The Cannabis Control Board on Jan. 8 briefed a committee about regulatory options for hemp-derived products as federal policy shifts threaten interstate hemp markets. James Spethard, chair of the Cannabis Control Board, told the committee the 2018 farm bill created a legal category for low-THC hemp but that product-level calculations and chemical conversions have allowed intoxicating products to be sold as hemp across state lines.

Spethard said recent federal action ‘‘would close the main loopholes’’ that have allowed higher-THC packaged products to be marketed as hemp. He cited a described federal per-container limit (which he said was 0.4 milligrams total THC per container under a provision with a delayed effective date) and warned many multi-state hemp product business models would be upended if the federal language stands. ‘‘If this 0.4 milligrams THC goes into effect in November…those sales will be illegal,’’ Spethard said.

Spethard described three common pathways regulators see in the market: product-level math that keeps a product under plant-based percentage thresholds, THCA-labeled products marketed as non-intoxicating until activated, and chemical conversions that produce delta-8 or delta-9-like cannabinoids from CBD. He said the Food and Drug Administration has stated THC and CBD are drugs rather than dietary supplements and that the agency ‘‘does not have the resources to police any of this,’’ contributing to a growing interstate market for hemp-derived intoxicants.

The board chair and staff highlighted that Vermont-based hemp companies generally have complied with emergency state rules passed in 2023 and ‘‘are begging for regulation’’ to provide banking, insurance and market certainty. Spethard described an in‑state product threshold the board has discussed — citing a 1.5 milligram-per-package nonintoxicating threshold used in prior rulemaking as an example — and said products above such a threshold would be treated as cannabis, subject to retail limits and taxation.

Kyle Harris, who said he worked at the Agency of Agriculture when Vermont drafted its USDA plan, told the committee that growers now operate under USDA AMS field-level rules because the state’s USDA-approved plan was given up when the Cannabis Control Board formed. ‘‘From a hemp grower perspective right now, they’re regulated directly through USDA AMS,’’ Harris said, and regaining farm‑level authority would be complex.

Spethard urged the committee to consider three broad approaches the Cannabis Control Board has drafted: a light-touch registration to legitimize businesses for banking and insurance, a complaint-driven enforcement approach, or bringing hemp products under cannabis-like product rules with registration, testing and age gating. He flagged economic concerns if the market became intrastate only, noting the board estimates about 90% of many hemp businesses’ sales flow to out-of-state markets.

The committee did not take formal action during the briefing. Members asked the board and Agency of Agriculture staff to continue conversations and to return with further recommendations, including possible rule language, ahead of federal changes expected in November.

Spethard and Kyle Harris provided the briefing; committee members said they will follow up with additional questions and discussions with both agencies.