Emergency Governance

Sunday night I was already in bed when my phone started lighting up like a slot machine.

Senate votes 60-40 to end shutdown.

Government funding secured through March.

McConnell's hemp provision passes.

I sat up and Slacked my cofounder immediately.

"Holy shit. It actually happened."

"Huge for us," he responded.

We'd been anticipating this day for two years. After five weeks of government shutdown, 1.6 million federal workers furloughed, agencies paralyzed, Congress finally passed a continuing resolution to reopen the government.

Buried in that must-pass bill was a provision that will effectively kill a $28 billion industry within a year. Hemp-derived THC products (the gummies at gas stations, the THC seltzers at Target, the entire sector employing ~300,000 Americans) will be eviscerated.

The irony is perfect: Senator Mitch McConnell, who wrote the 2018 law that accidentally created this industry, just pushed through the language that destroys it.

A legal loophole about gas station weed became the bargaining chip that ended a government shutdown.

My business, SparkPlug, works exclusively with state-licensed cannabis dispensaries. When hemp-derived THC flooded convenience stores, it siphoned customers from our customers. If this ban goes through, that spend flows back to regulated channels. We win.

My team has spent most of the week celebrating, but I can’t shake the feeling I'd just watched someone get executed for a crime I commit everyday.

Most people don't know that hemp and marijuana are the exact same plant. Cannabis sativa L. Same genus, same species, same DNA.

The only difference is a legal fiction.

Cannabis has been cultivated for at least 12,000 years. Rope, textiles, medicine. George Washington grew it. The Declaration of Independence was drafted on hemp paper! For most of human history, nobody bothered distinguishing between industrial and intoxicating varieties.

Then in 1937, the Federal Bureau of Narcotics needed a new villain after Prohibition ended. They chose "marijuana", popularizing the term because it sounded foreign and threatening. The campaign was nakedly racist. Commissioner Harry Anslinger testified that marijuana made Black men forget "their place in the fabric of American society."

For the next 80 years, federal law treated all cannabis as Schedule I: high potential for abuse, no medical value, illegal to research or possess.

But states started defecting. By 2025, 38 states legalized medical marijuana and 24 approved adult-use programs. These states created comprehensive regulatory systems: background checks, seed-to-sale tracking, mandatory lab testing, strict packaging standards, brutal taxation. California dispensaries pay effective tax rates approaching 70%.

The result: state-legal businesses operating in constant violation of federal law, unable to access banking, drowning in tax penalties, but at least following some framework designed for public safety.

Then in 2018, Mitch McConnell blew a hole through the entire system by legalizing "hemp" with one simple rule: if the plant contains less than 0.3% delta-9 THC by dry weight, it's legal hemp. If it's 0.31% THC, it's illegal marijuana and you face federal prison.

That threshold wasn't based on pharmacology or public health research. It was arbitrary. Nobody imagined it would become the foundation of American drug policy.

But once you understand that hemp and marijuana are literally the same plant, distinguished only by an arbitrary molecular threshold, the rest of this story makes perfect sense.

Because that arbitrary threshold created a loophole large enough to drive a $28 billion industry through.

McConnell championed hemp legalization for Kentucky farmers who needed a replacement crop after tobacco collapsed. The 2018 Farm Bill legalized "all derivatives, extracts, and cannabinoids" of hemp. The architects assumed the 0.3% delta-9 THC limit would keep hemp non-intoxicating.

They were catastrophically wrong.

The law only regulated delta-9 THC. But the cannabis plant produces dozens of other cannabinoids, and many of them can get you high. None of them were explicitly regulated.

Better yet: you could take legal CBD (extracted from legal hemp) and chemically convert it into delta-8 THC in a lab. The result is a psychoactive product technically derived from legal hemp.

Within months, chemists discovered they could create products that got you unmistakably high, all technically legal under federal law.

By 2020, delta-8 gummies were everywhere. Gas stations, smoke shops, brightly colored packages containing 25mg of THC each. Enough to put you in orbit. The market exploded to $28 billion. Target started carrying THC beverages. Circle K put them at checkout. DoorDash delivered them.

Meanwhile, my customers (licensed dispensaries who'd paid hundreds of thousands for permits, who submit to constant audits, who pay effective tax rates of 70%) watched people walk past their stores to buy functionally identical products at the bodega.

One Colorado customer told me he’s lost 30% of sales when hemp THC hit grocery stores. "I'm paying for security guards, testing labs, compliance officers. Some startup is selling the exact same high for half the price with zero oversight."

Same plant and same high, but wildly different rules.

The hemp industry calls it innovation. Licensed cannabis operators call it regulatory arbitrage. Both are right.

The Senate’s continuing resolution closes the loophole completely. Hemp can no longer contain more than 0.3% total THC, delta-8, delta-10, THCA, "any other cannabinoids with similar intoxicating effects." Any hemp product can't exceed 0.4 milligrams per container. A typical THC seltzer contains 5-10mg.

Companies have 365 days to comply.

This didn't happen through hearings or public debate. It happened because McConnell needed something to give his caucus, Democrats needed something to tell their base, and the alcohol lobby needed protection from THC beverages stealing market share.

Hemp became the sacrifice that let everyone declare victory.

The most revealing subplot is between Kentucky's two Republican senators.

Mitch McConnell, who wrote the original hemp legalization, has now killed what he created. Rand Paul calls the ban "the most thoughtless, ignorant proposal in a long, long time", arguing it represents "big-government overreach."

On Monday, Paul introduced an amendment to strip the hemp ban. The Senate voted 76-24 to table it. It wasn't even close.

Four of Kentucky's six House members signed a letter opposing McConnell and fifty-eight Kentucky hemp farmers wrote begging him not to pursue the ban. He refused to meet with them.

This is Republicans fighting over what "small government conservatism" means when it conflicts with protecting children and legacy industries.

McConnell won because he had leverage. The hemp ban got attached to a continuing resolution that had to pass to reopen the government.

Vote against it and you're voting to keep 1.6 million federal workers furloughed.

Rand Paul and the hemp industry never stood a chance.

Here's why you should care, even if you've never touched cannabis:

Major American policy changes don't happen through open debate. They happen through tactical insertions at moments of maximum leverage.

A $28 billion industry, employing hundreds of thousands of Americans, just got effectively criminalized through a provision inserted into a budget deal at the last minute. Most members of Congress probably didn't read it. Those who noticed couldn't vote against it without extending the shutdown.

Infrastructure spending doesn't pass through normal appropriations, it gets attached to defense bills that can't fail.

Tech regulation doesn't emerge from committee hearings, it gets inserted into omnibus bills at 2am during debt ceiling negotiations.

Environmental rules don't survive EPA rulemaking, they get bundled into must-pass continuing resolutions.

The committee hearings and votes are theater. The real work happens through riders on must-pass bills when everyone's exhausted and desperate to go home.

The government shutdown was the mechanism that made this all possible.

Without the crisis, the provision never gets the votes. It’s too controversial. Too many farmers losing livelihoods. Too many libertarian Republicans who'd balk at prohibition. Too many questions about whether we're solving a real problem or protecting alcohol and licensed cannabis from competition.

But attach it to a continuing resolution at the tail end of a five-week shutdown, with federal workers missing paychecks and agencies paralyzed, and suddenly it's not a debate. It's take-it-or-leave-it.

McConnell exploited this crisis masterfully.

Every shutdown, every debt ceiling fight, every "must-pass" bill is now an opportunity to attach provisions that could never survive standalone votes. The more urgent the crisis, the more leverage available to whoever controls the insertion points.

Crisis has become the infrastructure through which controversial policy gets implemented without democratic friction.

I've built a business in an industry that only survives because the federal government declines to enforce its own laws. Cannabis is still Schedule I. Every dispensary we work with operates in open violation of federal statute, tolerated only because Washington has chosen not to intervene.

SparkPlug depends entirely on that gray zone. The entire state-legal cannabis economy does.

The hemp industry did the exact same thing. They found a statutory gap, scaled fast, and built a multi-billion-dollar market before regulators could react.

The only difference is that my regulatory arbitrage happened to get state approval first.

I've spent years watching this situation spiral. Entrepreneurs exploited the loophole while licensed operators paid millions for permits and compliance. Kids landed in emergency rooms because nobody was regulating dosing or packaging. States scrambled to contain the problem while the federal government stood still.

The hemp loophole was broken. The safety failures were real and the competition was structurally unfair.

But still, I’m standing in an identical cage, just one that hasn't been locked yet.

Because if hemp can be killed overnight through a budget rider attached to a shutdown resolution, what makes me think state-legal cannabis is safe? The exact mechanism that just destroyed a $28 billion industry could be deployed against mine anytime Congress needs a bargaining chip.

I'm not against the hemp ban because I think hemp THC should be unregulated. I'm against it because of how it happened: through procedural violence disguised as crisis management.

And I'm afraid because I just watched the playbook that could be used against my industry get refined and executed perfectly.

For SparkPlug, this is objectively good news. Our customers will see more foot traffic and our growth will continue, unencumbered.

But I can't celebrate the way my team is celebrating because I see how the sausage was made.

The government will reopen this week. McConnell will see his legacy corrected. Licensed cannabis operators will get their unfair competition eliminated. Democrats get to reopen the government and claim they protected public health.

Everyone won except the people whose jobs just evaporated.

The hemp ban is just this week's example. Next month it'll be climate provisions attached to disaster relief. Tech regulation bundled into defense bills. Immigration policy inserted into debt ceiling negotiations.

This is how policy gets made in America now. Through crisis and leverage.

And what makes it so insidious is that sometimes, like with hemp, the outcome might even be right. The loophole was genuinely broken. Kids were genuinely getting hurt. The competitive dynamics were genuinely unfair.

But rightness of outcome doesn't justify corruption of process.

I just watched my own strategy (exploit regulatory gray zones, scale fast, hope the politics protect you) get weaponized against someone else. I saw the mechanism that could destroy my business get refined and deployed successfully.

The arbitrary line that separates legal hemp from illegal marijuana is the same arbitrary line that separates tolerated cannabis from enforced prohibition. Both are accidents of political timing and leverage points in must-pass bills.

When the next crisis comes (and there’s always another crisis) what's to stop someone from attaching a cannabis enforcement mandate to whatever must-pass legislation is keeping the government open?

Nothing.

Plus, I can't shake the image of those Kentucky hemp farmers who wrote letters begging McConnell to meet with them, and how he refused because he didn't need to. He had the votes. He had the leverage. He had the crisis.

So, many in the state-legal cannabis industries are treating this like a win.

They're right to celebrate. By every business metric, this is a win.

But all I can think about is that the next time Congress needs a bargaining chip and someone decides state-legal cannabis is politically expendable, I'll be writing the same letters those hemp farmers wrote.

And whoever has the leverage won't need to meet with me either.

Up and to the right.