Indiana hemp drug ban clears first hurdle

Indiana lawmakers seek to align state law with a recently enacted federal ban on intoxicating and synthetic hemp products — over opposition from the burgeoning delta-8 industry.

The lengthy, complex legislation also would regulate less potent products that do pass legal muster.

But, “there’s going to be no demand,” for products under the proposed threshold, asserted Justin Swanson, representing the Midwest Hemp Council and 3Chi, a THC product retailer.

THC is the active ingredient in marijuana.

Sen. Aaron Freeman, R-Indianapolis, confessed in committee Thursday that he’d rather “eliminate all these things from the planet, period,” but that his proposal “is what’s possible.”

His Senate Bill 250 would mimic Congress’ closure of what Freeman described as the “Farm Bill loophole,” referring to the 2018 legislation that defined legal hemp as any part of the plant containing less than 0.3% delta-9 THC by dry weight. That definition allowed products containing delta-8, THCA and other intoxicating cannabinoids to proliferate, including in Indiana.

A stopgap federal funding law enacted in November specifies that all forms of THC count. It also caps THC products to just 0.4 milligrams per container, and outright bans lab-made ones.

“I think (that) is what was intended by the federal government in 2018 when they first passed the Farm Bill; I think it’s what everybody had in mind when that language was then copied here in Indiana,” said Chris Daniels, the senior traffic safety resource prosecutor at the Indiana Prosecuting Attorneys Council. “… The goal was very low potency THC.”

One industry group supported the changes.

“It is imperative that Indiana act during the 2026 legislative session to harmonize with federal policy,” said Cory Harris, representing the American Trade Association for Cannabis and Hemp. “Failure to do so will mean that Indiana’s policy will be less stringent than federal law, and therefore equate to Indiana being a legal cannabis market.”

The federal provisions are set to take effect in November. Freeman’s bill replicates those provisions, but sets an effective date four months earlier, in July.

“It’s premature for Indiana to codify federal law that will decimate an entire industry in the state,” Swanson said. “The landscape is still not settled.”

He noted U.S. Rep. Jim Baird — a Republican representing Indiana — filed a proposal pushing the federal ban’s effective date back to 2028.

President Donald Trump has also signed an executive order to speed up reclassification of marijuana as a less dangerous, less restricted drug.

Swanson said his clients do support a “responsible regulatory framework,” telling lawmakers that “the status quo is not acceptable for anybody.”

Freeman’s bill spends dozens of pages regulating the low-THC “hemp-derived cannabinoid products” that would be expressly legalized — notably, with a long-sought 21-plus age requirement.

It also puts Indiana’s Alcohol and Tobacco Commission in charge of regulating the industry that remains, implementing four types of permits for manufacturers, distributers, retailers and carriers. They’d be banned from advertising within 1,000 feet of schools, playgrounds and more, with retailers barred from operating within the same radius.

Retailers wouldn’t be able to deliver their products or let customers consume them on-site. The sale of products online would also be illegal — another sticking point for advocates.

Sun King Brewery CEO and Co-Founder Dave Colt said his homegrown company spent months and more than $100,000 dollars on equipment, research and development for its THC seltzers. Amid a nationwide downturn in alcohol sales, the seltzers have allowed Sun King to retain its staff and even grow.

“We also make products for at least a dozen small Hoosier businesses as well. Without this additional revenue, we would be forced to lay people off and dramatically downsize our business,” Colt testified. “We do believe strongly the industry wants clear regulations that meet consumer demand.”

Other provisions deal with containers, labeling and testing.

A fiscal impact analysis by the nonpartisan Legislative Services Agency estimated a half-million-dollar financial hit annually to the ATC to administer and enforce the proposal. The agency will need to hire at least one additional excise officer in each of the six districts plus Marion County to investigate complaints associated with the new regulatory framework.

There will be additional expenditures for law enforcement training, purchases, and online databases, the analysis noted.

Costs could be offset from the permit and other fees collected. The measure would direct 70% of the earnings to ATC administrative efforts, 20% to enforcement work, 5% to the state’s 988 suicide and crisis hotline and 5% to the general fund.

If all tobacco sales certificate holders apply for a retail permit, for instance, their application fees would generate $2.1 million. If they’re all approved, the state would earn an additional $4.6 million, per LSA’s analysis.

The state’s seed commissioner would handle permitting for hemp growers and handlers.

Freeman also included a sentence preventing Indiana Code from immediately reflecting federal reclassification of marijuana, if that goes through.

“This bill simply says that we would not automatically follow what the federal government does, that we would decide, 150 of us — that we would make that decision, not the federal government for us,” Freeman told his colleagues.

The Senate Commerce and Technology committee also consented to an amendment removing an excise tax, since any provisions raising revenue must begin in the House.

The revised legislation was approved on a party-line vote of 7-2, but it must next get through the finance-focused Senate Appropriations committee before heading to the chamber’s floor.

Previous efforts to both ban and regulate intoxicating hemp products have failed.

Asked about this year’s chances, Senate Republican leader Rodric Bray told reporters, “I don’t have that crystal ball,” but added, “I think the bill right now is in pretty good shape.”

“I think we’d just like, in Indiana, some certainty as to these products so that the people manufacturing and selling them know kind of what our laws are,” he continued, “and also to build in some really significant protections for, in particular, our youth across the state.”

The Indiana Capital Chronicle is an independent, nonprofit news organization that covers state government, policy and elections.