Hemp THC Ban and Cannabis Reform Stalled by Federal Shutdown

As the Wheels of the U.S. Federal Government Grind to a Halt, the $32 Billion Cannabis Industry Faces a Stalemate on Reform, Hemp Regulation, and Rescheduling Efforts

As the wheels of the U.S. federal government – or most of them – remain halted following the budget impasse and the resultant shutdown that began at midnight on Oct. 1, the forward motion of the nation’s $32 billion cannabis industry has also come to an abrupt stop. The ongoing shutdown, sparked by deep divisions in Congress over federal spending and policy priorities, has left the cannabis sector’s long-awaited regulatory reforms in limbo, freezing progress on several key issues, including the proposed ban on intoxicating hemp-derived THC products and the anticipated move to reschedule marijuana at the federal level.

While some observers believe it may take until next summer before lawmakers reach a conclusion on intoxicating hemp-derived THC products – which several Republican legislators are determined to prohibit – insiders say the shutdown is unlikely to have any effect on President Donald Trump’s much-discussed plans to reschedule marijuana.

Trump’s Marijuana Rescheduling Effort Appears Unaffected Despite Government Shutdown

Speculation surged last week when President Trump shared a video on his Truth Social platform promoting the benefits of CBD. Cannabis stocks responded with a sharp uptick, reflecting optimism that a formal announcement on reclassifying marijuana as a Schedule 3 drug might be imminent.

However, the enthusiasm has since cooled, as neither Trump nor The Commonwealth Project – a pro-medical marijuana advocacy group led by billionaire and Mar-a-Lago member Howard Kessler – have made further statements about the policy shift.

“The Trump administration could announce a decision on rescheduling at any time, even in the midst of a shutdown,” said Michael Bronstein, president of the American Trade Association for Cannabis and Hemp (ATACH). “Meanwhile, continued discussions on addressing intoxicating hemp are expected to resume after the shutdown.”

Bronstein emphasized that despite the uncertainty surrounding broader government functions, the administration’s executive authority allows it to act independently on scheduling decisions through the Department of Health and Human Services (HHS) and the Drug Enforcement Administration (DEA). That means Trump could still deliver on his campaign promise to modernize federal cannabis policy, even as most other federal business remains paralyzed.

Cannabis Policy Reform Efforts Frozen in Washington

The broader picture for cannabis reform in Washington, however, is one of stalled momentum. The shutdown is likely to extend into mid-October – and possibly beyond – as negotiations between the House and Senate over a “clean continuing resolution” remain deadlocked. This temporary spending bill, intended to keep the government running, must pass without additional policy provisions to be accepted by both chambers.

Until that happens, much of the progress toward federal cannabis reform remains suspended. The current impasse halts deliberations on two of the most contentious issues facing the American THC landscape: how to regulate hemp-derived intoxicants and whether federal law should finally align with the 38 states that have legalized cannabis in some form.

A coalition of Republican lawmakers, led by Maryland Rep. Andy Harris and Kentucky Sen. Mitch McConnell, continues to press for a redefinition of hemp under federal law. Their goal is to close what they view as a loophole in the 2018 Farm Bill, which legalized hemp but inadvertently allowed for the widespread sale of hemp-derived intoxicants such as delta-8 THC products.

The Push to Ban Hemp-Derived THC and the Political Divide in Kentucky

For McConnell, who was instrumental in drafting the 2018 Farm Bill and whose home state of Kentucky is a major hemp producer, the proliferation of psychoactive hemp products represents what he now admits was an oversight. The Senate minority leader has expressed determination to correct that mistake before his retirement, aligning himself with conservative colleagues who favor strict regulation of intoxicating hemp derivatives.

However, not all Kentucky Republicans share McConnell’s stance. Sen. Rand Paul, a longtime defender of hemp farmers and small businesses, has repeatedly blocked legislative efforts to ban hemp-derived THC products. In August, Paul employed a procedural maneuver to preserve federal protections for these products, ensuring that drinks, edibles, and THCA flower remain legal under current interpretations of the Farm Bill.

Paul has warned that his colleagues’ “prohibitionist impulses” threaten a thriving segment of the hemp industry, which provides jobs and tax revenue in states across the country. His resistance may again prove decisive as Congress seeks to pass a continuing resolution to reopen the government.

A Temporary Truce, or the Prelude to Another Stalemate?

Observers believe the shutdown could last until mid-November, when lawmakers might agree to a short-term funding deal. Yet even if the government reopens, the hemp and cannabis policy debate is expected to remain unresolved.

Charlie Panfil, vice president at DB3, the lobbying division of Washington law and policy firm Baker Donelson, noted that the current environment leaves little room for lengthy negotiations or partisan infighting. “This leaves little room for a prolonged negotiation or intra-party conflict over the problematic McConnell-Harris hemp ban,” Panfil said. “I would not be surprised if the provision is removed again, as we saw earlier this summer, and the fight over intoxicating hemp is deferred to the next Farm Bill, which could be completed by the end of the year or early 2026.”

Panfil’s assessment reflects the growing consensus in Washington that the hemp THC issue will likely be pushed to future legislative sessions. That deferral would mean that both the hemp and marijuana sectors continue to operate under uncertain federal guidelines, leaving regulators, investors, and businesses to navigate a patchwork of state laws and enforcement priorities.

What’s Next for Cannabis and Hemp Policy in the U.S.?

If the federal government remains in shutdown for weeks or months, many administrative functions tied to cannabis oversight – including data collection, research grants, and policy consultations – will remain suspended. While this does not directly halt private-sector operations, it further delays the harmonization of cannabis policy across the United States.

In the near term, the industry’s focus remains split between anticipation of Trump’s potential rescheduling announcement and the looming showdown over hemp-derived THC. Rescheduling cannabis to Schedule 3 would represent a historic shift, easing tax burdens on marijuana businesses and opening the door for federal banking reforms. Yet, without a functioning Congress, any follow-up legislation or regulatory guidance would still face significant delays.

Meanwhile, the question of whether hemp-derived intoxicants will remain legal continues to divide lawmakers, industry groups, and consumers alike. The outcome will shape the next phase of America’s cannabis economy – one that increasingly straddles the line between agricultural product and controlled substance.

For now, as the government shutdown stretches on, both sides of the cannabis debate must wait. The gears of policy reform have stopped turning, and the industry’s future remains suspended between political gridlock and economic momentum.