Federal hemp ban delayed to December, but Illinois kept its November start
Hemp-derived THC drinks became illegal across Illinois at midnight on November 12, and manufacturers spent the final stretch selling off, discounting or shipping out whatever stock remained. Under the new law, no container can hold more than 0.4mg of THC in total. Illinois companies faced the cutoff immediately, while businesses in other states have another month to clear their inventory before the federal ban takes effect in December.
The prohibition traces to Washington, where Republicans tacked a provision onto last year’s spending bill that ended the government shutdown, banning all hemp-derived THC products, including the THC-infused alcohol alternatives sold at liquor stores and grocery stores. Illinois passed a state-level law in June intended to align with the federal ban, which was initially set to take effect this month. When Congress pushed the federal ban to December, Illinois did not change its own effective date.
The rollout has carried some confusion. The Illinois Healthy Alternatives Association, a hemp lobbying trade group that includes approximately 250 Illinois businesses, filed a lawsuit last week. Some headlines suggested the suit had effectively paused the Illinois ban until November 19, but the pause applies only to businesses that sued.
The timing was especially punishing for new entrants. Playdate, a non-alcoholic wine company, launched its first product — a THC-infused non-alcoholic rosé — less than two months ago. With less than two weeks to go before the ban, cofounders Sammy Dorf and Brian Ward were still unsure how to handle their remaining inventory. They sold off the wine at a steep discount and were left with less than a truckload, which they planned to ship to states where it can still be sold. If the ban remains in place, Dorf and Ward intend to shift their focus to plain non-alcoholic wine, minus the THC. Their uncertainty reflected a wider open question in the industry: it remains possible the federal government will ultimately leave hemp-derived THC regulation to the states, mirroring its approach to medical and recreational cannabis.
Many hemp companies have been strategically shipping remaining inventory to Wisconsin, Minnesota and Tennessee, which have different hemp regulations. Perfectly Dosed, a Chicago-based company that sells THC emulsions to beverage companies in bulk, had no fire-sale option, because it sells to other businesses rather than to consumers. Cofounder and CEO Alexander Choi said the company had a metric ton of emulsion left over, containing more than 100 million milligrams of THC, and it shipped the material to Wisconsin.
“We’re hopeful that more reasonable regulations will pass, and so we’d like our stuff closer to home than further,” Choi said. He has also been reformulating the emulsions to remain chemically stable in case they need to be diluted to comply with federal regulations.
Go Brewing in Naperville came to hemp drinks from the non-alcoholic side. Founder and CEO Joe Chura set out to create the world’s first gluten-free non-alcoholic beer, then launched Easy Man, a THC-infused option, last year, hoping to offer an alternative buzz without the health consequences of heavy drinking. The company made its last batch of Easy Man about a month ago and cancelled a planned run after that. “Probably a month ago, we made our last batch,” Chura said. “We were planning another one that we ended up cancelling, because we didn’t want to get stuck with it.”
The last of the Easy Man stock sold out on Friday. “Had I known the demand would have been as great at the end, I probably would have made [the cancelled batch],” Chura said. “But it was cutting it close.”
Companies outside Illinois have another month to off-load their product. Joe Gerrity, CEO of Crescent Canna, has been selling beverages to individual consumers by the pallet, and he has some sense of who is buying. “When someone’s buying thousands of dollars worth of product, you want to do some due diligence,” Gerrity said, adding that several former NBA players bought pallets.
For sellers, one of the hardest parts of planning has been uncertainty over how the ban will be implemented and enforced. “It was hard for us to tell when distributors were going to stop selling our products, when retailers were going to ask them to be off the shelves,” Gerrity said. While many in the industry do not expect the federal government to strictly enforce the ban, Gerrity said alcohol distributors will probably still refuse THC beverages if there is any possibility they could lose their license. He is also working out how to destroy inventory if it comes to that. “You can’t just click a button and destroy thousands of pallets,” he said.
Despite the volatility, Chura said he remains hopeful the bans will be reversed, and he is weighing a THC beer formulated to comply with the federal cap — one that contains only 0.4mg of THC. It remains unclear whether such a product would be legal. Chura noted that when he first began making Easy Man, retailers would only buy high-dose products from him, but his online sales revealed that customers actually prefer lower doses. A 0.4mg beer, he suggested, could appeal to people who like “having a few and knowing they still can be responsible.”