Politics
Feds Warn Retailers That Accepting Welfare Benefits For Marijuana Or CBD Could Result In ‘Criminal Prosecution’
The U.S. Department of Agriculture (USDA) is reminding all retailers that accept federal welfare benefits that they’re prohibited from selling products containing cannabis to people using Supplemental Nutrition Assistance Program (SNAP) funds—and that violating the rule could lead to penalties that include possible “criminal prosecution.”
In a letter to the more than 250,000 retailers participating in SNAP, USDA Food and Nutrition Service (FNS) Administrator James Miller said on Thursday the department is “committed to fighting waste, fraud, and abuse,” which includes “taking swift action to eliminate fraud occurring in the SNAP retailer community and rooting out fraudsters who take advantage of the taxpayer’s generosity.”
“Your participation as a SNAP authorized retailer serves an important purpose. Retailers connect American families to nutritious food each day,” Miller said. “More than 41 million low-income people redeem their SNAP benefits at stores nationwide each month. SNAP is funded by American taxpayers and must be operated with integrity and accountability. All participating retailers must follow the SNAP rules to protect taxpayer dollars.”
To that end, he wrote, the letter “serves as a reminder that it is a program violation to accept SNAP benefits for foods and drinks containing controlled substances such as cannabis/marijuana.”
“USDA FNS is actively fighting fraud and preserving taxpayer dollars,” it says. “Retailers who commit program violations will face consequences which include disqualification from the ability to accept SNAP benefits, monetary penalties, fines and/or criminal prosecution.”
It’s not clear why USDA felt the update on rules around cannabis was necessary, but it also comes amid a series of changes to the department’s FAQ page that similarly reiterates the policy. In the past week, the FAQ’s cannabis language was added and revised at least three times.
As originally updated, it said SNAP benefits can’t go to cannabis-related or CBD food and drink products. Then it was changed to list marijuana and cannabis, without mentioning CBD. Now, in the latest update posted on Wednesday, it says that “food and drinks containing controlled substances such as cannabis/marijuana and CBD” are ineligible.
In any case, the FAQ language doesn’t necessarily represent a policy change, as USDA first issued guidance in 2020 stipulating that while people can use SNAP benefits for certain foods containing “hulled hemp seed, hemp seed protein powder, and hemp seed oil,” they cannot buy “hemp plants, leaves, and shoots.”
USDA further clarified at the time that foods “containing cannabis-derived products, such as CBD, and any other controlled substances, are not eligible to be purchased with SNAP benefits,” similar to what’s articulated in the latest update to the FAQ. The same language was maintained in another update last year.
The letter and FAQ update comes at a time when many in the cannabis space are closely watching for signals about how the administration will navigate marijuana and hemp issues during President Donald Trump’s second term.
In his first term, Trump signed the 2018 Farm Bill that federally legalized hemp, creating an industry that has since experienced significant volatility amid concerns about the resulting proliferation of a largely unregulated market for intoxicating cannabinoid products.
But despite signing that legislation into law—and later endorsing marijuana rescheduling and industry banking access on the 2024 campaign trail—the president hasn’t publicly commented on cannabis policy issues since taking office in January.
Meanwhile, a pair of GOP-led congressional bills filed last month would prevent people from using federal financial assistance under the Temporary Assistance for Needy Families (TANF) program at cannabis dispensaries.
Back at USDA, the agency recently released a noticed that it is terminating a series of trade advisory committees to comply with an executive order Trump signed in February that’s meant to reduce the size of the federal government across multiple agencies. One of those committees that had been expanded to include hemp industry representatives to promote the crop internationally.
Separately, a report released by USDA in April found that, even as more states and some congressional lawmakers pursued bans on consumable hemp products, the industry saw significant growth in 2024.
The National Hemp Report, which USDA conducts annually to assess the economic health of the market, showed that hemp farmers cultivated 45,294 acres of the crop last year, up 64 percent from 2023. And the industry’s value jumped about 40 percent, increasing to $445 million.
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As the fate of the consumable hemp market remains murky amid legislative pushback, a congressional committee held a hearing on the Food and Drug Administration (FDA) last month—with a hemp industry expert explaining how the market is “begging” for federal regulations around cannabis products.
Lawmakers have consistently raised concerns about FDA’s refusal to establish rules allowing for the marketing of federally legal hemp as a food item or dietary supplement.
One potential legislative solution that U.S. Hemp Roundtable’s Jonathan Miller noted to the committee is a bipartisan bill Sen. Ron Wyden (D-OR) filed last year that would create a federal regulatory framework for hemp-derived cannabinoids.
The legislation would empower states to set their own rules for products such as CBD while also empowering FDA to ensure that certain safety standards are met in the marketplace.
In the absence of FDA rules, states from California to Florida to Texas have pushed for sweeping changes to their own laws around consumable hemp products. While much of the focus has been on intoxicating products, federally legal CBD businesses have also found themselves increasingly in the crosshairs.
On Thursday, a GOP-led House committee has approved a spending bill containing provisions that hemp stakeholders say would devastate the industry, prohibiting most consumable cannabinoid products that were federally legalized during the first Trump administration.
Meanwhile, as lawmakers prepare to once again take up large-scale agriculture legislation this session, congressional researchers in January provided an overview of the policy landscape around hemp—emphasizing the divides around various cannabis-related proposals among legislators, stakeholders and advocates.
Senate Democrats released the long-awaited draft of 2024 Farm Bill last year that contained several proposed changes to federal hemp laws—including provisions to amend how the legal limit of THC is measured and reducing regulatory barriers for farmers who grow the crop for grain or fiber. But certain stakeholders had expressed concern that part of the intent of the legislation was to “eliminate a whole range of products” that are now sold in the market.
Photo courtesy of Brian Shamblen.
