CHICAGO — Hundreds of Chicago businesses and smoke shops built around selling highs derived from hemp now face an existential crisis after a bill ending the federal government shutdown also effectively banned their products.
A late provision tacked onto the bill closes a loophole that allowed for the small traces of THC in hemp to be concentrated into products that have flooded the market in drinks, edibles and vapes and flower.
Hemp business owners now have a year to pull the products before they’re criminalized under federal law.
That’s likely to mark a swift end to debates that have burned on in the City Council and statehouse over what to do about the products, whose sellers do not face the steep taxes, security and testing regulations required of licensed dispensaries.
Local businesspeople have argued they turned to selling hemp products after the state legalized marijuana in 2020 but rolled out only limited licenses. They said that move locked out many small- and minority-owned businesses, making legal weed the stuff of corporate-backed dispensaries instead of corner stores.
Jason Knight, a lifelong South Sider, said he built a half-million-dollar online retail business selling THC-infused ice creams and sorbets derived from hemp. Knight had been looking into opening a storefront when news of the federal bill “killed my deals right on the spot.”
“It’s not fair. I’m a one-man show,” said Knight, a former social studies teacher. “I might have to go back to work or liquidate the business.”
Recipients of the state’s coveted social equity dispensary licenses, seeking to boost minority participation in the marijuana business, have said hemp products undercut their prices, years of investment and health standards.
Some members of the City Council have passed bans of hemp products in their wards, decrying products like one dubbed “Zkittles” and wrapped to look the popular candy.
Akele Parnell, a social equity license holder and owner of ÜMI Dispensary, 2575 N. Lincoln Ave., called the federal hemp ban “inevitable.”
“Congress never intended to create an intoxicating hemp market,” Parnell said. “In some ways, yes the ban is a bit of win for social equity licensees who have been forced to compete against an alternative market with far fewer rules.”
Ald. Gil Villegas (36th) holds up a package of “Zkittles,” a hemp-derived THC product resembling the popular candy, at.a City Hall press conference on Jan. 30, 2025 Credit: Mack Liederman/Block Club Chicago
Ed Marszewski, owner of Marz Brewing, 3630 S. Iron St., said many breweries have been making THC-infused hemp drinks as the craft beer business has contracted following the pandemic.
The drinks have became “too much” of Marzewski’s business, he said.
“Brewers were suffering under decreased alcohol sales, decreased consumption, and this was an alternative revenue source to keep them open,” Marszewski said. “This ban will just drive everything underground.”
Knight said his business in Illinois is “certainty dead” as he considers pivoting to a state that already has its own laws regulating intoxicating hemp products, he said.
Talks in the Illinois statehouse stalled after Gov. JB Pritzker pushed for the products be only sold in dispensaries, putting him at odds with the hemp industry and Democrats who supported it.
“We needed help, not a death sentence,” Knight said. “Because you always have some bad actors in every industry — tobacco, alcohol. The whole industry shouldn’t be judged by them. We wanted regulations.”
RELATED: Hemp Loophole Causing Chaos In City Hall, Springfield — But Smoke Shop Owners ‘Ready To Fight’
Members and supporters of the Illinois Black Hemp Association gathered in January to demand state officials not limit the sale of hemp-derived products to dispensaries. Credit: Atavia Reed/Block Club Chicago
In his proposal to close a $1.19 billion budget gap, Mayor Brandon Johnson banked on raising $10 million by taxing hemp products.
Following the federal bill’s passage, Johnson’s office has “removed the revenue for hemp” from its proposal, mayoral spokesman Cassio Mendoza said in a statement. It’s the second time a Johnson-led push to regulate and tax hemp has failed.
“Instead of regulating hemp, as we do with marijuana, this legislation has the potential to create the conditions for an underground market which would be unregulated and unsafe,” Mendoza said.
State Rep. La Shawn Ford, a leading supporter for the hemp industry, said it would be more “difficult to pass a [state] bill now” amid a new federal ban and with Democrats already divided in Springfield. Marijuana has been federally illegal for decades.
“The state allowed for hemp businesses to proliferate, and now the rug is going to be pulled from under them,” Ford said. “People who invested everything into these businesses, they’re going to lose all of that.”
Parnell said he “feels the worst” for employees of hemp businesses who may soon be out of work.
“Hopefully the hemp side can get back to the real potential of hemp and what it was originally intended to advance,” said Parnell, noting hemp can still be used to make fabrics, plastic, biofuels and CBD products.
Marszewski said he’ll keep selling the THC drinks until the clock runs out.
“It’s sucky what they did,” Marszewski said.
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