Minnesota beverage manufacturers and retailers are sounding the alarm over legislation passed by Congress this week that they say would effectively shut down the state’s thriving THC beverage and edible market.
A provision tucked into the bill that ended the lengthy federal government shutdown would ban products containing more than 0.4 milligrams of hemp-derived THC, significantly lower than the 5 milligrams per serving currently authorized under Minnesota state law.
The ban is set to take effect in one year, which beverage producers say sets up a life-or-death countdown for their businesses.
“If this goes through as it’s currently worded, there’s no chance we stay in business past that one-year mark,” said Drew Hurst, president and chief operating officer of Bauhaus Brew Labs in Minneapolis. “(THC beverages) have been both a point of innovation and fun and creativity, but also something that we’ve absolutely needed to be able to continue existing and thriving as a business. If it goes away, we don’t really see a path forward beyond that.”
A ban on THC products would also significantly impact other businesses in the beverage supply chain too, from can manufacturers to distributors to liquor stores, said Matt Kenevan, owner of Dabbler Depot on West Seventh Street in St. Paul.
A variety of hemp-based-THC-infused beverages are sold at Dabbler Depot in St. Paul. Most are made in Minnesota. (Jess Fleming / Pioneer Press)
“All we can do is hope there’s going to be a change that will allow us to do business as usual,” he said. “Why wouldn’t you freak out if someone said you’ve got 12 months to live? That’s what this is.”
While cannabis itself is not federally legal, hemp — a low-THC variety of the plant that’s generally used for industrial purposes — was legalized nationwide by the 2018 Farm Bill, providing a workaround for companies to extract THC from federally legal hemp and make products with effects similar to traditional cannabis.
Minnesota began authorizing the production and sale of THC drinks in 2022 and was among the first states to do so, making the state a pioneer in what’s now a multibillion-dollar nationwide industry. Minnesota has also recently begun licensing cannabis dispensaries through the Office of Cannabis Management.
And as local breweries see beer sales continue to decline in the years since Covid-19, industry leaders say, producing THC beverages has been a vital lifeline for them to remain operational.
“For a lot of us, these are the things we’re filling our tanks with; these are the things we’re keeping people employed with,” said Surly Brewing founder Omar Ansari. “We’ve put millions of dollars into an original facility that probably would’ve closed if not for THC beverages. We used to have 8 people employed there — we have 30 now, and those are all people that have homes, have kids, are paying taxes.”
But in the meantime, until the ban is set to be implemented in late 2026, consumers should know that there’s no change to the existing legal status of producing or purchasing hemp-derived THC beverages, said Christopher Lackner, president and CEO of the national Hemp Beverage Alliance.
The state Office of Cannabis Management also plans to continue licensing businesses, verifying safety and overseeing all THC products including beverages in this interim period, spokesperson Josh Collins said.
“The short term is that it’s business as usual,” Lackner said. “The beverages that are on the shelves today are the beverages that’ll be on the shelf tomorrow and next week and next month and next year.”
Regulations vs. bans
The restriction on hemp-derived THC was a last-minute addition to the federal shutdown bill by Sen. Mitch McConnell, R-Ky., who claimed that unregulated THC products put children at risk.
Hemp industry leaders agree that unregulated THC products are indeed not desirable and argue that a comprehensive regulatory structure, like the one that exists in Minnesota, is a more effective solution than wholesale bans, which might ultimately push customers into black markets.
“Minnesota has shown that with a proper regulatory scheme in place, hemp businesses can operate responsibly and keep products manufactured by bad actors out of the marketplace,” said Matt Schwandt, an attorney focusing on regulatory compliance at Maslon LLP in Minneapolis who previously co-founded and led Bauhaus.
A proposal in the Senate to remove the hemp provision from the shutdown deal, written by Sen. Rand Paul, also a Kentucky Republican, was supported by both Minnesota Sens. Amy Klobuchar and Tina Smith, but it ultimately did not succeed.
“Minnesota has one of the strongest, most carefully regulated systems in the country to allow the sale of hemp products, and the Republican bill that just passed screws all of that up,” Smith said via email Thursday afternoon.
A spokesperson for Klobuchar expressed the lawmaker’s support for federal hemp regulations that account for existing successful THC regulatory systems like the one in Minnesota.
Cole Huschied hoists another case of Bauhaus Brew Labs’ tetra, a hemp-based-THC-infused sparkling water, onto a pallet at the company’s Minneapolis brewhouse on Thursday, July 27, 2023. (Pioneer Press)
This is what brewery leaders, like Hurst at Bauhaus, want to see, too.
“With where we’re at economically, to massively and catastrophically impact an industry that employs hundreds of thousands of people and generates billions of dollars of revenue does not seem like the wisest choice right now,” Hurst said. “We’re all in favor of regulation and legislation around this. We want it legalized at the federal level so we can keep doing what we’ve already proved we can do safely and well.”
Next steps
Following the ban, which appeared to come as a surprise to many in the industry, producers and retailers are rallying to build public awareness and push for hemp-derived THC products to be re-legalized before the provision takes effect in a year.
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“That came out of nowhere,” said Bob Galligan, director of government and industry relations at the Minnesota Craft Brewers Guild. “But I think we’re feeling more hopeful than we were even a couple days ago, just from seeing some of the outrage and seeing how impactful people are realizing this really is.”
At this point, to allow hemp-derived THC beverages to remain legal in the long-term, federal legislation would be necessary to undo the ban, Schwandt said.
“At the end of the day, if people want these beverages to stay available and accessible, it takes the emails and calls to representatives,” Hurst said. “As doom and gloom as a lot of this is, there’s still a lot that can happen within the next year to change course.”
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