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October 29, 2025
Built by a former cannabis regulator, Policy, Decoded is your high-signal daily briefing for operators, investors, and policymakers navigating the collision of law, regulation, and business.
Washington’s hemp fight has reached a breaking point. Senator Rand Paul is threatening to block government reopening unless Congress removes sweeping hemp bans buried in spending bills - a sound-the-alarm moment forcing the industry to circle the wagons. The same legislative chaos threatening federal paychecks could now decide hemp’s legal future, while California’s treasurer calls Prop 64 a “failure” and Curaleaf takes New Jersey to court over union mandates.
To understand how we got here, catch Pam Epstein on the latest episode of The Hybrid - and stay tuned for this week’s new episode. Today’s edition is brought to you by Morning Brew, and powered by THC Group, helping regulated-industry leaders cut through the noise and get sh*t done.
🚨 Rand Paul’s shutdown threat rattles hemp markets
⚖️ Curaleaf challenges labor neutrality in NJ
💸 California admits Prop 64’s promise collapsed
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Start here — the day’s most important development, decoded for impact.
📌 What Happened: Senator Rand Paul warned hemp industry stakeholders Tuesday that he will block unanimous consent on spending legislation to end the 28-day federal government shutdown unless Congress removes language that would prohibit most intoxicating hemp products nationwide. The Kentucky Republican told a Hemp Industry & Farmers of America call that Senator Mitch McConnell and Representative Andy Harris are advancing THC restrictions so severe that the vast majority of hemp-derived cannabinoid products would become illegal: redefining hemp from 0.3% delta-9 THC to 0.3% total THC while capping finished products at 0.2 milligrams per serving, as reported by Marijuana Moment. Paul acknowledged "real danger" that leadership will override his objections through fast-track procedures, attaching hemp restrictions to must-pass appropriations packages within days and bypassing the committee process entirely. He proposed alternative language requiring an 18-month USDA study of state regulatory models instead of immediate federal prohibition, but expressed doubt that farm-state senators like John Thune, Mike Rounds, and John Hoeven will pressure McConnell given longstanding relationships. The shutdown is now the second-longest in U.S. history, with the House-passed continuing resolution failing 13 consecutive Senate votes as Democrats demand health care subsidy extensions and Republicans keep the chamber in recess.
💡 Why It Matters: Call your Senator. Call your Member of Congress. The proposed restrictions collapse wildly different hemp markets into a single prohibition: industrial fiber and grain that nobody considers intoxicating, non-intoxicating CBD wellness products operating compliantly since 2018, and the delta-8 gummies and THCA flower that emerged as Farm Bill loopholes. A blanket 0.3% total THC definition threatens to sweep up industrial cultivars and CBD products along with the gas station intoxicants McConnell actually wants to eliminate. States took divergent approaches after the Farm Bill created the opening: Minnesota built comprehensive frameworks with testing requirements and serving size limits, California banned all intoxicating hemp products outright, Texas yo-yoed from prohibition to regulation, while Florida and Georgia allow sales with minimal oversight. McConnell's credibility comes from authoring the 2018 Farm Bill that legalized hemp production, positioning him to characterize intoxicating products as unintended consequences requiring correction, but his proposed fix would override state regulatory successes in Minnesota, Kentucky, and Tennessee where beverage programs include age gates and lab testing. The timing matters because shutdown crises eliminate normal legislative process where industry could demonstrate regulatory distinctions between responsible operators and bad actors. Federal workers are missing paychecks, SNAP benefits expire this week in more than 30 states, and the military is getting paid through accounting gymnastics that officials admit may violate appropriations law.
🧠 THC Group Take: Thoughtful hemp policy will not emerge from government shutdown negotiations when senators are under pressure to fund troop paychecks and food assistance programs. McConnell apparently sees Allen Iverson-branded THC sodas at Circle K and concludes the Farm Bill was a mistake, but the proposed 0.2mg serving cap would also prohibit Minnesota's regulated 5mg beverages that include age verification and state testing protocols. The policy question that actually matters is whether intoxicating hemp products should be banned entirely, channeled into state-licensed cannabis systems, or regulated as a separate category with appropriate controls. What McConnell and Harris are proposing is door number one disguised as regulation, since the 0.2mg limit makes compliance mathematically impossible for any intoxicating product regardless of how responsibly operators behave. Paul's study language is the only off-ramp that preserves state regulatory authority while giving Congress time to distinguish between industrial hemp, wellness CBD, and intoxicating cannabinoids, but shutdown dynamics work against nuance when leadership needs quick resolution. The hemp industry's panic is justified because attaching prohibition language to appropriations bills bypasses the farm bill reauthorization process where agricultural interests typically defend commodity crops from sudden federal elimination. State-licensed cannabis operators should be watching closely because if Congress can recriminalize a legal agricultural product through appropriations riders during a shutdown, the same procedural path works for restricting state cannabis programs whenever federal priorities shift. McConnell's framing matters: he's not protecting state-licensed cannabis from hemp competition, he's arguing the Farm Bill created a loophole that allowed intoxicating products Congress never intended to authorize. Every state that built hemp regulations (and has been gladly cashing the tax checks with an increasing frequency!) assuming federal tolerance is learning now that tolerance can disappear in days if attached to must-pass spending legislation. The deeper problem is that five years after intoxicating hemp emerged, neither FDA nor USDA distinguished between fiber, wellness products, and intoxicating cannabinoids with appropriate frameworks for each category, so crisis mode becomes the policy-making environment by default.
Fast-moving headlines, flagged for what matters.
Curaleaf filed for emergency relief in federal court to block New Jersey regulators from enforcing a $610,000 penalty and potential license revocation over its expired labor peace agreement with UFCW Local 360. The MSO hired Littler Mendelson, the same firm representing Starbucks in union battles, and argues the state's mandatory neutrality requirement violates both the National Labor Relations Act and First Amendment speech protections. New Jersey regulators warned that Curaleaf's Bordentown dispensary license renewal is conditioned on securing a new agreement by October 31, with daily $5,000 fines accumulating and the threat of what Curaleaf's attorneys call "the commercial equivalent of the death penalty" through full license revocation. The suit comes after a federal judge found similar California labor peace requirements unconstitutional in an August ruling, giving Curaleaf precedent to cite. The challenge targets mandatory union neutrality provisions in place across California, New York, and New Jersey, and the timing capitalizes on the shift from Biden's labor-friendly NLRB to Trump's second term. UFCW organizers see it as MSOs testing whether the new administration will let them escape labor requirements embedded in equity-focused state frameworks. (Law360)
An Illinois appellate court reversed dismissal of a malpractice suit against Kutak Rock LLP after the firm's corporate structuring disqualified two of ten cannabis dispensary applications from the state's social equity lottery. The court ruled that lost lottery participation counts as actionable harm when the odds can be quantified, rejecting the traditional reluctance to award damages for speculative business opportunities. Kutak Rock had created what plaintiffs called a needlessly complex multi-layered structure that failed Illinois' statutory social equity requirements, directly causing disqualification from the licensing process. The ruling establishes that professional judgment isn't shielded when advice misses clear legal requirements, even in lottery-based licensing systems. The decision expands malpractice exposure across regulated industries where attorneys structure applications for competitive or randomized licensing processes. Every cannabis attorney who advised clients during Illinois' chaotic social equity rounds just got a reminder that getting corporate structures wrong has quantifiable damages attached, not just disappointed clients. (Mondaq)
California State Treasurer Fiona Ma told an industry conference that Prop 64 is "a failure" ten years after voters approved adult-use legalization, citing upside down enforcement targeting compliant licensees while illicit operators persist, leakage of California product to newer markets without tax capture, and zero pandemic relief reaching cannabis because Schedule 1 status blocked all $28 billion in COVID grants. Ma claimed licensed operators can count on "nothing" from state programs with only one state loan program currently serving cannabis, and she advocates for complete descheduling rather than rescheduling because pharmacy-style access makes compliance clunky while the illicit market keeps its edge. The treasurer's critique conveniently omits her own office's role in the failure, as state treasurers control bond issuance and investment decisions that could have supported cannabis infrastructure if the political will existed. Ma's positioning for a lieutenant governor run explains the suddenly frank assessment, and her advice that operators make their books "bulletproof" while the state provides nothing reveals the one-way accountability that defining California's approach. (High Times)
New Hampshire's HB 51 would allow the state's four licensed medical dispensaries to purchase hemp-derived nonintoxicating cannabinoids from third-party producers to make therapeutic products, with double testing requirements and a 0.3% THC cap. The state's Therapeutic Cannabis Medical Oversight Board voted 7-0 to support the measure after dispensary operators testified they already produce CBD and ratio products but face higher costs growing CBD-rich strains indoors under security protocols. The Department of Health and Human Services supports the bill and says it can handle the administrative work within existing budget, while opponents from Smart Approaches to Marijuana want New Hampshire to get USDA hemp plan approval first and align state definitions with federal law. The proposal exposes how ridiculous the "source rule" has become when dispensaries can legally sell CBD if they grow it under vault security but not if they buy identical molecules from cheaper outdoor hemp farms. Every state with high-cost indoor medical cultivation should watch this because hemp sourcing could cut patient costs without changing product safety, assuming testing standards remain constant regardless of whether the cannabinoid came from a plant classified as hemp or marijuana. (Citizen Portal)
Montana's Cannabis Control Division told state senators that intoxicating hemp products fall into a complete regulatory void once harvested, with no state agency holding enforcement authority despite the federal Farm Bill creating the legal pathway in 2018. The division oversees 900 licensed cannabis businesses generating roughly $920 million in sales and $152 million in tax collections through November 2024, but Administrator Kristen Barber warned that hemp-derived intoxicants operate outside this framework entirely. The agency deployed a dedicated synthetics inspector who covered 30,000 miles checking 252 locations in the first year after House Bill 948 created the position in 2023. Director Bridal Beatty told lawmakers the division could use more investigators if funded, but acknowledged broader enforcement bottlenecks including court backlogs and local law enforcement priorities. The briefing sets up coming bills to extend Montana's license moratorium beyond July 2025 and potentially close the hemp regulation gap, while senators pressed on whether the 35% THC flower limit should be lowered amid youth psychosis concerns. Montana's framing the hemp issue as a regulatory capacity problem rather than market protection suggests the fix will focus on inspection authority and product standards instead of outright prohibition. (Citizen Portal AI)
MainStreet Bank abandoned its cannabis banking initiative to make itself more attractive to potential acquirers, CEO Jeff Dick told the Washington Business Journal, reversing the strategy announced in February when the bank pitched cannabis as a solution to its failing Avenu banking-as-a-service platform. The $2.2 billion-asset bank had targeted $200 million in Avenu deposits by 2024 but reported only $41 million by December with a $3.6 million pre-tax loss, prompting the launch of Venu, a cannabis payment app designed to generate deposits and noninterest income. Safe Harbor Financial's chief strategic development officer predicted in February that financial institutions exiting cannabis in 2025 would outnumber new entrants as dominant players have established themselves and competition has intensified since the wide-open opportunities of three years ago. MainStreet's quick retreat confirms that cannabis banking no longer functions as a growth strategy for struggling institutions when the business case depends on unproven technology competing against established players in a maturing market. The bank's pivot to pursuing a sale satisfies shareholder pressure but demonstrates how cannabis banking has become a specialist business rather than a rescue option for banks with failing core strategies. (Washington Business Journal)
Highway Cannabis acquired Harrison Township-based Pleasantrees Cannabis just days after Michigan passed its controversial 24% wholesale tax, gaining five retail stores, 70,000 square feet of cultivation, and processing operations. CEO Chris Colon, who built operations in Oregon and California's brutal markets, calls it a contrarian play on mature market economics. He's banking on margin optimization through reworked supplier discounting and labor efficiency while retail competitors panic about the new tax. Highway will join the Michigan Cannabis Industry Association's constitutional challenge against the wholesale levy, but Colon isn't worried about the tax itself after navigating California's multilayered burden. The acquisition timing says everything about operator psychology right now: most Michigan players see apocalypse, but survivors from California's consolidation see opportunity in the chaos. (Crain's Detroit Business)
Police seized over 100,000 cannabis plants in Sardinia during 2024, a 32% increase from 2023, but hemp operators say legitimate crops are getting swept up in Prime Minister Meloni's national drug crackdown. The same farm cleared as legal by one police unit was raided seven days later by financial police who labeled the crop "planted for narcotic purposes" and destroyed 276 kilos of dried flowers plus 2,000 plants. Italy's emergency decree now treats hemp flowers and CBD extracts as narcotics despite a European Court of Justice ruling that they're legal, creating enforcement confusion where different agencies apply contradictory standards to identical crops. Sardinia passed regional hemp regulations in 2022 to support the sector, but farmers report planted acreage is shrinking as the risk of misclassification rises and processors won't contract until legal clarity returns. The dynamic mirrors enforcement inconsistency problems in early US state markets before testing protocols and agency coordination improved, except Italian farmers face the added complexity of national policy directly contradicting EU court precedent. (Hemp Today)
Germany increased its 2025 medical cannabis import quota by 58% to 424,000 pounds after exceeding its 269,000-pound cap by September, while Australia's allocation dropped from 223,000 pounds to 194,000 pounds because importers requested 331,000 pounds but used only half. Germany interpreted surging telemedicine-driven demand as legitimate patient access requiring more supply, while Australia concluded over-forecasting by importers was locking up quota without serving real patients. Both regulators now face political pressure over telemedicine prescribing, with Germany's Federal Drug Commissioner calling clinics "dealers in white coats" and Australia's Medical Association warning single-issue telehealth providers bypass traditional care. The divergent responses show you can expand import capacity while restricting prescribing controls simultaneously, treating supply management and access restrictions as independent policy levers rather than contradictory positions. US states with medical supply constraints should watch Australia's penalty structure requiring 75% permit utilization, as it forces importers to reveal whether they're serving patients or parking quota for competitive advantage. (Business of Cannabis)
The deeper pattern behind today’s moves - and why it matters next.
🧾 Context: Researchers from the UK and Canada published analysis arguing that jurisdictions with diverse product ranges should set high-potency thresholds at 30% THC rather than lower limits, because 30% represents the biological maximum for naturally-occurring cannabis flower before processing into concentrates. Only Connecticut and Vermont have implemented comprehensive potency caps in the US, both limiting flower to 30% THC and concentrates to 60% THC, while Quebec's 30% cap bans all products above that threshold except edibles. Germany's new cannabis framework restricts 18-20 year olds to 10% THC products while adults over 21 face no limits, but the complexity of the cannabis social club model combined with potency restrictions has limited uptake. Washington State's House Bill 2320 initially proposed banning products above 35% THC for adults under 25 but was watered down to mandatory educational signage and optional staff training with no actual potency limits, while Colorado's Senate Bill 25-076 proposing a 10% THC cap for consumers under 26 died in committee after unanimous rejection. Montana's Senate Bill 443 sought to reduce the state's existing 35% flower cap to just 15%, but opponents outnumbered supporters more than 2-to-1 at hearings and the bill was tabled after cannabis businesses argued virtually all current products exceed that threshold.
🔎 What It Signals: Vermont and Connecticut's market performance exposes how potency caps create border arbitrage problems that undermine both revenue and policy goals. Vermont's concentrate sales account for less than 3% of total adult-use sales while Massachusetts border towns report Vermont residents crossing state lines to access unavailable products, and Connecticut had the lowest per capita cannabis sales among Northeast states in 2024 at $54.40 versus Massachusetts' $233.16. The two-tier system where medical patients exempt from caps continue accessing higher-potency products creates incentives for recreational users to obtain medical cards, completely defeating the restriction's purpose. Lab shopping and THC inflation undermine any potency-based policy framework, as research found systematic THC inflation of 25% or more above actual potency in Oregon, California, and Colorado, with one testing expert calling it "probably one of the largest consumer fraud issues in US history." The Netherlands announced a 15% THC cap in 2011 intended to classify higher-potency cannabis as a hard drug, but implementation has been blocked for 14 years by opposition from police, prosecutors, forensic services, and municipal governments who found the threshold arbitrary with no evidence it would reduce harm.
🧠 THC Group Take: The wholesale failure of potency cap proposals across US states reveals that this regulatory approach is politically dead outside the two jurisdictions that launched with caps already in place. Washington's reduction from an outright ban to educational signage, Colorado's unanimous committee rejection, and Montana's 2-to-1 opposition ratio demonstrate that even relatively conservative states won't impose restrictions after industries develop around unrestricted access. The pattern matters because it means potency regulation will increasingly shift toward taxation rather than prohibition, following Illinois' model of 10% tax below 35% THC and 25% above, or Connecticut and New York's per-milligram taxation structures. Vermont and Connecticut's border problems preview what happens if federal rescheduling enables interstate commerce while some states maintain potency caps: consumers will simply order from out-of-state retailers the same way they currently drive to neighboring dispensaries, making enforcement impossible without inspecting every package. Germany's 10% limit for young adults paired with unlimited access for those over 21 creates the same inventory and enforcement nightmares that doomed US age-based proposals, as cultivators must either maintain separate lower-potency genetics or harvest early and reduce quality. The lab shopping crisis is the real story because systematic THC inflation of 25% makes all percentage-based regulations meaningless until testing standardization improves, and states pushing potency caps without first fixing testing infrastructure are building policy frameworks on fraudulent data. Watch Switzerland's pilot program limiting all products to 20% THC as the only example of potency restrictions implemented alongside comprehensive testing protocols and organic cultivation requirements rather than grafted onto existing markets.
From the hearing room to the comment section — we’re watching it all.
📉 MariMed exits Missouri immediately after managed services agreement fails to convert into license transfer, citing inability to reach scale without significant resource commitment despite brands performing well in select stores. The multi-state operator continues managing 13 dispensaries and six cultivation facilities across six other states but concluded Missouri would require too much capital for uncertain returns compared to established markets. (Cannabis Business Times)
🏀 Allen Iverson launched a hemp-derived THC soda line through Circle K, Total Wine, and Specs locations nationwide, partnering with Al Harrington's Viola brand and hemp beverage specialist Horticulture Co. The three flavors contain 10mg hemp-derived THC per 16-ounce can and leverage 2018 Farm Bill loopholes to reach consumers in markets where state-licensed cannabis remains locked behind dispensary doors. (The Daily Pour)
📊 Op-ed from Aurora Cannabis exec Rick Savone argues Canada needs a national export strategy as medical sales abroad hit $154 million while domestic medical market crashes to lowest levels since before adult-use legalization. The industry pitch: adopt domestic Good Manufacturing Practices certification instead of requiring country-by-country approvals, speed up export permits, and integrate cannabis into trade missions. The real story is that Canada's first-mover advantage is evaporating as producers become dangerously dependent on just three markets where Australia, Israel, and Germany account for 80% of flower exports while countries like Colombia and Denmark build competing export capacity. (Financial Post)
🍁 Organigram released polling showing 59% of Canadians want Ottawa to do more for the cannabis sector and 59% see it as economically important, timing the survey release for Mark Carney's federal election campaign amid Trump's trade aggression. The company framed cannabis as contributing $16 billion to GDP and 227,000 jobs compared to forestry or brewing, positioning the industry as economic insulation against American unpredictability. It's smart corporate lobbying disguised as civic engagement, pushing tax relief and illicit market enforcement as policy priorities while Carney focuses on sovereignty battles rather than domestic cannabis reform. (Financial Post)