After Boom, States Increasingly Seek to Tighten Rules on Hemp THC Drinks
Hemp-derived THC product manufacturers, especially those selling hemp-THC beverages, have their work cut out for them when it comes to keeping up with hemp products sales laws across the country. The hemp-THC beverage industry has been in a boom lately, but tides are shifting in some states. In response to rising safety concerns and political pressure, states are beginning to bring these intoxicating hemp products under stricter control, often by regulating them through alcohol distribution systems.
Manufacturers, distributors, and brand-owners must keep up with these changes as they often affect not just THC caps, but also registration, permitting, and advertising requirements. Below we provide a high-level overview of a few states which have gone from a relatively liberal hemp beverage market to the ABC model.
Kentucky
Kentucky’s SB202, signed into law in March of this year, brings hemp-THC beverages under the jurisdiction of the Kentucky Department of Alcoholic Beverage Control. “Cannabis-infused beverages” or CIBs will be subject to a three-tier distribution chain, with all tiers of the chain licensed by the ABC. There is a pathway for manufacturers to make direct-to-consumer sales, including via direct shipping, but a license for such activity must be obtained. An excise tax is imposed on the sale of CIBs.
CIBs are limited to 5mg of “intoxicating adult-use cannabinoids” per 12 ounces, and as of June 1, 2025, CIBs can only be sold in liquor stores and are restricted from bars and restaurants. The drinks can be sold at events in wet territories until January 1, 2026.
The ABC has been directed to promulgate regulations by July 1, 2026. Until then, the ABC will be administering the existing Department of Public Health Regulations.
Tennessee
Tennessee is implementing similar changes as Kentucky with the passage of HB1376. This bill, signed by the Governor in May, requires hemp-derived THC beverages to be regulated through the state’s Alcoholic Beverage Commission. The bill also calls for three tiers of licensing – suppliers, wholesalers, and retailers. Suppliers are defined to include a manufacturer or someone who contracts for the manufacture of beverages, whether within or outside Tennessee.
Unlike Kentucky, Tennessee will continue to allow on-premise consumption where alcohol consumption is allowed (such as bars and restaurants). Unlike Kentucky, however, Tennessee prohibits direct-to-consumer online sales.
Alabama
Alabama’s HB445 also brings hemp beverages under the purview of the state’s ABC, which will license manufacturers, wholesalers and retailers. The new obligations go into effect on January 1, 2026. Beverages will be capped at 10 milligrams of total THC and a maximum of 12 ounces per container. Retailer licenses will have to obtain approval from their local city or county before they may qualify for a state license.
Hemp beverages will be permitted to be sold in grocery stores, liquor stores, and stores that only sell consumable hemp products. No on-premise consumption will be permitted, nor will direct-to-consumer online sales be permitted.
Retailers and distributors in Kentucky, Tennessee, and Alabama should also be aware that an excise tax is or will be imposed upon sales of hemp-THC beverages.
Rhode Island: Two Paths Forward
For a front-row seat to the hemp debate, keep an eye on Rhode Island. The state is currently debating two competing approaches. HB 6056 would allow hemp THC drinks to be sold in liquor stores, bars, and restaurants—with new licenses and regulatory oversight. HB 6270 would ban them entirely. Cannabis dispensaries are pushing back, arguing that allowing liquor stores to sell THC undermines the more heavily regulated cannabis market.
Compliance is No Small Feat
Considering that hemp regulation is already a patchwork with constantly evolving requirements, compliance is no small feat. While hemp products can be sold across state lines, state appetites to create new and diverse regulatory systems make nationwide sale complex. Many brands rely on in-state distributors and retailers to understand their state laws, but distributors and retailers may be looking back to brands to confirm the product’s compliance.
Wherever you are in the supply chain, a qualified attorney can help you understand and meet your regulatory obligations and respond to any distributor or retailer compliance requests. Our Regulated Industries Practice group is working within hemp regulatory systems across the country and is available to help simplify compliance for your business.
