Craft brewers say new Hemp rules could cut the industry's lifeline: THC drinks
Proposed Hemp Regulations Threaten Illinois Craft Breweries' THC-Infused Beverage Sales.
After watching sales of their new THC-infused beverages explode in recent months, Illinois’ craft beer makers are worried proposed regulation could zap their newfound revenue stream.
The state’s craft beer industry struggled following the pandemic. Ten percent of the state’s breweries permanently closed throughout 2022 and 2023, as taproom traffic failed to return to pre-pandemic norms and consumer drinking habits shifted away from craft beer. Survivors began looking to THC-infused drinks as a lifeline.
The brewers knew it was a risky move. The drinks are not part of the state’s recreational marijuana economy because the THC added to them does not come from weed. It is extracted from hemp, which is less regulated in Illinois than its more potent cousin. For guidance, brewers looked to a 2018 federal law that made it legal to farm hemp around the country and sell it between states. Under that law, hemp is legal if the plant’s THC content is less than 0.3% when it is dry. Processors can create potent THC distillate by extracting from a larger volume of hemp plants.
Now, proposed hemp regulation is gaining steam in the Illinois Senate, seeking to establish a similar framework to how the state regulates marijuana. One of the bills, for example, would establish licenses for businesses that sell products derived from hemp. It would cost $5,000 to apply, and the state deadline to issue such licenses would be July 1, 2026.
Illinois craft brewers say if the bill passes, sales of their hemp-derived, THC-infused beverages — which are showing potential — would be crushed.
It is “going to completely lock out breweries, because there’s no way they’d be able to comply with running like a dispensary,” said Ray Stout, executive director of the Illinois Craft Brewers Guild. “Additionally, people who want to do that wouldn’t be able to do it until 2026, effectively killing this marketplace.”
Illinois’ cannabis industry has been pushing for more regulation surrounding hemp products for some time. Of particular concern are the intoxicating products sold at gas stations and convenience stores that imitate packaged foods. Other bills have previously been introduced aimed at regulating such products.
Sen. Kim Lightford, D-Maywood, is the main sponsor of the bill that has the craft beer industry concerned. She said in an emailed statement that filing the bill is just one step toward getting it over the finish line.
“Negotiations with the hemp and cannabis industry continue to take place almost daily,” she said. “We are working diligently to put forth a final bill that all sides can agree upon while ensuring our common goal to have a fair, just and safe industry remains.”
Illinois has about 280 craft breweries, and roughly 30 of them are selling THC-infused beverages, Stout said. Another 40 or so are in various stages of research and development on the products. It’s a testament to how vital a new revenue stream has been to craft breweries, he said.
“We were having breweries close every single day in this state up until the point where people started making these beverages,” Stout said. “We’re at a point in our life cycle as an industry that every revenue stream matters. I’m not saying there’s a direct causation between the two, but there certainly is correlation.”
Hopewell Brewing in the Logan Square neighborhood rolled out THC-infused sparkling beverages less than three months ago, and they already comprise 4% of the 8-year-old brewery’s sales.
“That’s pretty significant, given that we’ve only had sales for two months,” said co-founder Samantha Lee. “If things pace the way they are and people get more familiarity with hemp-based THC beverages, I think this is something that could easily become 25% of our business this year.”
Hopewell’s THC beverage is called Choom, and the 8-ounce cans have 10 milligrams of THC. Hopewell also sells Choom Lite, with 3 milligrams of THC in the same size of can. Both drinks are nonalcoholic, have real juice and just a few calories. The drinks are sold at liquor stores and in Hopewell’s taproom.
Like other breweries, Hopewell took measures to mitigate the risks of operating in an unregulated market. It put a QR code on the Choom cans that links to a hemp analysis, and trained its employees on how to spot customers that have had too much. It also worked with brewers who sell hemp-derived THC beverages in Minnesota, where such products are more regulated.
Brewery owners have been hoping for some type of regulation around their new products, so they didn’t have to tread through such murky waters. Stout said they would like to see regulation around product testing standards and taxing, for example. He’d like to see licensing, but the licenses need to be attainable for small businesses, particularly those that are struggling financially.
In recent years, many consumers have switched away from craft beer, turning to wine, spirits and ready-to-drink canned cocktails, or drinking less altogether and opting for nonalcoholic options. Worsening matters for breweries is the massive debt load many carry, taken on to survive the pandemic’s darkest days. Others expanded just before the pandemic hit and must grow to reach that increased capacity.
The almost 10-year-old Noon Whistle tripled the size of its Lombard brewery in 2019 and opened a second location in Naperville. The brewery leans on new revenue streams, such as its recently launched hemp-derived THC-infused beverages, to help fill its added capacity and draw in customers. Noon Whistle has started to “significantly” invest in those products, said co-owner Mike Condon. He also has several brewery employees devoted to the THC beverages. If the bill passed, he’s worried about whether he could find another role for them.
“It would be quite the blow,” he said. “You’ve been putting money into something that next week you just can’t sell. It’s dollars down the drain.”
