Since the passage of the 2018 Farm Bill, which legalized hemp production and products throughout the United States by removing hemp from the Controlled Substances Act, annual hemp industry revenues have exploded nationally. The broader hemp industry — including infused beverages, edibles, and other intoxicating hemp products — is now estimated at approximately $28 billion. States like Texas moved quickly to align with the 2018 Farm Bill, passing legislation and adopting regulations with the aim of fostering a robust “hempire” economy.
That goal suffered a significant setback in November 2025, when President Donald Trump signed into law the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (H.R. 5371). The law ended an unprecedented forty-three-day government shutdown, but its implications extend far beyond appropriations.
- The deadline: November 12, 2026 (“Hemp D-Day”).
- The law: H.R. 5371 introduces a strict 0.4mg total THC cap per container.
- The impact: Most current hemp-derived THC products (delta-9 and THCA) will become federally illegal Schedule I substances.
- The real estate risk: Compliant businesses may inadvertently trigger lease defaults, creating a “time bomb” for commercial landlords.
- Immediate action: Audit leases for “compliance with law” clauses and negotiate early termination or “pivot” rights now.
H.R. 5371 included significant changes to federal hemp law that will effectively recriminalize most hemp-derived THC products once the new provision takes effect on November 12, 2026 — “Hemp D-Day.” As the effective date approaches, the hemp industry faces considerable uncertainty regarding the future of products that have proliferated for eight years.
What is the H.R. 5371 ‘hemp-killing clause’?
The spending bill that ended the shutdown included what industry insiders have dubbed the “hemp-killing clause” — a provision that essentially guts what qualifies as legalized hemp and threatens to legislate hemp business of all kinds, around the country, right out of existence. Under the new law, compliance is measured by total THC, including both delta-9 THC and THCA (as adjusted). Finished hemp-derived cannabinoid products must stay under a 0.4mg total THC cap per container. Accordingly, delta-9 products generally no longer will be compliant “hemp” products.
That leaves roughly eight months for the industry to fight back. A bipartisan group of lawmakers from South Carolina, Kentucky, California, and Indiana already have introduced legislation to repeal the ban outright, while other bills, like S. 2112 (Hemp Economic Mobilization Plan Act of 2025), would raise the THC threshold to 1 percent delta-9 on a dry-weight basis.
Congress may yet have time to reverse this gut-punch law, enacted in a bid to close what its advocates call a “loophole” in the 2018 Farm Bill that allowed hemp-derived intoxicants to flourish. Meanwhile, the U.S. Food and Drug Administration was supposed to publish its list of regulated cannabinoids within ninety days of the law’s enactment. That deadline passed in February 2026 with no public guidance in sight. The clock is ticking, the feds are dragging their feet, and the hemp industry is holding its breath.
Can Congress stop the 2026 hemp ban?
Of course, Congress has bigger fish to fry. Government funding will always take precedence, and lawmakers have made clear that “keeping the lights on” may matter more than saving the hemp industry. But that does not mean the fight is over. Since November, a bipartisan coalition has emerged to push back. The Hemp Planting Predictability Act (H.R. 7024), introduced in January 2026 by Representatives James R. Baird (R-IN) and Angie Craig (D-MN), would push the effective date back two years to November 2028, giving farmers and businesses time to adapt while Congress works out a real regulatory framework. A Senate companion bill backed by Senators Amy Klobuchar (D-MN), Rand Paul (R-KY), and Jeff Merkley (D-OR) is also in play.
Meanwhile, the American Hemp Protection Act (H.R. 6209), introduced last year, and the HEMP Act, introduced earlier this year, are taking different approaches: One aims for outright repeal; the other for comprehensive regulation with higher THC limits. Whether any of these measures will gain traction between now and November remains to be seen, but the industry is not going down without a fight.
Why hemp leases are a ‘real estate time bomb’
In the meantime, hemp businesses are operating and renting properties all over the country. The uncertainty in the law, implementation, and potential exceptions create a looming crisis for landlords and tenants alike. With roughly eight months until noncompliant products become Schedule I controlled substances, contingency planning is not optional. It is essential.
Landlords and hemp tenants need to take stock of their contractual obligations, including leases and loan agreements, and determine how changes in the law will impede, limit, or outright destroy hemp tenant operations, revenues, and payment prospects. Most commercial leases contain clauses requiring tenants to comply with all applicable laws and ordinances.
If the products a hemp tenant sells become federally illegal in November, non-monetary and monetary lease defaults likely will skyrocket. Planning, pivoting, and exit strategies need to be on the table now for landlords, tenants, and guarantors. The November deadline is not just the industry’s problem. It is a potential real estate time bomb.
4 immediate steps for hemp business compliance
If you are running a hemp business, the time to act is now.
Audit for compliance issues
Start by auditing every document that governs your operation: lease, loan agreements, supplier contracts, and licensing paperwork, to name a few. Look for “compliance with law” clauses, change-of-law provisions, and termination triggers. It is important that you know exactly what happens to your business — on paper — when your product line becomes Schedule I contraband. Do not hesitate to seek legal counsel to get ahead of the potential fallout and devise a successful legal strategy for your particular facts and circumstances.
Negotiate contingencies
Next, negotiate contingencies while you still have leverage. Right now, you are a paying tenant with a viable business. In eight months, you could be a liability. Use this window to lock in lease amendments that address the regulatory uncertainty. This may include extended cure periods for law-related defaults or early termination rights if federal prohibitions kick in. Your landlord likely does not want a vacant storefront or a lawsuit any more than you want to lose your business.
Preserve your options
Preserve your pivot options. Check your lease for any permitted use restrictions, and if you find yourself boxed in consider potentially pushing for broader use clauses, such as “health and wellness products,” “retail sales,” or whatever gives you room to shift to compliant product lines without triggering a default. If your current lease and space allow for and can support alternative revenue streams, start your due diligence and lay that groundwork.
Map exit strategies
Finally, map your exit and relocation scenarios before distress spreads. If November arrives and Congress has not bailed out the industry, you need a plan. Can you relocate to a state with more favorable laws? Can you wind down operations in an orderly fashion? Can you assign your lease or sublease to a non-hemp tenant? Do not wait until you are in default to figure this out because by then, your options likely will be limited and your negotiating power will be significantly reduced or close to zero.
How can landlords manage hemp tenant risks?
Landlords with hemp tenants have their own homework to do.
Evaluate exposure
Start by evaluating your exposure across your portfolio. How many leases involve hemp-related businesses? What is the total rent at risk? Do any of your financing documents prohibit leasing to tenants engaged in federally illegal activities? If your lender decides a hemp tenant violates your loan covenants after November 2026, a vacancy may be the least of your troubles.
Document everything
Avoid inadvertent waiver. If you know your tenant is selling products that may soon be Schedule I controlled substances, be careful how you handle the relationship between now and November. Document everything, reserve your rights in writing, and consult counsel before making any moves that could be used against you down the road.
Work with tenants to find solutions
Consider targeted lease amendments that reduce both vacancy and litigation risk. A scorched-earth approach may backfire. Instead, consider working with your tenant to negotiate amendments that serve both parties: transition periods, modified use clauses, or structured wind-downs that keep rent flowing while the tenant pivots or relocates, among other things.
Minimize risk amid uncertainty
With proper planning and communication, hemp tenants and their landlords can work together to minimize risk in their respective businesses arising from the uncertainties surrounding the November 2026 deadline. The goal should be to avoid a chaotic default situation that leaves everyone worse off. Tenants and landlords should also contact their local, state, and federal lawmakers to voice their concerns and to spur their representatives into action.
Karen L. Hart, Esq., is a partner in the litigation section at the law firm Bell Nunnally, where she has practiced for more than twenty years. Described by clients as “strategic, aggressive, tenacious, efficient, and effective,” she also serves as the firm’s general counsel. Based in Texas, she brings a distinctly international perspective to her representation of clients in business and real estate disputes and was included among Thomson Reuters’ annual Texas Super Lawyers® from 2022 through 2025.
Giuliana Hays-Angelelli, Esq., is a litigation associate attorney at Bell Nunnally. Drawing on her background in philosophy, Giuliana brings analytical precision, clarity and logical reasoning to every matter. She possesses experience in civil litigation, fiduciary litigation, and estate planning.
