Indiana Lawmakers Approve Bill To Restrict And Regulate Hemp THC Products

*“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.”*

*By Leslie Bonilla Muñiz, Indiana Capital Chronicle*

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’s 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
percent 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 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 percent of the earnings to ATC administrative efforts, 20
percent to enforcement work, 5 percent to the state’s 988 suicide and
crisis hotline and 5 percent 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.”

*This story was first published by Indiana Capital Chronicle.*

*Photo courtesy of Brendan Cleak.*

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