November 12 Is Still the Deadline. Is Your Hemp Business Ready?

Congress may move the date, BUT You should not build your compliance plan around that possibility.

November 12, 2026, is coming quickly. We hope Congress will move the date, but you should not build your compliance plan around that possibility.

If you manufacture, distribute, or sell hemp-derived cannabinoid products, you should already have a plan for what your business looks like on November 13.

I emphasize November 12 because there is a lot of inaccurate information circulating about the federal deadline. On August 8, the Senate passed H.R. 6500, as amended, by a 90–6 vote. The Senate version contains a provision that would delay some of the impending federal hemp restrictions until December 11, 2026. That later date is not the law. 

As of this writing, the House has not agreed to the Senate amendment. The House received the amended bill from the Senate, but has not enacted the extension. 

What happens on November 12?

Congress enacted Public Law 119-37 on November 12, 2025. Section 781 fundamentally rewrites the federal definition of hemp effective 365 days later. I discuss the effects in an article you can read by clicking here(opens in new tab). 

The Senate proposal discussed above would delay most of the negative provisions until December 11. Importantly, though, it is not a complete delay. Under the Senate language, the exclusion for products containing cannabinoids that are not naturally extracted from Cannabis sativa L. still begins on November 12. Practically speaking, this means that HHC, delta-8 THC, delta-10 THC, THCP, and other products containing cannabinoids that are manufactured from another starter cannabinoid will be illegal as of November 12. The law likely allows products with naturally occurring cannabinoids, such as delta-8 THC and CBN, in trace amounts. But that is an issue for another day. 

Start with inventory

Pull your inventory list and the COAs. Identify every SKU that will satisfy the new federal definition and every SKU that will not. Then develop a disposition plan.

Can the inventory lawfully be sold before the effective date? Can it be returned to the manufacturer? Reformulated? Reworked? Transferred into a properly licensed state cannabis system where state law permits? Must it ultimately be destroyed?

Do not assume that inventory manufactured while the old definition was in effect is permanently grandfathered. Section 781 does not contain a general grandfather provision protecting existing inventory after the new definition takes effect. I am also often asked about how long businesses will have to sell off inventory after the law takes effect. As currently written, the law is enforceable immediately and there is no sell-off time. 

Unfortunately, the issue is not merely whether you can sell the product after the deadline. A product that ceases to be hemp may become illegal “marijuana” under the Controlled Substances Act or otherwise create controlled-substance exposure for merely possessing it. The federal definition of marijuana expressly excludes hemp. This means that changing the boundary of what constitutes “hemp” also changes what falls on the outside that boundary line. The fact that the feds are in the process of rescheduling does not help with this issue because the rescheduling would only apply to a narrow band of licensed medical marijuana operators and their products. 

Talk to your bank and payment processor 

For years, hemp businesses have benefited from a federal financial-services framework that distinguishes federally lawful hemp from federally illegal marijuana. Federal banking regulators have expressly stated that banks do not have to file suspicious activity reports (SARs) merely because a customer conducts a lawful hemp business. Marijuana-related businesses operate under a very different Bank Secrecy Act (BSA) framework.

What happens if a substantial portion of your revenue suddenly comes from products that federal law no longer considers hemp? 

Review your banking documents, merchant-processing agreements, ACH relationships, e-commerce terms, lending agreements, and representations about the legality of your business. Ask what happens if some of your products become federally controlled substances while remaining lawful under state law.

Credit-card processors and banks frequently operate under risk policies that are more restrictive than the outer boundary of what a lawyer may be willing to argue is lawful. A clever legal theory does not help much if your merchant account disappears on a Friday afternoon. We’re already hearing reports of credit card processing shut downs and banks notifying clients that they are closing their accounts. 

Insurance, leases, and contracts ALSO matter 

The same analysis applies to insurance.

Talk with your broker and, where appropriate, the carrier. Does your product-liability policy cover a product that is lawful under state law but no longer qualifies as hemp under federal law? What about general liability, cargo, D&O, property, and recall coverage? Does the application contain continuing representations about compliance with federal law?

Landlords are another frequently overlooked issue. Commercial leases commonly require tenants to comply with “all applicable laws.” Some expressly prohibit controlled-substance activity. Others contain use restrictions tied to the landlord’s insurance or lender.

If your business intends to continue selling state-lawful products after they cease to be federally lawful hemp, read the lease now. Depending on the language, you may need a landlord consent or amendment.

The same applies to loans and passive investors. Review operating agreements, subscription documents, investor representations, loan covenants, side letters, and preferred-equity rights. A pivot from a federally lawful hemp company to a state-lawful but federally controlled marijuana company can be a material change in the business. Passive investors deserve and have a legal right to know about it, and in some companies their consent may be required. 

What if my state still says the product is legal?

This is where things get complicated.

A state can decide that a hemp product remains lawful under state law even though the federal government no longer considers it lawful hemp. But state legality does not erase federal law.

The Supreme Court made that point in Gonzales v. Raich(opens in new tab), holding that the federal Controlled Substances Act can reach marijuana activity that occurs entirely within one state and complies with state law. Keeping everything inside state lines does not create a federal safe harbor, and we anticipate possible federal enforcement action in states that do not have have comprehensively regulated hemp industry. 

That said, if a business intends to operate in a state-lawful cannabis market despite federal illegality, having a fully intrastate business model becomes critically important.

The 2018 Farm Bill expressly protects interstate commerce and transportation of hemp. If your product is no longer hemp, that federal transportation protection disappears. The supply chain must be entirely within the hemp-legal state, and the following questions are important:

Where was the cannabis grown? Where was it extracted? Where was it manufactured? Where was it packaged? Where is it warehoused? Who distributes it? Where is the customer?

A state-lawful business will likely need cultivation, extraction, manufacturing, distribution, sale, and delivery to occur entirely inside that state, assuming the state regulatory structure allows it. That does not make the activity federally lawful. It does, however, avoid adding interstate transportation of marijuana to an already complicated legal situation.

E-commerce changes dramatically

The same problem applies to internet sales. There is a major difference between taking an online order from a customer across town and shipping a product from North Carolina to Texas.

The national e-commerce model that hemp businesses have relied on since 2018 is built on federal hemp status. If the product becomes marijuana under federal law, calling it “hemp” on your website does not preserve the Farm Bill’s interstate-commerce protections.

Businesses that intend to continue operating under state law need to evaluate whether online ordering can be restricted to customers physically located in the state, whether delivery is permitted under state law, how age and location are verified, and whether the entire fulfillment process stays inside the state.

Do not forget Section 280E

Taxes may be one of the most painful surprises. Often, when I bring up the possibility of 280E tax liability to my hemp clients they don’t know what I’m talking about. This is arguably the biggest pain point awaiting hemp businesses that intend to distribute products that meet the legal definition of hemp under state law but not under federal law. 

Internal Revenue Code §280E(opens in new tab) generally denies ordinary business deductions and credits to a business trafficking in Schedule I or II controlled substances.

There has been substantial movement on marijuana scheduling. In April, DOJ placed marijuana covered by qualifying state medical marijuana licenses, along with FDA-approved marijuana drug products, into Schedule III. Broader marijuana rescheduling remains the subject of a separate federal proceeding. Adult-use and other marijuana outside the covered medical framework have not simply become Schedule III across the board. 

Do not assume that all of the recent Schedule III headlines make §280E irrelevant to a hemp company whose products become marijuana under federal law. In fact, as I mentioned above, Schedule III will almost certainly not be helpful to a hemp business, at least not at the moment. 

Talk with a cannabis tax professional before the transition. The answer may depend on what you sell, how the product is scheduled, what state licensing structure you operate under, and how the business is organized.

November 12 requires a business plan 

I hope Congress changes course and am working with several groups to advocate for positive hemp policies and laws. I have written repeatedly that the new federal hemp provisions are terrible policy. The Senate’s recent action is encouraging, and there are other serious proposals in Congress, including the Lawful Hemp Protection Act, that would replace prohibition with a genuine regulatory framework. Unfortunately, we are looking down the barrel of a law that will cripple the hemp industry. 

Kight Law has advised hemp and cannabis businesses through difficult legal and regulatory pivots since 2015. We have helped farmers, manufacturers, laboratories, brands, distributors, retailers, investors, and other operators navigate federal and state changes that threatened products, supply chains, banking relationships, contracts, and sometimes entire business models. This transition will require the same type of work.

If your company is trying to determine what happens to its inventory, products, manufacturing process, banking, credit-card processing, insurance, leases, investors, taxes, e-commerce, or state-lawful operations after the new federal hemp provisions take effect, we are available to consult and help develop a plan. Click here to schedule a consultation. (opens in new tab)

The date to prepare for is November 12.

If Congress gives the industry more time, excellent. If it does not, you should already be ready.

August 24, 2026

ATTORNEY ROD KIGHT REPRESENTS CANNABIS BUSINESSES THROUGHOUT THE WORLD.

Rod Kight (opens in new tab)is an international cannabis lawyer. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the cannabis industry. You can schedule a call with him by clicking here(opens in new tab).