Hawaii Hemp Retailers Sue to Block State Product Crackdown

Hawaii’s hemp and CBD shops began the week facing a stark choice: strip most of their inventory off the shelves, or risk state penalties. On July 1, 2026, regulators started enforcing some of the strictest hemp product rules in the country, and two retailers have gone to federal court to stop them.

Lance Alyas, who runs four shops through Oahu Dispensary and Provisions, and a second seller on Maui asked a federal judge for an emergency order pausing enforcement while their case proceeds. Alyas told Hawaii News Now the rules would gut his business. “This is almost 90 percent of our product line,” he said. “It will probably destroy our business.”

What Hawaii now bans

The state’s Department of Health, through its Office of Medical Cannabis Control and Regulation, announced in June that a grace period for hemp sellers would end June 30, 2026, with enforcement of both registration and product-compliance rules beginning the next day. The registration requirement took effect at the start of 2026 under Act 269, a hemp law the legislature passed in 2025. Every retailer and distributor selling manufactured hemp products to Hawaii customers — including online and out-of-state sellers shipping to the islands — must register with the office for a $50 fee covering five years. As enforcement opened, fewer than 50 businesses had signed up.

What counts as a legal product is narrow. Under Hawaii’s interim hemp rules, only “manufactured hemp products” in oral or topical form — gummies, tablets, capsules, oil-based tinctures, beverages, and creams — may be sold, and only after lab testing and child-resistant packaging. Smokable hemp flower, pre-rolls, vapes, and anything made with artificially derived or synthetic cannabinoids, including delta-8 and delta-10 THC converted from CBD, are prohibited outright. What is allowed carries some of the tightest THC limits in the country — many products are held to roughly a milligram of THC per serving, and everything must stay at or below 0.3 percent THC by weight.

Regulators frame the banned goods as intoxicants that were never permitted in the first place. Products like smokables and vapes “have never been legal under Hawaii law,” OMCCR program manager Andrew Goff told Hawaii News Now. Sellers who ignore the rules face product seizure and destruction, fines that can reach $10,000 per violation, and, for shops that keep operating without registering, the threat of closure.

The federal preemption fight

The retailers’ case rests on the argument that Washington already settled this. The 2018 Farm Bill legalized hemp containing less than 0.3 percent delta-9 THC nationwide, and the plaintiffs contend Hawaii cannot criminalize products Congress made legal. Their federal lawsuit argues the state’s regime violates the supremacy of federal law, the Constitution’s protection for interstate commerce, and guarantees of fair treatment — and that enforcement is designed to shield Hawaii’s eight licensed medical marijuana dispensaries from hemp competition.

That argument faces steep odds. The Farm Bill expressly left states free to regulate, and even ban, hemp products within their borders, so long as they don’t block hemp moving through interstate commerce. Federal appeals courts have largely sided with states on that point, and even a 2022 decision from the appellate circuit covering Hawaii — favorable to hemp — addressed only what legally counts as hemp, not which finished products a state may pull from shelves. Hawaii has also defended its hemp rules in federal court before, winning a 2023 challenge to its ban on delta-8 and delta-10 products.

Alyas has stumbled already, too. He voluntarily dropped an earlier version of the suit in December 2025, and the judge who dismissed it chided his team for repeatedly reworking the same failed claims. The state’s attorney general has moved to throw out the current case as well.

The dispute echoes fights across the country as states tighten hemp rules ahead of Congress. Hemp companies recently sued Ohio over a law folding intoxicating hemp into its marijuana program, and Hawaii’s retailers say they serve customers who want relief without registering as medical marijuana patients.

What comes next

A federal judge was set to hear the retailers’ request for an emergency pause alongside the state’s motion to dismiss on July 2, 2026 — one day into enforcement — and could rule quickly.

The stakes reach past Hawaii. A federal change taking effect in November 2026 will shift the national definition of hemp to a stricter total-THC standard, capping consumable products at a fraction of a milligram and pulling much of the current market outside federal legality. Hawaii’s approach already measures total THC that way, which means the outcome in Honolulu may preview how the coming federal squeeze lands on hemp retailers everywhere.