Illinois ban on intoxicating hemp will end unregulated legal market, but likely shut or shrink many businesses

The Wild West era of cannabis in Illinois may be coming to an end.

The sale of intoxicating hemp products, which have been legal but largely unregulated for the past eight years, is due to be banned in Illinois as of Thursday.

The prohibition on hemp THC — the stuff that gets users high — could put stores that sell the products out of business, industry members said. Those who work there are at risk of losing their jobs, and customers won’t be able to buy their products, they said.

It also means an end to a legal loophole that has allowed the sale of intoxicating drugs to minors, untested and mislabeled products, and products that far exceeded state limits on THC.

But adults 21 and over may still buy state-legalized cannabis at licensed dispensaries, both standardizing and sanitizing an industry once known for its counter-cultural vibe.

So in the war between unlicensed small hemp businesses that popped up across the nation, and large multistate organizations (MSOs) that dominate the industry, the big guys won. Last week, hemp businesses filed suit seeking a court order to stop the state ban, and were waiting for a ruling.

“I think most people on both sides agree that regulated markets would be a good thing for assuring quality assurance,” said Donald Opitz, director of cannabis studies at DePaul University. “The concern is about how this is interrupting one of the last spaces where some inclusivity in the market remained. A lot of business owners who entered this space are from minority communities that have been pushed out of the legal cannabis market.”

That concern was one of the reasons cited by Chicago Mayor Brandon Johnson in vetoing a citywide ban on hemp businesses early this year. The mayor wanted to regulate and tax hemp.

Similarly, a battle raged among lawmakers at the state and federal levels who wanted to regulate and tax the product, and those who wanted to ban it.

Both sides of the industry lobbied for their side, and a Politico investigation showed that the alcohol industry got involved in lobbying prosecutors, including Illinois Attorney General Kwame Raoul, to write letters in support of the ban.

Ultimately, lawmakers approved bans to take effect in Illinois Nov. 12, and nationally on Dec. 11, though hemp business continue lobbying for regulation instead of prohibition.

Since intoxicating hemp was inadvertently legalized in the 2018 federal Farm Bill, smoke shops, convenience stores, and gas stations have sold it without restrictions.

“That ban as it stands would effectively put us out of business,” said Charles Wu, owner of Chitiva hemp cafes. “That’s a definite shutdown if nothing changes. I feel really bad for the people who work for me.”

Wu once employed 30 people at three shops and a cultivation site, but has pared down to two shops and 11 workers with the looming ban.

“There is still the illicit market,” Wu said. “I’m not going to play in that space, but there are opportunistic people that will go back to it.”

One segment in particular, hemp THC-infused drinks, became popular and have been a new revenue source for micro brewers as alcohol consumption has declined in recent years.

Democratic state Rep. La Shawn Ford of Chicago, who just won a seat in Congress, sponsored legislation that would have resulted in looser regulations than the impending ban. This week, he said he did not expect new state legislation that would push back on the hemp restrictions before the new General Assembly begins next year.

Glenn McElfresh, who with Black and female co-founders helped start Chicago-based Plift THC beverage company, said they recently launched a drink that meets the new federal standard of less than .4 milligrams of THC, containing CBN as a sleep aid.

The company is moving business operations out of Chicago to Wisconsin, and may have to lay off workers if the ban stands. He predicted customers would cross the border to neighboring states while only the Illinois ban is in effect.

He argued that there are no signs that THC beverages, which generally are regulated at bars and stores with a 21 minimum age requirement, are harming minors or anyone else.

“It makes no sense,” he said. “It’s effectively a state oligopoly over THC.”

To mark the seeming end of legal intoxicating hemp sales, there will be a “last call” at Duffy’s Tavern & Grille in Lakeview Tuesday night, with an attempt to set a record for most THC beverages raised in a toast at one time.

Olivia Olander contributed to this report.

rmccoppin@chicagotribune.com