🥤 McConnell’s Ban, Michigan’s Tax Fight, and the Year Hemp Turns Into Data Warfare

Built by a former cannabis regulator, Policy, Decoded helps operators see the policy terrain before it shifts beneath their feet.

Congress reopened government by closing the door on hemp. Mitch McConnell waited for his moment, tied prohibition to must-pass funding, and handed the industry a one-year fuse disguised as implementation. Michigan tested the limits of voter protections with a new wholesale tax. Packaging firms ran headfirst into federal enforcement. State frameworks from Kentucky to Rhode Island were preempted mid-experiment. A new emergency episode of The Hybrid drops today, unpacking how this ban took shape and what happens next.

Today’s edition is supported by Morning Brew, Superhuman AI, and the IgniteIt Cannabis Capital and Policy Summit in Washington, D.C. Subscribers get 20% off with code POLICYDECODED20.

🥤 Hemp prohibition used as political leverage
⚖️ State frameworks collide with federal preemption
🎙️ The Hybrid breaks down what the hemp ban really means

Keep receipts. Build evidence. Shape the next round.

🧾 Context: Mitch McConnell’s 0.4 milligram THC limit risks ending nearly two dozen active state frameworks before results could be measured. Rhode Island’s Cannabis Control Commission is five months from completing its legislatively mandated beverage study. Massachusetts unanimously passed significant reforms through the House, and their Senate seems poised to act any week now. Maine’s working group is drafting rules now moving into emergency implementation. Each state represented a distinct trial: Minnesota’s 10 milligram beverage cap and $11.5 million in tax receipts, Kentucky’s 5 milligram cap through alcohol distribution, Colorado’s 1.25–1.75 milligram CBD:THC ratios, Texas’s age-verification system, and Tennessee’s per-milligram wholesale tax scheduled for 2026 to study potency incentives. South Carolina’s House already approved age-21 requirements while its Senate subcommittee debates potency, retail limits, and alcohol-style licensing with more hearings planned before January. Every one of these efforts risks becoming meaningless if the federal ban takes effect. The language itself came from Smart Approaches to Marijuana, a prohibitionist group that opposes both cannabis and hemp, confirming the amendment’s ideological origin rather than any data-driven rationale.

🔎 What It Signals: States were functioning as laboratories, testing different routes to balance safety, access, and enforcement. Minnesota explored integration into alcohol systems. Kentucky tested whether existing distributors could adapt without new bureaucracy. Colorado examined ultra-tight ratios, and Tennessee planned to use tax design as a behavioral tool. McConnell ended those experiments before any outcomes existed, imposing a national prohibition stricter than alcohol rules. The Rhode Island study illustrates the damage best: legislators froze licenses, funded research, and scheduled findings that now may never see daylight.

Inside the alcohol industry, divisions reveal the real motive. Dawson Hobbs of the Wine and Spirits Wholesalers of America told South Carolina lawmakers that the one-year federal delay was meant to give Congress space to design a broader package, not to enforce an immediate ban. He warned the policy will push production underground, drive compliant distributors out, and create “a less safe marketplace rather than a safer one.” That perspective comes from the distribution tier that actually sells hemp drinks, not the producers who lobbied to eliminate them. The ban now looks like leverage for future consolidation under an alcohol-style national framework.

THC Group published an in-depth analysis of the alcohol lobby's push to freeze hemp beverage sales while federal rules are written. The piece examines why the timing of the industry letter matters, who didn't sign it, and what Minnesota's early hemp beverage program reveals about actual market dynamics versus regulatory fears. The essay argues that responsible national standards should govern the market consumers have already chosen rather than pause adoption to benefit incumbents still preparing to compete. Read the full analysis →

⚖️ Ted Cruz Breaks Republican Ranks to Defend Hemp THC

The Senate vote on Rand Paul’s amendment fractured both parties and exposed how little consensus exists on hemp. Ted Cruz joined Democrats opposing Mitch McConnell’s federal ban, arguing that regulation belongs with the states and should rely on testing, dosing, and age limits instead of blanket prohibition. His stance mirrored Governor Greg Abbott’s approach in Texas, where the state imposed ID verification rather than potency caps. Democrats split too: Sens. Schumer and Booker supported Paul’s amendment, while Sens. Gillibrand and Kim voted to uphold the ban. The cross-party mix shows hemp policy is still defined by local economics rather than ideology. Every state with a functioning framework now knows which senators understand that distinction. (Marijuana Moment)

🍺 Beer Institute Wants Hemp Beverages Taxed Higher Than Alcohol

The Beer Institute released a hemp-beverage framework that sounds cooperative but reads like a competitive strategy. It proposes excise taxes higher than alcohol, strict retail segregation, and zero-tolerance THC driving laws until roadside testing exists. The plan lets beer companies claim public-safety credibility while designing an entry barrier that smaller hemp brands could never clear. By defining “fair regulation” as higher taxation and delayed implementation, beer producers shift attention from market competition to policy compliance costs. Congress now has a template for killing rivals through regulation without ever calling it prohibition. (American Craft Beer)

⚖️ Michigan Defends Cannabis Wholesale Tax With Revenue Purpose Argument

Michigan defended its new 24% wholesale cannabis tax by claiming its purpose is road funding, not rewriting marijuana law. Officials insist the levy “works in concert” with existing retail taxes and therefore avoids the supermajority vote required to amend voter initiatives. The industry argues the effect is the same as rewriting the statute, collapsing margins and pushing buyers back to the illicit market. The case will test whether legislative intent can override real-world impact when voter protections exist. Other states watching Michigan’s defense may see a path to raise revenue without touching ballot-approved frameworks. (Michigan Public Radio)

📦 Cannabis Packaging Firms Face Federal Enforcement Over Mold Prevention Claims

Washington and Colorado regulators ordered Grove Bags to withdraw its TerpLoc packaging after “mold-prevention” language triggered federal pesticide-device rules under FIFRA. The company lacked EPA registration, making the products “misbranded.” Similar language appears throughout the packaging sector, exposing firms that never imagined EPA oversight applied to them. The crackdown shows how federal law can reach deep into cannabis supply chains even while the plant remains federally illegal. Ancillary companies will need compliance programs as rigorous as licensed operators or risk becoming the next enforcement example. (MJBizDaily)

⚖️ New Jersey Bill Would Let Medical Dispensaries Bypass Municipal Bans, Gut Regulatory Ethics Rules

Senate President Nicholas Scutari introduced a bill that lets medical dispensaries sell adult-use cannabis in towns that opted out of recreational sales. It also loosens ethics restrictions on the Cannabis Regulatory Commission, allows off-site meetings with applicants, and raises commissioner pay. Supporters call it long-overdue modernization for a shrinking medical market. Critics see it as a retreat from transparency and local autonomy. The proposal lands just before a new governor takes office, signaling an effort to cement influence before the next administration redefines oversight. (New Jersey Monitor)

🍁 Canadian Operators Warn Industry Fragmentation Cost Budget Relief, Resulted in Medical Cuts

High Tide, Toke Cannabis, and Atlantic Cultivation blamed the Canadian industry’s lack of unity for losing ground in Ottawa’s 2025 budget. Federal leaders cut reimbursement rates for veterans and police while offering no excise-tax relief. The companies cite provincial wins like home delivery and markup reductions as proof that cooperation works when the sector speaks collectively. Their statement doubles as a warning to U.S. operators divided between hemp and cannabis interests. Fragmented lobbying never beats industries that show government one coherent voice. (StratCann)

🏥 Japan Moving to Ban CBN as Controlled Drug, Threatens CBD Through Differentiation Concerns

Japan’s health ministry plans to classify CBN as a narcotic after an overdose report involving a student who ate a CBN cookie. Officials say the difficulty of distinguishing CBN from CBD justifies full prohibition instead of incremental limits. The rule would block sales, imports, and advertising while reserving limited pharmaceutical exceptions. Trade groups argue existing dosage guidance already protects consumers and that the new rule sacrifices science for administrative simplicity. If finalized, Japan’s decision could influence other regulators who find enforcement clarity more appealing than nuance. (Hemp Today)