White-Collar Crime

North Carolina finds itself at a pivotal—and precarious—moment in cannabis policy. The state has one of the largest unregulated cannabis markets in the nation, a booming industry in intoxicating hemp-derived products sold without meaningful oversight, and a legal framework that satisfies virtually no one: not consumers, not law enforcement, not businesses, and not public health officials. The April 2026 Interim Report of the North Carolina Advisory Council on Cannabis, a comprehensive state-level review of North Carolina's cannabis landscape, puts it plainly: North Carolina has a “wild west” with neither true prohibition nor meaningful regulation.

This article surveys the current legal status of marijuana and hemp in North Carolina, explains the critical distinctions between the two, traces the rise of intoxicating hemp-derived products, identifies the serious legal risks facing businesses and individuals operating in this space, and outlines what may be on the horizon.

Marijuana: Still Illegal, Still Prosecuted

Marijuana—defined under both state and federal law as cannabis containing more than 0.3% delta-9 THC on a dry weight basis—remains fully illegal in North Carolina for all purposes. There is no recreational market and no comprehensive medical cannabis program. North Carolina is one of only ten states and three U.S. territories that has not established either an adult-use market or a medical marijuana program.

Under North Carolina General Statutes § 90-95, the criminal consequences depend on quantity and conduct with the seriousness of charges ranging from misdemeanors for simple possession of less that 1.5 ounces, to felony changes for possession of larger amounts or resin extracts, and trafficking charges with mandatory minimum prison sentences for more than ten pounds. The Department of Revenue is also likely to issue unauthorized substance tax assessments for trafficking levels of marijuana possession.

One narrow exception exists on the sovereign tribal land of the Eastern Band of Cherokee Indians (EBCI). Under principles of tribal sovereignty, the EBCI has enacted its own cannabis laws independent of state policy. In 2024, the tribe opened the Great Smoky Cannabis Company, which was the first tribally-owned cannabis dispensary in North Carolina to offer legal adult-use cannabis to persons 21 and older. Marijuana remains illegal under state law outside tribal jurisdiction.

An additional, extremely limited allowance falls under the Epilepsy Alternative Treatment Act for patients with intractable epilepsy to use hemp extract with less than 0.9% THC and at least 5% CBD. This narrow carveout does not constitute a medical marijuana program.

Hemp: Legal, But Complicated

Hemp is defined as cannabis containing no more than 0.3% delta-9 THC on a dry weight basis and it is legal in North Carolina. The federal 2018 Farm Bill removed hemp from the federal Controlled Substances Act and authorized states to permit its cultivation. North Carolina followed suit, permanently removing hemp from the state's controlled substances list in 2022.

To the untrained eye, however, the distinction between hemp and marijuana is anything but simple. Both are varieties of Cannabis sativa L. Both look alike. Both smell alike. The difference lies at the molecular level: marijuana contains elevated concentrations of delta-9 THC, the primary intoxicating compound, while hemp does not.

That chemical distinction has become enormously consequential with impacts for consumers, and producers, well as the wholesale and retail markets.

The Rise of Intoxicating Hemp-Derived Products

The 2018 Farm Bill focused narrowly on delta-9 THC concentration and did not account for other intoxicating cannabinoids, chemical conversion processes, or alternative product formulations. That gap gave rise to what critics and regulators now widely call the "Farm Bill loophole."

Manufacturers discovered two principal workarounds:

1. Semi-Synthetic Cannabinoids: Delta-8 THC, delta-10 THC, and a range of related compounds can be created by extracting CBD from hemp and chemically converting it into a psychoactive substance. Because the starting material is legal hemp and the final product's delta-9 THC content is below 0.3%, these products are legal in North Carolina under the existing statutory definition. In Anderson v. Diamondback Investment Group, LLC, the 4th Circuit Court of Appeals took up the issue and determined that hemp derived products containing synthetically derived THCs are legal, provided they are under the 0.3% delta-9 THC threshold, and rejected the DEA’s position that such products are illegal scheduled substances.
2. THCA Flower: THCA (tetrahydrocannabinolic acid) is the raw, non-intoxicating precursor to THC found in cannabis flower. THCA converts to delta-9 THC when heated (a process called decarboxylation). Retailers have been legally selling THCA hemp flower because the flower tests below the delta-9 limit in its unheated form.

The result: a booming, largely unregulated market for intoxicating products. A variety of legally compliant products are sold in vape shops, smoke shops, gas stations, convenience stores, and online, which are estimated by the Advisory Council to be worth approximately $1 billion annually in North Carolina alone.

The Regulatory Void

The April 2026 NC Advisory Council on Cannabis Interim Report documents the sweeping absence of consumer and safety safeguards for intoxicating hemp products in North Carolina. Specifically, the Report identifies:

• No minimum age requirement. There is no state law requiring retailers to verify a buyer's age before selling intoxicating hemp products.
• No labeling requirements. Products need not disclose THC concentration, serving size, batch number, or manufacturer. Consumers may not know they are buying an intoxicating product at all.
• No packaging standards. Products may be packaged in ways that appeal to children, including cartoon imagery and candy-like formats, sometimes infringing on food trademarks. However, the FDA has previously signaled its willingness to step in and enforce these issues.
• No potency or serving-size limits. There are no caps on milligrams of THC per serving or per package.
• No mandatory laboratory testing. There are no required protocols for potency, heavy metals, pesticides, mold, residual solvents, or synthetic byproducts.
• No licensing requirements. Any retailer can sell intoxicating hemp products without a license or vetting process.
• No zoning restrictions. Unlike licensed marijuana dispensaries in other states, intoxicating hemp products may be sold immediately adjacent to schools and playgrounds.
• No track-and-trace system. There is no seed-to-sale oversight of the supply chain.
• No enforcement authority. No state agency has a clear mandate to inspect, recall, or sanction non-compliant products.

The Advisory Council’s Interim Report notes the concern with public safety issues, especially for children, resulting from the lack of regulatory scheme. The Council commented that North Carolina currently has neither effective prohibition nor effective regulation.

Law Enforcement: A Legal Minefield

The co-existence of legal hemp and illegal marijuana has created difficult legal problems for law enforcement, defendants, and businesses alike.

First, hemp and marijuana smell exactly the same. No human, and no canine, can reliably distinguish them by scent. Yet North Carolina law enforcement has continued to rely on the odor of cannabis as probable cause for vehicle searches, home searches, and arrests. Despite the challenge, North Carolina courts have currently upheld that an odor of marijuana can form the basis for a probable cause search of a vehicle, although that issue is facing review at the State Supreme Court.

Second, various enforcement operations by North Carolina Alcohol Law Enforcement and local police and sheriff’s offices have resulted in search warrants, seizure of inventory and cash, criminal charges, and tax consequences. Lawsuits against law enforcement agencies have followed, alleging constitutional violations including unlawful search and seizure, entry without a warrant, and excessive force. These examples provide a cautionary tale that operating in the hemp industry in North Carolina without impeccable documentation, laboratory testing, and compliance records is a serious legal risk—regardless of whether the products are legal under the current framework.

Federal Developments: The Clock Is Ticking

The federal legal landscape shifted dramatically in November 2025. Congress tucked a sweeping amendment to federal hemp law into the resolution that ended a 43-day government shutdown. The amendment—effective November 12, 2026—tightens the federal definition of hemp by adopting a “total THC” standard (including THCA) rather than a delta-9-only standard and imposes an extremely strict limit requiring that finished consumer contain no more than 0.4 milligrams of total THC per container.

The practical effect: virtually all intoxicating hemp-derived products currently on the market, including delta-8, delta-10, THCA flower, and many delta-9 edibles and beverages, will become illegal under federal law in November 2026 unless Congress acts again.

In response, there are two competing bills pending:

• The HEMP Act (Hemp Enforcement, Modernization, and Protection Act) would create a regulatory framework rather than a prohibition, permitting sales of consumable hemp products to adults 21 and older under comprehensive requirements including a total cannabinoid cap.
• The Hemp Planting Predictability Act (HPPA) would simply delay implementation of the ban by two years, giving the industry more time to adjust.

In parallel, President Trump issued an Executive Order in December 2025 directing the Department of Justice and DEA to expedite rescheduling marijuana from Schedule I to Schedule III. As of April 2026, the DOJ has not issued a final rule, and marijuana remains Schedule I. Rescheduling would ease research restrictions, reduce certain criminal penalties, and address longstanding banking and tax issues for state-legal cannabis businesses—but would not federally legalize recreational marijuana.

For North Carolina specifically, State law has not changed. All intoxicating hemp-derived products discussed above remain legal under North Carolina state law. Come November 2026, absent state legislative action, North Carolina will find itself in a position where these products are banned under federal law but unrestricted under state law, which raises significant enforcement and commerce questions.

What's Coming in North Carolina

Governor Josh Stein issued Executive Order No. 16 in June 2025, establishing the North Carolina Advisory Council on Cannabis. The Council includes legislators, law enforcement, healthcare providers, tribal representatives, business owners, defense attorneys, and public health experts.

The Council's April 2026 Interim Report contains several significant recommendations for the General Assembly's consideration in the upcoming short session:

1. Regulate by molecule, not by origin. The Council recommends regulating the THC molecule based on intoxicating potential and total THC content, rather than maintaining separate frameworks for "hemp" and "marijuana."
2. The status quo is unacceptable. The Council advanced the position that allowing intoxicating THC products to circulate without enforceable standards is a public health and public safety crisis.
3. Adult-use market with medical protections. One of the Council’s preliminary recommendations is an adult-use regulatory model that contemplates licensed sales to adults. Considered regulations would include low-THC product options, comprehensive testing standards, expanded product warnings, recall authority, and access to medical consultation.
4. Medical-only programs are not recommended. The Council identified significant drawbacks to a medical-only approach: high administrative costs, limited tax revenue, continued pressure on the illicit market, limited support from the medical community, and access barriers for rural, low-income, and elderly patients.
5. Any path requires legislative action. The Council is advisory only. Meaningful change requires the General Assembly to act.

A final report with detailed regulatory recommendations is due in December 2026.

In the meantime, state legislators introduced several bills in the 2025 session, including House Bill 607 and Senate Bill 265, intended to create a regulatory framework for hemp-derived consumables.

The Risks Are Real: What Businesses and Individuals Should Know

North Carolina's cannabis market presents genuine legal exposure for all stakeholders:

Hemp retailers and distributors: The absence of regulation is not the same as the absence of risk. Law enforcement can and does execute search warrants on hemp businesses. Without clear product documentation like laboratory certificates of analysis, batch records, supplier chain verification, a retailer's defense against criminal charges or product forfeiture is severely weakened. The federal clock running to November 2026 adds urgency. Businesses operating in the delta-8, delta-10, and THCA flower space must closely monitor both federal developments and any state legislative action.

Consumers: Carrying hemp products in North Carolina remains legally precarious. Because hemp and marijuana cannot be distinguished by sight or smell, and because law enforcement retains the authority to use cannabis odor as probable cause for searches, anyone carrying hemp products may be subject to stop, search, citation, and even arrest pending laboratory testing. Keeping purchase receipts and certificates of analysis is advisable but not a guarantee against adverse law enforcement contact.

Criminal defendants: The legal distinction between hemp and marijuana is a live and actively litigated issue. The North Carolina Supreme Court's forthcoming ruling on odor-based probable cause will be consequential. Existing case law from the Court of Appeals has generally upheld law enforcement's authority to search based on cannabis odor, but the issue is not fully settled, and the factual circumstances of each case matter. Defendants with evidence that seized substances were in fact legal hemp have grounds for suppression motions and challenges to the sufficiency of the evidence.

Investors and other industry participants: North Carolina's intoxicating hemp market presents profound legal uncertainty. Federal prohibition of most current products is scheduled to take effect in November 2026. State regulatory legislation has been considered and introduced but not enacted. The Advisory Council's final recommendations are not due until December 2026. Anyone investing in or acquiring North Carolina hemp businesses should account for the realistic possibility that current products and the current market may change drastically by the end of the year.

Conclusion

North Carolina's hemp market is defined by rapid commercial development and legislative inaction which has left the industry to operate without meaningful oversight.

But changes are coming. A federal ban on most of the intoxicating hemp market is set to take effect in less than eight months. The North Carolina Supreme Court is scheduled to weigh in on whether law enforcement may still search a car because based on the smell of cannabis. The recently formed Advisory Council is likely to make recommendations for a comprehensive regulatory overhaul. And our General Assembly is showing life with the introduction of bills designed to provide parameters. Time will show whether any of these efforts will result in meaningful change for an industry where the legal risks for businesses and individuals remain high and uncertain.

This article is provided for informational purposes and does not constitute legal advice. Cannabis and hemp law in North Carolina is rapidly changing. Businesses, individuals, and defendants with questions about their specific circumstances should consult a licensed attorney.