The City Council’s License Committee is expected to vote on a measure that would extend current local bans at the neighborhood level to the entire city despite the Johnson administration asking aldermen to pump the brakes.
The full City Council would need to approve the measure. As drafted, the ban would begin 10 days after the ordinance is approved.
Lead sponsor, Ald. Marty Quinn, 13th, told Crain’s "I’m confident in my roll call.”
Quinn represents one of four areas around the city that have already banned the products. Additional neighborhoods have been introduced to the City Council, but have yet to be approved.
“There’s an appetite for the City Council to take this matter up," he said. "We can always change things later on, but in the interim, there’s still a whole lot of shady business around this industry … We should not forget that this whole industry was created through a loophole, and so regulation is catching up with the industry right now.”
A “loophole” in the 2018 Farm Bill legalized hemp entrepreneurs to produce hemp-based THC-infused goods such as edibles and drinks that complied with federal law, and could thus be sold online or at any common retail establishment.
The legal cannabis industry has argued the loophole has allowed competitors to their own businesses to operate without the same strict regulations.
Charles Wu, executive director of the Illinois Hemp Business Association, told Crain’s the cannabis industry was trying to “shut down competition.”
A citywide ban “puts thousands of people out of work, and closes hundreds, if not more, storefronts. IHBA has been lobbying for regulations at both the city, county and state level over the last couple of years," Wu said.
Ivan Capifali, commissioner of the Department of Business and Consumer Affairs, sent aldermen a letter this week, obtained by Crain’s. saying “the ordinance would effectively eliminate the CBD/THC beverage market that numerous establishments have relied on to support their post-pandemic recovery.”
The city does not currently have the sufficient resources to proactively enforce a ban, Capifali wrote.
“The substantial resources required to conduct citywide enforcement would far exceed any revenue generated through fines and would divert personnel from other critical business-license compliance duties,” he said.
Jung Yoon, Johnson’s chief of policy, told reporters today the administration does not support a citywide ban because “this is a big industry that many business owners and breweries rely on.”
Johnson’s initial budget proposal projected receiving $10 million in revenue by taxing hemp products while banning sales to those under 21.
While the federal government considers how to close the loophole in the farm bill, there is potential the issue “gets kicked to the states,” Yoon said.
"We don’t think it’s prudent or helpful to our local businesses to preemptively cut ourselves off from what has become a big business,” she said. "We would much prefer limits like bans for sales to people under 21, limiting it to tobacco licensee, liquor licensee locations, so not your corner stores, not your drug stores.”
A group of hemp beverage manufacturers and retailers, including local breweries, held a press conference this afternoon at Revolution Brewing to call on the City Council to reject Quinn’s ordinance.
Glenn McElfresh, owner of Chicago-based Plift, a maker of hemp THC drinks, said during the event that 14 other states — including Alabama, Connecticut, Iowa, Kentucky and Minnesota — have all embraced regulations for intoxicating hemp products instead of banning them.
“It can be done, and it’s being done,” McElfresh said, adding that Quinn’s proposed ban “turns respected Chicago businesses into criminals."
McElfresh estimated that hemp companies in the Chicago area have likely contributed upwards of $100 million in tax revenue to the city this calendar year alone.
The boom in hemp beverage sales has not been lost on the liquor industry either. Both small breweries and a large-scale liquor distributor were on hand to protest Quinn’s proposed ban, calling instead for “sensible” regulations such as age restrictions, lab testing for safety, and labeling requirements.
Josh Deth, founder of Revolution Brewing, said if the ban goes through, his company may have to lay off some of its 75 employees, many of whom are focused solely on hemp THC beverage production and sales.
He said what small breweries like his want is a three-tiered regulatory system for hemp THC drinks similar to that for alcohol, where the federal government sets out top-line rules, followed by more rigorous regulation at the state and local levels.
“Prohibition is not the answer,” Deth said. “A hundred years ago it was illegal to do what we do today, making beer here in Chicago."
Danny Romano, the owner of alcohol distributor Romano Beverage, said his company serves about 6,000 accounts in Illinois, including about 1,200 that sell THC beverages. Romano estimated that his firm’s revenues from THC-infused drinks skyrocketed from last year to this year, going from from 0.5% of company revenue to 25%.
“We’re going to have a whole division that’s going to be selling THC,” Romano said. “Why? Because the market demands it. The market wants it.”
