overly broad language may unintentionally impact non-intoxicating products crucial for medical use, thereby limiting patient access to specific cannabinoid formulations.

The Response from NC Hemp Industry Stakeholders

Hemp growers, retailers, and consumers in North Carolina have responded with shock and concern, viewing the change as a de facto ban or even a return to criminalizing products that were previously legal and widely used. 

One NC shop-owner warned that the law would mean shutting down entirely if enacted as-is.

Some industry participants who were already focusing on zero-THC or purely industrial hemp viewed the change as expected. They had started adjusting their production in previous years to reduce regulatory risk.

For many smaller farms, retailers, and consumers, the change feels like a betrayal: after investing under the previous legal framework, they may have to start over or close entirely. One industry group warned that the bill “could wipe out” 95% of the existing hemp-derived consumer products market.

What does this mean for NC’s Hemp Future?

Short Term Impact

The law was signed in November 2025, but most rules give businesses some time to adjust. Even so, the year ahead could be tough. Stores may need to clear out old inventory and create new products. Many shops might not make it. Closures, layoffs, and mergers of businesses are expected as the industry adjusts.

Long Term Impact

There are two possible futures:

• The hemp industry may shift to focus on industrial and non-intoxicating products. This includes fiber, grain, and hemp-derived CBD that meets THC limits. Textiles and wellness products without psychoactive cannabinoids would also fit. This approach follows the stricter federal rules.

• Much of the consumer hemp market could disappear. Low-dose THC products, edibles, beverages, and other consumables would be most affected. This might push customers toward state-legal cannabis or even the black market.

Broader Implications

The 2025 shutdown-funding deal highlights a clear divide in U.S. cannabis policy. Non-intoxicating hemp is treated differently from psychoactive cannabis. Rules from the 2018 Farm Bill are partly reversed for hemp-derived THC products. Regulators want to stop loosely regulated THC hemp from reaching stores. This benefits licensed dispensaries but puts small hemp businesses, especially in North Carolina, at risk. The change shows how quickly laws can shift. What was legal five years ago may now be illegal, which is a warning for the whole industry.

Conclusion

The federal budget deal of 2025 may have ended the government shutdown, but it brings significant challenges for North Carolina’s hemp industry. Stricter rules threaten small businesses, farmers, and jobs, potentially reshaping the market. The NC hemp shutdown impact underscores the fragility of legal hemp, highlighting a turbulent future for the state’s industry.