Finance

Congress Faces Pressure to Regulate Hemp: Will This Reshape the Cannabis Industry?

Attorneys general urged Congress to tighten hemp regulations, leading to a Trulieve stock drop due to concerns over synthetic THC.

byAndres Castro

October 27, 2025, 7:24 PM

A green flag with a black cannabis leaf flying in front of the US Capitol dome.

A green flag with a cannabis leaf in front of the US Capitol dome. By Wirestock Creators / Shutterstock.com.

Executive Summary

A bipartisan coalition of 39 state and territory attorneys general is urging Congress to tighten federal regulations on hemp products, citing concerns about “bad actors” selling recreational synthetic THC products due to poor definitions in current law.

The attorneys general sent a letter to congressional committees requesting clarification of the term “hemp” in federal law and calling for the unambiguous outlawing of “fake THC products” that exploit the 2018 legalization framework.

The news of this regulatory push negatively impacted the cannabis market, with Trulieve Cannabis shares declining over 4%, and successful legislative action could lead to increased scrutiny and higher compliance costs for hemp product manufacturers.

The Story So Far

The current push for tighter federal regulations on hemp products stems from the 2018 legalization of hemp, which, despite containing minimal THC, has an ambiguous legal definition. This ambiguity is being exploited by “bad actors” to sell synthetic THC products, prompting a bipartisan coalition of 39 state and territory attorneys general to urge Congress to clarify federal law and outlaw these “fake THC products.”

Why This Matters

The bipartisan push by 39 state and territory attorneys general to tighten federal hemp regulations, clarifying its definition and outlawing synthetic THC products, signals a significant shift in the regulatory landscape. This legislative pressure is expected to lead to increased scrutiny and higher compliance costs for manufacturers, potentially reshaping the operating environment for the entire hemp-derived product industry, as evidenced by the immediate negative market reaction seen in companies like Trulieve Cannabis.

Who Thinks What?

A bipartisan coalition of 39 state and territory attorneys general believes the current federal hemp law is poorly defined and exploited by “bad actors” to sell recreational synthetic THC products, urging Congress to tighten regulations, clarify the definition of “hemp,” and explicitly outlaw “fake THC products.”

Cannabis companies, such as Trulieve Cannabis, show concern over the proposed tightening of federal hemp regulations, as evidenced by a decline in their share prices, anticipating increased scrutiny and higher compliance costs for the industry.

A bipartisan coalition of 39 state and territory attorneys general has urged the U.S. Congress to tighten federal regulations on hemp products, citing concerns over the current law’s poor definition that they claim allows “bad actors” to sell recreational synthetic THC products. This legislative push, which saw news disseminated on Monday, October 27, 2025, contributed to a more than 4% decline in Trulieve Cannabis shares, even as the broader S&P 500 index rose by 1.2% that day.

Legislative Concerns

The attorneys general sent a letter on the previous Friday to the chairs of the appropriations and agriculture committees in both the U.S. House of Representatives and the Senate. Their communication emphasized the need for federal law to clarify the term “hemp.”

Hemp, which was legalized in 2018, contains minimal tetrahydrocannabinol (THC), the psychoactive compound found in marijuana. The officials expressed concerns that the existing legal framework is being exploited to facilitate the sale of synthetic THC products across the country.

Market Reaction and Potential Impact

The news of this regulatory push negatively impacted some cannabis companies. Trulieve Cannabis, a prominent player in the sector, experienced a share price drop of more than 4% on Monday.

The attorneys general also called for modifications to current policy to unambiguously outlaw these “fake THC products.” If successful, this effort could lead to increased scrutiny for hemp product manufacturers and potentially result in higher compliance costs across the industry.

Regulatory Outlook

The collective action by state and territory legal officials signals a growing pressure on federal lawmakers to address perceived ambiguities in hemp regulations. The outcome of these discussions in Congress could significantly reshape the operating environment for companies involved in the production and sale of hemp-derived products.