Retail chain shuts all locations as legal changes hit industry

Running a business when it's unclear whether your core product can actually be legally sold comes with its own set of challenges.For retailers trying to sell CBD and other hemp products, the legal situation has been a challenge even though the federal government has given some guidance."At the end of 2018, the U.S. Senate passed a bill that changed the classification of the hemp plant from a controlled substance to federally legal. Since then, CBD products have appeared on shelves in thousands of mainstream retailers across the country. Nowadays, CBD can be found in waters, oils and in even lattes at your corner coffee shop," Karen Knapstein, contributor of Underground Group, shared on Oracle's NetSuite.She noted some of the challenges in operating a business in this space.Opportunities abound in the CBD business, but logistics regarding legality can cause headaches.The government is developing regulations around the sale and use of CBD products, and some state laws currently conflict with federal ones.For some producers, an opportunity to educate consumers about the potential benefits of CBD motivates as much as the potential of business success.The biggest challenge for any operators in the CBD and hemp retail space is that states have also attempted to regulate these businesses.“In going this route, we have created this problematic patchwork, and it becomes particularly challenging when it comes to labeling because one state will say, ‘This needs to be on the label,’ and another state will say, ‘This needs to be on the label,’” said Jonathan Miller, general counsel to the U.S. Hemp Roundtable, whose members include prominent CBD brands, in an interview with Supply Side Supplement Journal. “And oftentimes, they’re all reasonable, but we’re given the direction of needing a dozen different labels to meet the different standards of these states, and that’s quite burdensome for a company that wants to sell in all 50 states or sell in many of them.”It's a regulatory situation that has pushed many businesses, including a popular chain of CBD retailers, to close their doors.U.S. government changes hemp rulesEarlier this year, the large liquor store in my neighborhood started selling CBD and THC-infused products. They offered beverages and gummies that were legal under federal laws.The law that made those products legal will soon change.The new rules “takes us back to the original intent of the 2018 farm bill and closes this loophole,” preventing “the sale of unregulated intoxicating lab-made, hemp-derived substances with no safety framework," said Senator Mitch McConnell in an interview with Louisville Public Media.Those new rules go into effect next November, and as they currently stand, they would effectively end the sale of hemp and CBD-based products.More Retail:Costco CFO makes rare pricing promiseHome Depot faces growing consumer boycott calls ahead of holidaysTarget’s efforts to make amends with customers hit a snagAmazon lawsuit could be a warning to other employersThat led to Tallulah CBD + Juice Bar owner Ashley Guy closing all six of her retail locations."It's just devastating that the federal government banned hemp-derived THC (and) that will go into effect in November next year," she told the Tallahassee Democrat.The paper tied the closing to new enforcement efforts in Florida."Coinciding with the closings is an ongoing state crackdown on kratom compounds and hemp products appealing to children, as previously reported." New rules will make most CBD products illegal.Shutterstock How big is the CBD and Hemp market?The global cannabidiol (CBD) market was valued at approximately $9.14 billion in 2024, with expectations to grow to around $22.05 billion by 2030 at a 15.8 % CAGR, according to Grand View Research.Another estimate shows the global CBD market at $7.6 billion in 2023, projected to reach $36.6 billion by 2033 (CAGR ~17.5 %), reported GlobeNewswire.The Hemp CBD segment (CBD from hemp) held a dominant share of 56–60 % of CBD market revenue in 2024 added Grand View Research.A U.S.-specific study estimates the U.S. CBD hemp oil market rising from $486 million (2024) to $2.47 billion by 2035 (CAGR 15.9 %), as reported by Market Research Future.Key CBD and hemp takeaways:Rapid Growth: Across multiple estimates, the CBD market is on a multi-billion-dollar growth trajectory globally, with forecasts often projecting doubling or more in value by the early-to-mid 2030s, shared GlobeNewswire.Hemp-Derived CBD Dominance: Hemp remains the primary source of commercial CBD products and represents a majority share of the broader CBD market, added Grand View Research.The U.S. Food and Drug Administration has acknowledged the need for new guidance and rules."The FDA has concluded that a new regulatory pathway for CBD is needed that balances individuals’ desire for access to CBD products with the regulatory oversight needed to manage risks. The agency is prepared to work with Congress on this matter," the federal agency shared in a press release.Law clerk Elliot Race, working under the supervision of licensed lawyers, shared his thoughts on the current state of the law."States have taken matters into their own hands in some cases, implementing laws and regulations permitting the use and sale of CBD products in a variety of food and supplements. Overall, the state-specific landscape is changing constantly, on an almost weekly basis, and the clear trend is toward states permitting CBD in consumables despite the FDA’s clearly articulated position that hemp is not permitted in foods and supplements pending issuance of regulations that would permit such use," he wrote on ReedSmith.com.Where U.S. hemp and CBD regulation standsWhile the upcoming regulatory changes will devastate retailers selling CBD and hemp products, government regulators are working on softening and clarifying some rules.Democratic Sen. Jeff Merkley of Oregon thanked McConnell for the one-year delay of its implementation, but warned that it still contains a significant threat to a hemp industry that farmers, businesses, and consumers now rely on."Merkley said the bill rightly combats those synthetically altering hemp into hallucinogenic products, but there are other products that come from hemp, such as CBD, that has, in fact, been a significant factor as a health care supplement in many, many products across America that does not have a hallucinogenic effect," Louisiana Public Media reported.Merkley hopes to work with McConnell over the next year to develop “a definition that addresses the hallucinogenic factors but does not eliminate the CBD product that is non-hallucinogenic, that is valued by many Americans.”Various legislation has been proposed to attempt to protect hemp farmers and retailers."The Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act, which was formally House Resolution 841, "would subject hemp extract products to the regulatory framework for dietary supplements," while the CBD Product Safety and Standardization Act, formally H.R. 6134, would establish "regulations for CBD as a food and beverage additive," according to a press release from the U.S. Hemp Roundtable (USHR).Those are two of many examples of federal efforts to protect and define these businesses, but no bill has passed, or appears likely to pass, that will stop the upcoming change in classification for hemp and CBD-derived products. If nothing changes, retailers will have to stop selling these products late next year.Legal status of hemp and CBD productsThe 2018 Farm Bill legalized hemp cultivation and removed hemp (≤0.3% delta-9 THC) from Schedule I status, but did not change FDA’s authority to regulate CBD in consumer products, according to Congress.gov.FDA maintains that CBD cannot be lawfully added to food or marketed as a dietary supplement under current frameworks, added Congress.gov.The FDA has not issued a rulemaking to allow CBD in foods or supplements. it is calling for a new regulatory pathway with Congress, shared the U.S. Food and Drug Administration.House hearings have highlighted that FDA’s inaction suppresses industry growth, reduces retailer willingness to carry products, and contributes to market fragmentation, according to the House Oversight Committee.The FDA has issued warning letters to companies making unsupported medical claims or selling products with unsafe ingredients, according to Congress.gov.Consumer concerns (e.g., mislabeled THC content, contaminants) are frequently cited in regulatory discussions and enforcement rationale shared Congress.gov.Related: 75-year-old fast-food chain closing 200 restaurants, fights to surviveRelated: 75-year-old department store brand closing forever