Virginia retailers selling intoxicating hemp products had wide swaths of inventory become illegal on Aug. 15 after a federal judge denied a temporary restraining order for industry stakeholders the previous day.
As part of the state budget Virginia lawmakers passed in June, a new law now prohibits consumable hemp products from containing more than 2 milligrams of total THC per package, eliminating the commonwealth’s 25-to-1 CBD-to-THC rule that had allowed products to contain intoxicating amounts of THC so long as they had 25 times more nonintoxicating CBD.
Democratic Gov. Abigail Spanberger signed the budget legislation, House Bill 30, on June 29.
In response, seven companies filed a lawsuit against Spanberger and other state officials on July 31, seeking a temporary restraining order (TRO) and a preliminary injunction to prevent the law from taking effect on Aug. 15.
U.S. District Judge Robert S. Ballou, from Virginia’s Western District, denied those motions on Aug. 14.
“Plaintiffs entered and invested in a heavily regulated and rapidly evolving industry,” Ballou wrote in his opinion. “Federal and state governments have repeatedly altered the legal status and regulatory treatment of hemp-derived THC products. Against that backdrop, plaintiffs’ expectation that their products would remain lawful for sale indefinitely is not obviously reasonable.”
As part of a budget compromise between Spanberger and lawmakers, the bill also transfers regulatory oversight of the state’s consumable hemp product market from the Virginia Department of Agriculture and Consumer Services to the Virginia Cannabis Control Authority (CCA) beginning on July 1, 2027, correlating with the state’s adult-use cannabis sales launch.
The seven plaintiffs – including hemp processors, manufacturers, distributors and retailers – argued in their complaint that state officials failed to provide them guidance on how to comply with the new law while also maintaining viable businesses.
The judge wasn’t persuaded.
“It should be of little surprise that many of plaintiffs’ claims relate to the attendant complications and unintended consequences that rushed legislation creates,” Ballou wrote. “But it is not the role of this court to second-guess the Virginia Legislature in setting an effective date for the new law. The court is limited to determining whether the law violates plaintiffs’ constitutional rights and whether plaintiffs are entitled to the extraordinary remedy of enjoining its effective date.”
The plaintiffs include Cypress Hemp, District Hemp, Kultivate Wellness, Northern Virginia Hemp & Agriculture, Pure Shenandoah, Redfern Hemp Co. and Simply Hemp.
While federal law under the 2018 Farm Bill paved the way for gas stations, smoke shops and convenience stores to sell intoxicating hemp products as an unintended consequence of a 0.3% delta-9 THC definition that separates hemp from high-THC cannabis plants, Virginia enacted legislation in 2023 to implement tighter restrictions on consumable hemp products.
The 2023 law required all businesses selling consumable hemp products to hold a state-issued permit. Also, the law prohibited those businesses from selling hemp-derived products that exceeded 0.3% total THC and generally no more than 2 milligrams of THC per package unless the product contained an amount of CBD at least 25 times greater than the amount of total THC – the 25-to-1 ratio.
The 2026 law removes that exception, putting products containing more than 2 milligrams of total THC into Virginia’s statutory definition of marijuana.
To succeed in their motions for relief, the plaintiffs had to establish that:
- they are likely to succeed on the merits of their case;
- they are likely to suffer irreparable harm in the absence of injunctive relief;
- the balance of equities tips in their favor; and
- an injunction would be in the public interest.
Ballou determined they did not meet these burdens of proof, ruling that Virginia lawmakers acted under their police power to enact legislation they believe to be in the interests of promoting the health and welfare of the state’s citizens and that it’s not his place to overturn such a decision.
“Plaintiffs allege that most of their existing inventory will become unlawful to sell in Virginia, and the resulting loss of inventory value and sales revenue will be substantial,” the judge wrote. “However, at least some plaintiffs have sold portions of the affected inventory, and plaintiffs’ claimed losses may be attributed at least in part to the changing federal regulatory landscape rather than H.B. 30.”
Under federal law President Donald Trump signed late last year, hemp-derived products containing more than 0.4 milligrams of total THC per container will be prohibited on Nov. 12, 2026 – more restrictive than Virginia’s 2-milligram cap.
“Even accepting plaintiffs’ allegation that the vast majority of their current inventory will no longer be lawful to sell, the challenged statute does not render plaintiffs’ businesses or their property – real or personal – wholly without economic value,” Ballou wrote. “Many plaintiffs have other business lines not affected by the new statutory scheme, and at least some have sold portions of their inventory that will become subject to the new restrictions.”
The seven hemp businesses also argued in their complaint that H.B. 30 violated their equal protection rights because the new law permits state-licensed cannabis dispensaries to sell products containing more than 2 milligrams of total THC.
State officials, as the defendants, argued that cannabis and hemp retailers are not similarly situated because they operate under different statutory and regulatory regimes and that the Virginia Legislature has the power to determine that intoxicating THC products should solely be sold through a more heavily regulated cannabis marketplace.
The judge sided with state officials, noting that cannabis businesses must adhere to more restrictive licensing, registration, testing, tracking, taxing and enforcement requirements.
Ballou did acknowledge that the seven plaintiffs stand to lose tens to hundreds of thousands of dollars, and that their businesses may no longer be financially viable under the new law.
While the judge concluded that they demonstrated substantial economic injury from lost sales, inventory and customers, he ruled that those losses do not constitute irreparable injury.
“While some plaintiffs testified that they may be unable to remain in business or face bankruptcy absent preliminary relief, this testimony was largely in the nature of estimates, and plaintiffs did not provide financial records, third-party valuations or other documentary evidence substantiating the calculations underlying those estimates,” he wrote. “Although such evidence is not required to establish irreparable harm, I decline to find that a substantial reduction in sales will progress to business failure or bankruptcy based on the present record.”
