How Hemp Prohibition Fuels the Black Market

Introduction

For centuries, hemp has been an American agricultural staple, valued for its fiber, food, and wellness benefits. Yet because of outdated laws and fear-driven narratives, hemp was lumped into marijuana prohibition and driven out of legitimate commerce for decades. The consequences of this decision were not consumer safety or public health, but thriving black markets, economic loss, and missed opportunities.

Today, as lawmakers debate the future of hemp-derived cannabinoids, it is worth remembering a simple truth: prohibition does not stop demand. It only pushes people into unregulated, unsafe markets.

Why Prohibition Creates Black Markets

When a product people want is banned, history shows they do not stop buying it. They simply lose access to regulated sources. Alcohol prohibition in the 1920s created bootleggers, speakeasies, and organized crime. Cannabis prohibition in the mid-20th century fueled a global underground trade. Hemp prohibition follows the same pattern.

Without regulated access, consumers turn to the black market, where:

• There is no testing for safety, potency, or contaminants.

• Products may contain dangerous chemicals or inconsistent dosages.

• Sellers operate without oversight, accountability, or responsibility.

Instead of protecting the public, prohibition creates bigger risks.

The Cost to Farmers and Small Businesses

Prohibition does not just harm consumers, it harms legitimate businesses. Hemp farmers and manufacturers have invested heavily in building a supply chain rooted in compliance, safety, and transparency. The U.S. Department of Agriculture valued hemp production at $291 million in 2023 and $445 million in 2024, a 40 percent year-over-year increase. This is a growing industry with real economic weight, yet prohibition leaves compliant businesses stranded while illicit sellers continue to thrive.

Safety Through Regulation, Not Prohibition

The alternative to prohibition is straightforward: regulation. By creating reasonable guardrails, lawmakers can protect consumers and support economic growth. 

Responsible policies should include:

Testing standards to ensure products are free from harmful contaminants.

• Age restrictions to prevent youth access.

• Packaging rules that discourage marketing to minors.

• Licensing requirements that ensure accountability across the supply chain.

States like Colorado have already proven that regulated cannabis markets can generate significant tax revenue, more than $325 million annually, while reducing reliance on illegal sellers. Hemp deserves the same treatment: a clear, regulated framework that balances access with safety.

Lessons From History

The history of prohibition is filled with unintended consequences. From alcohol in the 1920s to cannabis in the decades that followed, bans never eliminated demand. They only made markets more dangerous and drove consumers to untested, underground products.

Hemp prohibition did the same. And unless policymakers learn from that history, we risk repeating the same mistakes.

The Bottom Line

Hemp prohibition does not protect consumers. It fuels the black market, hurts farmers, and strips communities of economic opportunity. Regulation, not prohibition, is the only path that ensures safety, supports American agriculture, and builds a thriving, transparent industry.

Now is the time to replace outdated fears with evidence-based policies that protect consumers and strengthen the hemp industry. Anything less simply repeats the failures of the past.

Citations

RAND Corporation. (2018). How Illicit Drug Markets Adapt to Policy Shifts
Hemp Gazette. (2023). USDA 2023 National Hemp Report Released
U.S. Department of Agriculture. (2024). National Hemp Report
Colorado Department of Revenue. (2022). Marijuana Tax Reports