Feds Warn Retailers That Accepting Welfare Benefits For Marijuana Or CBD Could Result In ‘Criminal Prosecution’

The U.S. Department of Agriculture (USDA) is reminding all retailers that
accept federal welfare benefits that they’re prohibited from selling
products containing cannabis to people using Supplemental Nutrition
Assistance Program (SNAP) funds—and that violating the rule could lead to
penalties that include possible “criminal prosecution.”

In a letter to the more than 250,000 retailers participating in SNAP, USDA
Food and Nutrition Service (FNS) Administrator James Miller said on
Thursday the department is “committed to fighting waste, fraud, and abuse,”
which includes “taking swift action to eliminate fraud occurring in the
SNAP retailer community and rooting out fraudsters who take advantage of
the taxpayer’s generosity.”

“Your participation as a SNAP authorized retailer serves an important
purpose. Retailers connect American families to nutritious food each day,”
Miller said. “More than 41 million low-income people redeem their SNAP
benefits at stores nationwide each month. SNAP is funded by American
taxpayers and must be operated with integrity and accountability. All
participating retailers must follow the SNAP rules to protect taxpayer
dollars.”

To that end, he wrote, the letter “serves as a reminder that it is a
program violation to accept SNAP benefits for foods and drinks containing
controlled substances such as cannabis/marijuana.”

“USDA FNS is actively fighting fraud and preserving taxpayer dollars,” it
says. “Retailers who commit program violations will face consequences which
include disqualification from the ability to accept SNAP benefits, monetary
penalties, fines and/or criminal prosecution.”

It’s not clear why USDA felt the update on rules around cannabis was
necessary, but it also comes amid a series of changes to the department’s
FAQ page that similarly reiterates the policy. In the past week, the FAQ’s
cannabis language was added and revised at least three times.

As originally updated, it said SNAP benefits can’t go to cannabis-related
or CBD food and drink products. Then it was changed to list marijuana and
cannabis, without mentioning CBD. Now, in the latest update posted on
Wednesday, it says that “food and drinks containing controlled substances
such as cannabis/marijuana and CBD” are ineligible.

In any case, the FAQ language doesn’t necessarily represent a policy
change, as USDA first issued guidance in 2020 stipulating that while people
can use SNAP benefits for certain foods containing “hulled hemp seed, hemp
seed protein powder, and hemp seed oil,” they cannot buy “hemp plants,
leaves, and shoots.”

USDA further clarified at the time that foods “containing cannabis-derived
products, such as CBD, and any other controlled substances, are not
eligible to be purchased with SNAP benefits,” similar to what’s articulated
in the latest update to the FAQ. The same language was maintained in
another update last year.

The letter and FAQ update comes at a time when many in the cannabis space
are closely watching for signals about how the administration will navigate
marijuana and hemp issues during President Donald Trump’s second term.

In his first term, Trump signed the 2018 Farm Bill that federally legalized
hemp, creating an industry that has since experienced significant
volatility amid concerns about the resulting proliferation of a largely
unregulated market for intoxicating cannabinoid products.

But despite signing that legislation into law—and later endorsing marijuana
rescheduling and industry banking access on the 2024 campaign trail—the
president hasn’t publicly commented on cannabis policy issues since taking
office in January.

Meanwhile, a pair of GOP-led congressional bills filed last month would
prevent people from using federal financial assistance under the Temporary
Assistance for Needy Families (TANF) program at cannabis dispensaries.

Back at USDA, the agency recently released a noticed that it is terminating
a series of trade advisory committees to comply with an executive order
Trump signed in February that’s meant to reduce the size of the federal
government across multiple agencies. One of those committees that had been
expanded to include hemp industry representatives to promote the crop
internationally.

Separately, a report released by USDA in April found that, even as more
states and some congressional lawmakers pursued bans on consumable hemp
products, the industry saw significant growth in 2024.

The National Hemp Report, which USDA conducts annually to assess the
economic health of the market, showed that hemp farmers cultivated 45,294
acres of the crop last year, up 64 percent from 2023. And the industry’s
value jumped about 40 percent, increasing to $445 million.


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As the fate of the consumable hemp market remains murky amid legislative
pushback, a congressional committee held a hearing on the Food and Drug
Administration (FDA) last month—with a hemp industry expert explaining how
the market is “begging” for federal regulations around cannabis products.

Lawmakers have consistently raised concerns about FDA’s refusal to
establish rules allowing for the marketing of federally legal hemp as a
food item or dietary supplement.

One potential legislative solution that U.S. Hemp Roundtable’s Jonathan
Miller noted to the committee is a bipartisan bill Sen. Ron Wyden (D-OR)
filed last year that would create a federal regulatory framework for
hemp-derived cannabinoids.

The legislation would empower states to set their own rules for products
such as CBD while also empowering FDA to ensure that certain safety
standards are met in the marketplace.

In the absence of FDA rules, states from California to Florida to Texas have
pushed for sweeping changes to their own laws around consumable hemp
products. While much of the focus has been on intoxicating products,
federally legal CBD businesses have also found themselves increasingly in
the crosshairs.

On Thursday, a GOP-led House committee has approved a spending bill
containing provisions that hemp stakeholders say would devastate the
industry, prohibiting most consumable cannabinoid products that were
federally legalized during the first Trump administration.

Meanwhile, as lawmakers prepare to once again take up large-scale
agriculture legislation this session, congressional researchers in January provided
an overview of the policy landscape around hemp—emphasizing the divides
around various cannabis-related proposals among legislators, stakeholders
and advocates.

Senate Democrats released the long-awaited draft of 2024 Farm Bill last
year that contained several proposed changes to federal hemp laws—including
provisions to amend how the legal limit of THC is measured and reducing
regulatory barriers for farmers who grow the crop for grain or fiber. But
certain stakeholders had expressed concern that part of the intent of the
legislation was to “eliminate a whole range of products” that are now sold
in the market.

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*Photo courtesy of Brian Shamblen.*

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Or CBD Could Result In ‘Criminal Prosecution’ appeared first on Marijuana
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