Cycle Log 29

Written By Cameron Tavassoli

The Big 4 Combine

The End of Delta-8: A Turning Point in American Cannabis Regulation

Why Federal Restrictions Are Forcing States Toward Legal, Regulated THC Markets

I. What Delta-8 THC Is — and Why People Used It

Delta-8 THC emerged in the early 2020s as a legal derivative of hemp due to a quirk in the 2018 Farm Bill. Chemically, it is a THC isomer that binds more weakly to the CB1 receptor than traditional Delta-9 THC, but it still produces mild euphoria, pain relief, relaxation, and appetite stimulation. For millions of people in prohibition states, Delta-8 became the only accessible form of cannabinoid-based relief.

Users commonly reported:

  • Reduced chronic pain

  • Anxiety relief

  • Better sleep

  • Relief from muscle tension

  • PTSD symptom reduction

  • Less dependence on opioids or alcohol

The attraction wasn’t just the effect — it was the access. You could walk into a gas station, convenience store, smoke shop, or CBD store and buy a “THC-like” product without entering a dispensary, without a medical card, and without violating state law.

And because hemp is inexpensive to grow and process, Delta-8 was:

  • mass-produced

  • easily extracted

  • sold at low cost

  • shipped across state lines

  • taxed like a normal retail good

This gave consumers a cheap, mild, functional alternative to cannabis — and gave local businesses and state governments a surprising new revenue stream.

II. Why the Hemp Industry Could Produce So Much Delta-8 So Cheaply

Hemp processors built enormous extraction facilities capable of running tens of thousands of pounds of biomass per month. Because hemp is federally legal, they enjoyed economic advantages that licensed cannabis producers do not:

  • No costly grow licenses

  • No seed-to-sale tracking

  • No heavy compliance audits

  • No 280E tax penalty

  • No state THC excise taxes

  • No multi-million-dollar dispensary license requirements

  • Legal interstate commerce

In short:
Hemp had industrial-scale production without cannabis’s regulatory handcuffs.

This allowed the hemp sector to produce cannabinoids — including Delta-8, THCA, CBD, CBG, and even small amounts of Delta-9 — at an efficiency and price point that outcompeted the legal cannabis industry by a huge margin.

III. The Four Major Industries Threatened by Delta-8 THC

While consumers loved these products and states quietly loved the tax revenue, four powerful industries saw Delta-8 as an existential threat:

1. Big Pharma

Delta-8 cut into markets for:

  • sleep aids

  • anti-anxiety medication

  • pain pills

  • anti-nausea drugs

  • appetite stimulants

Any cannabinoid that reduces pharmaceutical consumption is seen as a competitive threat.

Evidence:

  • Rolling Stone’s business council reported that Big Pharma has “$700 billion ready for acquisitions” and cannabis is “exactly the kind of fast-growing target they want.”

  • Pharmaceutical firms have already begun investing in cannabinoid-based drugs and delivery systems, as documented by PharmaPhorum.

2. Big Cannabis (Multi-State Operators)

Delta-8 products undercut:

  • dispensary prices

  • highly taxed THC flower

  • regulated vape cartridges

  • state-licensed cannabis markets

Legal operators were forced to compete with gas stations selling psychoactive products at a fraction of the price.

Evidence:

  • Stateline reported that Congress acted “after pressure from the marijuana industry” to shut down hemp-derived THC products.

  • MJBizDaily documented that MSOs pushed hard to eliminate hemp-THC beverages and vapes.

3. Big Alcohol

Hemp-derived THC beverages began replacing beer, seltzers, and spirits for large groups of younger consumers. Alcohol lobbyists quickly pushed Congress to shut down “unregulated psychoactive beverages.”

Evidence:

  • Reuters reported that “big alcohol is preparing to fight back as cannabis drinks steal sales.”

  • Constellation Brands (Corona, Modelo) continues investing in cannabis partnerships, including THC-beverage ventures.

  • Multiple alcohol lobbies pressed Congress to ban hemp-derived THC beverages, as reported by Marijuana Moment and MJBizDaily.

4. Big Vape / Tobacco

Hemp vapes rapidly outpaced nicotine vape sales in many regions.
This threatened both nicotine companies and the regulatory agencies aligned with them.

Evidence:

  • Philip Morris International signed a $650 million agreement with an Israeli medical cannabis inhalation-tech company, marking one of the biggest tobacco-to-cannabis moves ever.

  • TobaccoAsia reported that major tobacco companies are shifting toward “beyond nicotine” portfolios — explicitly including cannabis.

When the big four align, Congress listens.

IV. The Revenue States Were Quietly Collecting

Though technically “unregulated,” Delta-8 generated significant taxable retail revenue:

  • Sales tax on every purchase

  • Wholesale distributor tax in some regions

  • Local business tax revenue

  • Licensing fees for CBD/hemp retailers

Estimates from trade groups suggest that by 2024–2025:

  • The national hemp-THC market exceeded $10–12 billion annually

  • Many states saw hundreds of millions of taxable sales

  • Prohibition states relied disproportionately on these revenues because they had no legal cannabis market

States like Texas, Tennessee, Georgia, Florida, North Carolina, and South Carolina saw thousands of small businesses survive because of hemp-derived sales.

Delta-8 wasn’t a “loophole economy.”
It was a large, functional, parallel cannabinoid industry.

V. The New Law: What Congress Just Did

In late 2025, Congress inserted language into a major spending/appropriations bill redefining hemp and banning most intoxicating hemp-derived products. Key changes include:

  • Redefinition of hemp to exclude viable seeds of high-THC plants

  • Strict total-THC limits that eliminate Delta-8, THCA flower, THC-O, THCP, etc.

  • Limitations on hemp-derived beverages and vapes

  • Effectively ending the Delta-8 and hemp-THC retail industry nationally

The intention was framed as “closing the loophole” — but the practical effect is far broader.

This act kneecaps the hemp-derived THC sector entirely.

VI. Why the Big Four Industries Pushed So Hard for This Ban

The lobbying motivation is straightforward:

  • Big Pharma wants cannabinoid regulation under FDA control.

  • Big Cannabis wants a clean national market where THC is only sold in regulated dispensaries.

  • Big Alcohol wants to dominate the THC beverage market without competition from convenience stores.

  • Big Vape wants THC vapes regulated under the same frameworks as nicotine vapes.

Delta-8 was an uncontrolled competitor to all of them.
The ban clears the field.

This wasn’t about safety.
It was about market consolidation and future profits.

VII. The Coming Tax Hole and Why States Will Be Forced to Legalize

Now that hemp-THC is banned, states face three immediate problems:

1. Loss of retail revenue

Gas stations, vape shops, and CBD stores lose 20–50% of their revenue overnight.

2. Collapse in state sales tax income

Prohibition states, previously benefiting from those taxable sales, now lose millions per month.

3. The demand for cannabinoids doesn’t disappear

Consumers still want:

  • pain relief

  • sleep aid

  • anxiety support

  • mild euphoria

  • alternatives to alcohol

  • alternatives to opioids

If states do not create a regulated cannabis market:

  • illegal THC markets expand

  • opioid and pill use rises

  • cartels fill the demand-gap

  • untested street vapes reappear

  • tax dollars flee to nearby legal states

This is a textbook prohibition vacuum.

VIII. What Major Industries Plan to Do With Legal Cannabis

Once states legalize, the big industries intend to launch:

Big Cannabis → Nationwide THC flower, vapes, edibles

Standard, regulated Delta-9 products in licensed stores.
(MSO-branded beverages already exist in pilot markets.)

Big Alcohol → THC beverages

Beer replacements, micro-dosed seltzers, cocktail-style drinks.
(Constellation Brands investing in THC drink companies.)

Big Pharma → FDA-regulated cannabinoid medicines

Pain-relief formulations, sleep products, anxiety calming compounds.
(The pharma sector already produces an FDA-approved cannabis drug: Epidiolex.)

Big Vape → Regulated THC pens and cartridges

Nicotine vape companies entering the cannabinoid market under unified regulations.
(PMI’s $650M cannabis inhalation deal is proof.)

Delta-8 had to be removed so these industries could move forward.

IX. Consequences if States Do Not Legalize

If states stay prohibitionist:

  • illegal markets expand

  • overdoses and dangerous synthetics increase

  • opioid relapse rises

  • cartels and street chemists fill the retail gap

  • all taxable revenue ends up in bordering legal states

  • rural economies suffer

  • small CBD stores close

  • enforcement costs rise

The safest public-health alternative is simply:
regulated cannabis markets.

X. 6 States Most Likely to Legalize Cannabis Next — Based on the Collapse of the D-8 Hemp Market

We are at a crossroads! An important medicine has been lost and I don’t want America sliding back into dangerous street drugs or pharmaceutical opioids. I’m going to keep this clear and straightforward while pulling together information on which states are most likely to legalize next — and why.

The whole point is to frame the discussion around:

  • the massive loss of tax revenue from D-8 sales,

  • the sudden displacement of an already proven cannabis consumer market,

  • and the economic vacuum that now pressures states to create regulated adult-use systems.

(And honestly, all of this data is gold for big industry.)

Below is a breakdown of which states are MOST likely to legalize sooner rather than later because of the collapse of the hemp-derived psychoactive market — and the financial and political pressure that creates.

⭐ How These Scores Were Calculated (5 Factors)

Each state is rated on five simple factors.
Each factor = 1 point.
Total score ranges from 1/5 → 5/5.

1. Hemp / D-8 Market Size

States with large, now-collapsed D-8/D-10/THCA markets face the strongest pressure to replace that revenue.

2. Border Pressure

If neighboring states allow adult-use cannabis, tax dollars bleed across the border.
More leakage → faster legalization.

3. Legislative Momentum

If a state already has cannabis bills filed, bipartisan interest, or a governor showing openness, the probability of legalization increases dramatically.

4. Fiscal Pressure

Budget shortfalls, rural economic damage, or declining sin-tax income make cannabis tax revenue extremely attractive.

5. Public Support

States with 60–75% voter approval for cannabis reform are highly likely to act once the hemp loophole disappears.

⭐ Score Meaning

(5/5 = extremely likely, 1/5 = very unlikely)

  • 5/5 → All pressures aligned. Legalization is the rational move.

  • 4/5 → Strong push toward legalization with some political lag.

  • 3/5 → Noticeable pressure, moderate likelihood.

  • 2/5 → Possible but slower moving.

  • 1/5 → Low chance for full rec, but medical expansion is plausible.

🔶 Pennsylvania — 5/5 Likelihood

Why:

  • Major border pressure (NJ & MD fully legal)

  • Bipartisan interest forming inside the legislature

  • Massive budget incentives

  • Huge consumer market already proven

Sources:

🔶 Virginia — 5/5 Likelihood

Why:

  • Retail cannabis sales already scheduled in earlier law

  • Market stalled due to vetoes

  • Hemp collapse creates fiscal urgency

  • Legal framework already exists, just waiting for activation

Sources:

🔶 Wisconsin — 4/5 Likelihood

Why:

  • Surrounded by legal states (MN, IL, MI)

  • Massive hemp-THC participation → sudden revenue loss

  • GOP shifting due to extreme border leakage

  • Public support rising

Sources:

🔶 Hawaii — 4/5 Likelihood

Why:

  • Tourism-driven economy

  • Democratic trifecta

  • Strong public support

  • Hemp products represent a big economic footprint

Sources:

🔶 Florida — 4/5 Likelihood

Why:

  • Enormous hemp-THC market now collapsing

  • Massive consumer base

  • Strong public support for legalization

  • Severe economic pressure as D-8 tax revenue evaporates

Sources:

🔶 North Carolina — 4/5 Likelihood

Why:

  • Rural economies deeply invested in hemp

  • D-8 crash hitting farmers and stores hard

  • Medical cannabis gaining traction

  • Border pressure from Virginia

  • Industry cannot pivot → major political pressure

Sources:

None of this feels good in the short term. Legislation moves slowly, medical options that help people keep getting restricted, and it feels like freedoms are shrinking instead of expanding. I’m not disagreeing with that — I’m looking at the reaction to those forces.

What matters here is who gains when something this big collapses.

A massive, already-proven cannabis consumer market didn’t disappear — it just got displaced overnight. Tens of billions in demand didn’t evaporate, it just lost its legal outlet. And that kind of vacuum attracts the only entities with the money, scale, and lobbying power necessary to reshape markets:

big industry, big agriculture, big retail, big tax revenue.

These groups now have every reason to push states toward fully regulated adult-use systems, because that’s the only way to replace the economic footprint D-8 used to fill. Legislators may drag their feet, but they can’t resist these pressures forever.

I don’t think legislators can keep hemp — and by extension, accessible cannabinoids — off the table forever. Public support is too high, the relief is too real, and the economic incentives are overwhelming. Right now it looks like nothing but bans and crackdowns, but zoom out and the pattern is obvious:

the hemp gray-market era is being shut down to make room for a regulated, industrial-scale adult-use cannabis market.

Not out of fairness —
but because the money, the pressure, the economics, and the voters all push in that direction.

Once these fall, the remaining prohibition states will be outliers with financial pressure mounting.

XI. The Federal Playbook for Descheduling or Reform

Federal reform will likely follow a predictable pattern:

  1. THC moved from Schedule I → Schedule III
     (already in discussion at DEA and HHS)

  2. FDA oversees purity, labeling, and manufacturing standards

  3. TTB or ATF regulates THC beverages and smokables

  4. Interstate commerce becomes legal once states have regulatory frameworks

  5. Treasury creates a federal cannabis excise tax
     similar to tobacco and alcohol

  6. States harmonize their rules
     to allow national brands to operate

This is the endgame the Delta-8 ban is pushing the country toward.

Conclusion

Delta-8 THC didn’t rise because it was trendy — it rose because millions of Americans needed accessible cannabinoid relief in states where traditional cannabis remained illegal or prohibitively expensive. Hemp processors, operating with lower regulatory burdens and industrial-scale equipment, were able to meet that demand with unprecedented efficiency. The result was a thriving national market that delivered affordable relief, created thousands of small businesses, and generated substantial tax revenue even in prohibition states.

But the very success of this ecosystem threatened four powerful sectors: pharmaceuticals, multi-state cannabis operators, major alcohol companies, and the vaping/tobacco industry. Delta-8 undercut their prices, eroded their consumer base, and competed directly with their future cannabis-infused product strategies. These industries’ collective pressure — combined with political concern over unregulated psychoactive products — produced a sweeping federal crackdown that effectively eliminates intoxicating hemp derivatives altogether.

Its removal leaves behind a vacuum in both consumer demand and state revenue:

  • Tens of thousands of small businesses will lose significant income.

  • States will forfeit millions in dependable sales tax revenue.

  • Consumers who relied on Delta-8 for sleep, pain, or anxiety will turn to illegal markets.

  • Opioids, synthetic drugs, and illicit THC products will fill the void.

  • Cartels and underground operations will exploit the sudden gap in supply.

The combination of economic strain, public-health risk, and unsatisfied demand creates a pressure system that pushes states — especially prohibition states — toward legalization faster than they ever intended. At the same time, major corporations are already preparing for a regulated cannabis economy, with alcohol giants developing THC beverages, pharmaceutical companies investing in cannabinoid medicines, vape companies acquiring cannabis inhalation technology, and multi-state operators expanding brand portfolios.

In effect, the Delta-8 ban has unintentionally accelerated the next national phase: regulated, state-licensed cannabis markets designed to replace the hemp-derived THC sector that Congress just dismantled.

States may not have planned to embrace full cannabis legalization — but by eliminating the one legal alternative their populations depended on, the federal government has effectively forced their hand. The result will almost certainly be a wave of rapid legalization across the country, driven not by ideology, but by economics, industry alignment, public demand, and political necessity.

Cameron Tavassoli
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Cycle Log 28