Lawful Hemp Protection Act

The Lawful Hemp Protection Act revises the legal definition of hemp, establishes federal oversight and taxation for hemp-derived cannabinoid products, sets age and manufacturing restrictions, allows Medicare Advantage plans to cover such products, creates a zero-tolerance impaired driving standard for hemp, and preserves state regulatory authority while protecting interstate commerce.

Sec. 3, Definition of hemp: The bill amends the Agricultural Marketing Act to define hemp as Cannabis sativa L. with a total THC concentration (including THCA) of no more than 1 percent on a dry weight basis. It excludes viable seeds above that limit, intermediate and final products containing cannabinoids not naturally produced by the plant or altered by artificial processes (such as HHC, THC-O-acetate, THCP), and products made using methods the Secretary of Agriculture and HHS deem a public health risk. It also defines industrial hemp as non-cannabinoid uses of the stalk, fiber, grain, oil, or cake.

Sec. 4, FDA oversight and milligram limitations: The bill amends the Federal Food, Drug, and Cosmetic Act to define hemp-derived cannabinoid products as finished products for human or animal use that meet the hemp definition and contain cannabinoids. These products are deemed foods. It prohibits introducing into interstate commerce any such product not derived exclusively from U.S.-grown, processed, finished, packaged, and labeled hemp. It bans sale, possession, or consumption of these products by anyone under 21. It also makes a product adulterated if its cannabinoid content exceeds a maximum set by the FDA, if it contains a cannabinoid not on an FDA list, or if it is for food-producing animals.

Sec. 5, Medicare Advantage coverage: The bill allows Medicare Advantage plans to include hemp-derived cannabinoid products as a supplemental benefit for the chronically ill, starting the first plan year after enactment. It also permits providers in certain CMS innovation models to offer consultation and provision of such products as a beneficiary engagement incentive, beginning one year after enactment.

Sec. 6, Taxes on hemp-derived cannabinoid products: The bill adds a new chapter to the Internal Revenue Code imposing a tax of 5 cents per milligram of THC on hemp-derived beverages, removed for consumption or sale. It defines manufacturers, wholesalers, and retailers, and sets qualification requirements and collection methods.

Sec. 7, Unfair competition and unlawful practices: The bill makes it unlawful for manufacturers or wholesalers of hemp-derived beverages to require or induce retailers to buy exclusively from them, through practices like acquiring retailer interests, furnishing equipment or money, paying for advertising, guaranteeing loans, extending excessive credit, or requiring quotas. It also bans consignment sales or conditional sales that restrain trade.

Sec. 8, Prohibition related to unfinished hemp-cannabinoid ingredients: The bill makes it unlawful to market, sell, distribute, or ship an unfinished hemp-cannabinoid ingredient to anyone other than a permitted manufacturer for further processing. Violations are a misdemeanor punishable by a fine of up to $1,000 and possible permit suspension or revocation.

Sec. 9, Zero tolerance for impaired driving: The bill requires states to have laws that assess hemp impairment using the same field sobriety standards as for lawfully prescribed pharmaceuticals, and impose the same penalties as for alcohol or other impairing substances. Starting fiscal year 2027, states without such laws will lose 10 percent of certain federal highway funds. It does not require a per se blood concentration threshold.

Sec. 10, Protection of state regulatory authority and interstate commerce: The bill preserves the right of states, territories, and Indian Tribes to enact more stringent or equally protective laws on hemp and hemp-derived cannabinoid products within their borders. However, they cannot prevent the passage and delivery of compliant products through their borders under the Interstate Commerce Clause.

Sec. 11, Severability: If any provision of the Act is held invalid, the remainder of the Act and its amendments continue in effect.