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November 5, 2025
Built by a former cannabis regulator, Policy, Decoded helps operators see the policy terrain before it shifts beneath their feet.
The alcohol lobby just made its move. Not to regulate hemp beverages. To stop them. That tactic says everything about the stakes. Hemp beverages validated THC as a mainstream social product faster than the licensed market ever could. Consumers are voting in real time, retailers are following the demand, and trade associations are now trying to freeze the market long enough for incumbents to buy the future they could not build. Operators who treat this as a cannabis-vs-hemp fight will miss the real competition forming on the horizon.
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🥤 Alcohol pushes pause to own THC drinks
📦 Minnesota’s rules trigger operator flight
🌾 Tribal sovereignty shapes medical rollout
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🧾 Context: The American Distilled Spirits Alliance, Beer Institute, Distilled Spirits Council, Wine America and Wine Institute, just asked Congress to ban intoxicating hemp products "until federal regulations are established". The timing isn't coincidental. Hemp-derived THC beverages hit $382 million in 2024 sales and are projected to reach $600 million in 2025, growing 143% year-over-year while selling through liquor stores, convenience stores, and bars. Minnesota retailers report THC beverages now represent 15% of total sales just two years after launch. The consumer data alcohol sees internally keeps getting worse: only 54% of Americans now drink alcohol, the lowest rate in Gallup's nine decades of tracking. Gen Z consumes 20% less per capita than Millennials, and half of Gen Zers over 21 have never had an alcoholic drink. Average weekly consumption dropped to 2.8 drinks in 2025 from 5.0 in 2005. Alcohol is watching a substitute product capture the demographic they're losing, using distribution infrastructure they spent a century building.
🔎 What It Signals: When we talk about "the alcohol industry" lobbying against hemp beverages, we're really describing trade associations representing massive corporations like Anheuser-Busch InBev and wholesaler monopolies. But the actual alcohol industry includes craft brewers, small distributors, independent retailers, their employees, and most importantly, consumers who are actively choosing hemp beverages in the exact same stores where they buy beer and wine. Minnesota liquor store owners reporting 15% of sales from THC beverages aren't complaining - they're stocking more because customers want it. The WSWA/Beer Institute lobbying doesn't represent thousands of retailers discovering hemp beverages drive traffic and fill margins from declining beer sales.
This maneuver confirms the strategic shift observed after major corporations like Constellation and AB InBev lost spectacularly when betting on the licensed dispensary model last year. Constellation invested $4 billion in Canopy Growth, lost 90%, converted to passive. Molson Coors launched Truss, then exited completely and sold to Tilray. AB InBev announced a $100 million Tilray joint venture, produced nothing, terminated the partnership, then sold eight beer brands to their former partner. Those bets assumed cannabis beverages needed dispensaries and state licensing. Hemp proved you don't need any of that when the Farm Bill lets you ship THC nationally and sell wherever beer goes.
🧠 THC Group Take: Nobody planned for hemp beverages to validate THC as a consumer product, but that's exactly what's happening. Consumers buying 5mg seltzers at Target are doing more to normalize cannabis than a decade of dispensary marketing. They're proving Americans want THC in social settings through familiar retail at accessible prices without medical stigma or regulatory complexity. That consumer acceptance is the most valuable asset in this fight, and cannabis and hemp operators battling over control are missing that they're building it together.
The WSWA/Beer Institute letter isn't from craft brewers or retailers meeting customer demand. This is AB InBev and the three-tier oligopoly trying to freeze a market until they can own it. If they cared about consumer safety, they'd lobby for immediate federal testing requirements and potency limits that legitimize responsible operators. Instead they want prohibition "until" an undefined future framework. The strategy is market elimination disguised as regulation. Ban hemp now, acquire remnants at distressed valuations once federal cannabis policy shifts, launch with distribution advantages no startup can match. Constellation learned entering early without those advantages costs billions. The majors won't repeat that mistake.
Licensed cannabis operators figured out emulsification, cleaned up cannabis' gunky reputation, and proved this form factor was possible. They learned to store pallets of beverages in vaults and wrestle with child-proof packaging for aluminum cans - regulatory constraints that made no sense but taught them how to walk. Hemp beverages are running with the product formulation and consumer acceptance that licensed operators built while navigating absurd compliance requirements. When federal policy eventually allows licensed cannabis into traditional retail, hemp will have proven the mass market exists but licensed operators created the product that made it possible. The question is whether cannabis and hemp spend the next two years destroying each other while the majors position for acquisition, or recognize they're building the same consumer behavior that threatens the same incumbent industry. The trade associations representing AB InBev understand the stakes. It's worth asking whether the operators fighting over hemp market share do.
Fast-moving headlines, flagged for what matters.
Republican support for cannabis legalization dropped 13 percentage points over the past year to 40% , the lowest level in a decade, while overall American support fell to 64% from 68%. Gallup attributes the shift to Trump's aggressive anti-drug campaign involving extrajudicial killings of alleged drug traffickers and military strikes justified by drug interdiction, which appears to be convincing Republicans the administration is winning the war on drugs despite unclear impact on domestic addiction rates. The polling shows Trump's base responding to perceived progress on border drug enforcement by retreating from progressive cannabis positions they'd been trending toward throughout the 2010s, even though Trump himself endorsed rescheduling, SAFE Banking, and Florida's adult-use initiative during the campaign. The contradiction creates serious problems for Republican governors and legislators in states with legalization ballot measures or pending regulatory frameworks: their voters are simultaneously demanding legal cannabis access while becoming more skeptical of legalization as a policy concept because Trump's tough-on-drugs theater is working politically even when it contradicts his stated cannabis positions. (Marijuana Moment)
The Omaha Tribe claims Nebraska Attorney General Mike Hilgers ended tobacco tax compact negotiations in retaliation for the tribe launching a medical marijuana program, with Tribal Attorney General John Cartier saying a state official told him explicitly the compact wouldn't move forward because the tribe is entering the medical cannabis industry. The compact would have allowed revenue sharing from Nebraska's tobacco sales tax. Cartier also alleges the state plans to station police around the reservation border to stop people from leaving after purchasing cannabis legally under tribal sovereignty. Nebraska voters approved medical marijuana ballot measures in November 2024 despite Hilgers fighting legalization, and now the Omaha Tribe is moving ahead with cultivation and sales under tribal authority while the state implements its voter-approved program. Hilgers' office declined comment but said he'll provide written response after consulting the governor. Using unrelated intergovernmental negotiations as leverage against tribal cannabis programs tests the boundaries of state-tribal sovereignty arrangements, particularly when tribes are exercising the same sovereign authority that allows them to operate gaming facilities that states cannot regulate. Nebraska's approach of threatening to withhold benefits from one compact to influence tribal decisions on cannabis creates precedent for how states might retaliate against tribal operators even as voters approved medical programs the attorney general opposed. (WOWT)
Minnesota hemp businesses are relocating to Wisconsin after the Office of Cannabis Management mandated all intoxicating hemp products be tested in-state starting January 1st at one of just two licensed labs. Nothing But Hemp is spending $100,000 to move operations because Minnesota's labs can't meet contract obligations, while Legend Technical Services expects testing turnaround times to double from two weeks to four weeks right when manufacturers need January compliance testing during holiday cycles. New labeling rules force businesses to print supply chain details on packages, exposing proprietary relationships competitors can read on shelves, while the state banned direct-to-consumer shipping and forced small manufacturers to pay $10,250 for wholesaler licenses just to transport their own products. OCM built hemp rules assuming stable conditions, then adult-use launch, AG pressure for federal prohibition, and lab capacity constraints hit simultaneously. Operators are choosing Wisconsin's lighter regulatory touch over a market where compliance requirements change faster than businesses can adapt and their own state's AG advocates criminalizing their products. (MJBizDaily)
Michigan Treasury released implementation details for the state's new 24% wholesale cannabis tax taking effect January 1st, clarifying that the tax applies recursively to itself and creates an effective rate closer to 32% rather than the advertised 24%. Combined with Michigan's existing 10% retail excise tax and 6% sales tax, the total burden reaches approximately 51% from cultivation to consumer. Treasury will calculate an "average wholesale price" for vertically integrated operators to prevent transfer pricing manipulation, eliminating flexibility these businesses use to manage federal 280E exposure. Cultivators and processors owe the tax based on invoice amounts regardless of whether retailers actually pay, forcing cash-on-delivery models that strain retailers who historically stocked inventory on credit. The medical market remains exempt, potentially driving patients back to medical cards they abandoned after adult-use. Michigan Cannabis Industry Association's lawsuit challenging the tax as unconstitutional remains pending, but the industry needs Lansing to fix this politically because courts won't grant relief until businesses can show actual financial injury from the tax. (Cannabis Business Times)
NORML's deputy director told the industry to prioritize defending existing state legalization laws against potential federal interference, citing concerns that a second Trump administration could pressure states to reverse adult-use programs. The warning reflects anxiety about DOJ enforcement posture shifts and possible conditions attached to federal grants, though the practical mechanics of forcing states to re-prohibit remain unclear given decade-plus implementation and hundreds of millions in annual tax revenue. NORML's positioning this as an "entire industry" priority suggests advocacy groups see existential threat scenarios that operators focused on quarterly results might be discounting. The call comes as Trump has made contradictory statements on cannabis policy and his judicial appointments consistently opposed legalization, creating uncertainty about enforcement priorities. State legislatures that fought legalization initially aren't going to suddenly reverse course and refund years of tax revenue because DOJ changes prosecution priorities, but the fear itself will shape lobbying strategies and political positioning throughout 2025. (Marijuana Moment)
Former White House Domestic Policy Council staffers confirmed Biden's cannabis pardons and rescheduling push originated from campaign commitments rather than evolving personal views, with the team spending months navigating DOJ coordination and clemency office processes. Biden never seriously considered descheduling despite advocacy pressure, viewing Schedule 3 as the administrative limit given his interpretation of treaty obligations and DOJ institutional constraints. The pardon rollout's staged approach reflected interagency negotiation complexity rather than strategic communications planning, and HHS's Schedule 3 recommendation represented the ceiling of what Biden's team would push agencies toward. The interviews show a White House that saw rescheduling as fulfilling a campaign promise through available administrative channels while avoiding broader legalization debates. Biden's team seemed genuinely surprised when the industry treated Schedule 3 as inadequate half-measures, which makes sense when you realize they thought moving cannabis down two schedule levels represented meaningful reform worth the bureaucratic effort. (Marijuana Moment)
Oklahomans for Responsible Cannabis Action withdrew their adult-use legalization petition after failing to collect the required 172,993 valid signatures within the 90-day deadline that ended Monday. The Secretary of State's office confirmed no petition pamphlets were filed and the initiative is no longer active. The proposal would have allowed anyone 21 or older to grow, buy, consume or transport cannabis with a 10% excise tax on top of state and local sales taxes, while existing medical dispensaries could have opened to adult-use customers without new licensing. Opposition from the Oklahoma Association of Chiefs of Police cited concerns about normalizing drug use and workplace impacts. Oklahoma voters rejected a similar adult-use measure by a sizable margin in 2022. The withdrawal leaves Oklahoma's famously chaotic medical market without a near-term path to adult-use, meaning the state continues operating with one of the highest dispensary-per-capita ratios in the country but no legal recreational framework to capture that obvious demand or generate the tax revenue other states are using to fund everything from schools to infrastructure. (Tulsa World)
At least six class action lawsuits against Ohio Medical Alliance over a massive data breach have been consolidated in federal court after a researcher discovered unencrypted databases containing 957,434 patient records from Ohio, Arkansas, Kentucky, Louisiana, Virginia and West Virginia in July. The exposed 323-gigabyte database included driver's license images, Social Security numbers, medical records, mental health evaluations and internal staff comments for patients who used the telemedicine company's services to obtain medical marijuana cards. Ohio Marijuana Card never publicly acknowledged the breach despite being notified July 14th, though the databases were secured within 24 hours. The consolidated litigation alleges the company failed to implement basic data security while handling protected health information, exposing patients to identity theft and stigma from disclosure of medical marijuana use. Cannabis-adjacent healthcare services operate in a regulatory gray zone where HIPAA compliance obligations remain unclear: companies facilitating medical marijuana certifications may qualify as business associates subject to federal privacy rules despite marijuana's Schedule 1 status. Telemedicine providers connecting patients to certifying physicians are handling sensitive health data without the regulatory clarity or liability insurance traditional healthcare providers rely on, creating exposure that grows as state medical programs expand. (Law360 / Multiple Sources)
Verano Holdings completed its migration from British Columbia to Nevada, becoming the first major multi-state operator to fully exit Canadian corporate structure. The Chicago-based company now operates as a Nevada corporation with shares trading on the Canadian Securities Exchange under the same VRNO ticker. Verano cited enhanced operational flexibility and alignment with its U.S. business footprint as primary drivers, completing the process that began with shareholder approval in September. The move follows a broader trend of MSOs reconsidering Canadian domiciles as U.S. federal policy evolution remains uncertain and state-level expansion continues. Every major MSO still operating through Canadian holding companies is watching this closely because Nevada's corporate law offers governance flexibility and tax treatment advantages that British Columbia's structure increasingly can't match as these companies scale domestically without meaningful federal reform momentum. (Cannabis Business Times)
Hawaii will require all hemp retailers and distributors, including online and out-of-state sellers, to register with the state beginning January 1st under a new law signed in July. The registration costs $50 for five years and applies to any business selling manufactured hemp products in Hawaii regardless of physical location. The Office of Medical Cannabis Control will launch outreach with a grace period before enforcement, though the department continues enforcing existing prohibitions on hemp flowers, pre-rolls and vapes. The $50 fee is deliberately low to encourage compliance while giving regulators visibility into who's selling hemp products and creating enforcement hooks against unregistered operators once the grace period ends. States are discovering that outright banning intoxicating hemp is politically difficult, so they're building light regulatory frameworks that split the difference between prohibition and the federal free-for-all the 2018 Farm Bill created. (Kauai Now)
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From the hearing room to the comment section — we’re watching it all.
💰 Trulieve is redeeming $368 million in 8% senior secured notes due 2026, paying them off at par plus accrued interest on December 5. The move delists the notes from the Canadian Securities Exchange and signals the MSO has enough cash flow to retire expensive debt ahead of schedule despite continued federal banking restrictions forcing cannabis companies into capital structures that would be considered distressed in any other industry. (TipRanks)
🎭 South Dakota's Medical Marijuana Oversight Committee's final meeting devolved into accusations of departmental disrespect, committee leaders cutting off witness audio mid-testimony, and a legislator claiming he saw a state inspector hugging an industry person in the Capitol hallway before admitting it was actually an independent tester. The committee recommended banning THC products from unlicensed smoke shops, but none of the 11 approved recommendations will be formally proposed as legislation - any of the 105 lawmakers can cherry-pick what they want for the 2026 session. (KELOLAND)