Hemp Vs. Marijuana: Industry Tensions Rise Amid Rejection Of Cannabis Legalization In Florida, The Dakotas

Tensions within the U.S. cannabis industry have intensified, particularly within the U.S. Cannabis Council (USCC), where conflicts between hemp companies and large marijuana operators have come to the forefront. These internal disputes are unfolding against the backdrop of recent rejections of adult use marijuana legalization in Florida, North Dakota and South Dakota.

Industry "Civil War" Over Cannabis Control

Robert Hoban, a prominent figure in the cannabis sector, recently addressed what he terms the industry’s “civil war.” In his recent article in Forbes, Hoban questioned the future of the market: "Will the cannabis market be controlled by a small group of publicly-traded, multi-billion dollar vertically-integrated marijuana companies… or will cannabis be produced and distributed by farmers and small businesses?" 

Hoban argues that this question underscores the high stakes in the battle between large multi-state operators (MSOs) and independent hemp producers.

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The USCC, a key cannabis industry association, recently rejected applications from several hemp companies seeking board membership. These companies, including Mood, Apotheca and Kight Law, aimed to collaborate with marijuana businesses to promote unified industry policies. 

“The olive branch offered by the hemp industry was forcefully rejected by the MSOs,” Hoban stated. According to him, “a representative of one of the largest MSOs engaged in heavy politicking… to ‘preserve the voting block.'” This move, he suggests, undermines the USCC's credibility as a "big-tent" organization and highlights the deepening divide within the industry.

"The MSOs don't want to risk Main Street having a chance to compete in a market with Wall Street," Hoban added. The conflict between corporate consolidation and the interests of smaller businesses is becoming increasingly apparent.

Hemp Market On The Rise As Florida, Dakotas Reject Cannabis Legalization

Meanwhile, the market for hemp-derived THC products is booming, especially in states where cannabis remains illegal. Hemp companies have capitalized on legal loopholes to sell products containing delta-8 THC and other hemp-derived cannabinoids, which are unregulated and widely available. This burgeoning market poses a competitive threat to traditional marijuana businesses, exacerbating industry tensions.

This internal industry conflict is mirrored in recent state election results. Voters in Florida, North Dakota and South Dakota rejected measures to legalize recreational cannabis. Florida’s Amendment 3, which aimed to legalize recreational cannabis, received 55.8% yes votes but failed to reach the 60% threshold required for a constitutional change. The initiative faced strong opposition from Governor Ron DeSantis and the Florida GOP, who allied with hemp companies opposing the policy shift.

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Hemp businesses contributed over $500,000 to DeSantis and the GOP to oppose Amendment 3, fearing that legalization would harm small enterprises involved in hemp cultivation and sales. Some of these donors’ hemp products were found to exceed legal THC limits and contain unauthorized pesticides, raising concerns about unregulated products in the market.

Conversely, Trulieve Cannabis Corp. TRUL TCNNF, a major cannabis company, supported the legalization effort by donating significantly to the campaign. This highlights the contrasting interests within the industry, with large marijuana operators pushing for legalization while some hemp businesses resist.

Hemp And Marijuana Industry At Odds

The rejection of cannabis legalization initiatives in Florida and the Dakotas underscores the complex dynamics within the cannabis industry, where hemp companies and large marijuana operators are often divided. As Hoban predicts, this may be “the beginning of the end of their reign,” referring to MSOs’ dominance as he asserts their motives become more transparent.

Industry leaders acknowledge that while these setbacks are significant, public support for cannabis reform continues to grow. The tensions between hemp and marijuana sectors reflect broader challenges in achieving unified regulations and market practices.

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