Illinois hemp businesses owners call for regulation and taxation, not prohibition

The last thing most business owners want is to be taxed and regulated, but hemp business owners are asking for just that — as a way to keep their industry alive.

Hemp entrepreneurs came out Tuesday in favor of a state legislative proposal to license hemp sales, require testing and labeling of their products, prohibit products that look like well-known snack brands, and limit sales to those 21 and over. The bill would create 10% wholesale and a 10% retail sales taxes, and an unlimited number of $500 licenses.

That proposal stands in contrast with a bill backed by the Cannabis Business Association of Illinois, which would prohibit sales of hemp-derived intoxicating products.

Jennifer Weiss, founder and CEO of Cubbington’s Cabinet in Chicago, which sells hemp products, fears that the opposing bill would set such strict limits that it would even prevent sales of non-intoxicating products such as CBD.

“We would have to shut our doors, as well as hundreds of other Illinois companies,” she said. “Let’s not go backward with out-of-touch prohibitions.”

Potentially at stake is the future direction of the cannabis industry in Illinois. Currently, a split between state and federal law has created a stark contrast between the marijuana and hemp industries.

Both marijuana and hemp are grown from the same cannabis plant. State law has legalized marijuana, which gets users high through a component called delta-9-THC. Marijuana remains illegal federally. In 2018, Congress legalized hemp, which is defined as cannabis having less than .3% delta-9-THC, and so was meant to allow sales of non-intoxicating products like CBD.

But hemp processors figured out how to synthetically derive other intoxicating cannabinoids from the plant, such as delta-8 or delta-10, or even delta-9-THC. The CDC issued a health advisory in 2021 warning of adverse events involving consumption and insufficient labelling of delta-8, similar to delta-9 intoxication.

State weed licenses remain very limited and expensive, and are subject to strict testing and labeling requirements, meant to ensure their purity and potency. In contrast, unlicensed hemp is being sold in vape shops, corner stores and gas stations across the country, with no age or other restrictions.

As a result, sales of hemp products have exploded into a $28 billion industry, even larger than the legal cannabis market, by one estimate. The recent move by federal regulators to relax restrictions on cannabis would not likely affect the hemp THC conundrum. As a result, some licensed cannabis businesses have even resorted to selling hemp-based products.

Last month, some lawmakers and the Cannabis Business Association of Illinois, which represents the licensed cannabis industry, called for a ban on intoxicating hemp products until an advisory committee can recommend how to proceed.

Tiffany Chappell Ingram, the association’s executive director, issued a statement again calling for a “pause” of hemp intoxicant sales pending further studies.

“We look forward to working with legislators to find a path forward that empowers consumers, protects minors and ensures the state’s adult-use cannabis law lives up to its full promise, including uplifting social equity license holders and communities disproportionately impacted by the war on drugs,” she said.

State Rep. La Shawn Ford, a Chicago Democrat and chief sponsor of the bill to regulate hemp, said lawmakers shouldn’t kill a multi-billion dollar industry, and create an illegal market.

“Prohibition doesn’t work, and Illinois should reject going backward,” he said.

John Murray, CEO of Sustainable Innovations in Rockford, said his company is using its larger hemp business to help finance its licensed cannabis venture.

While licensed dispensary owners could be undercut by hemp businesses, they could operate in both spheres, he said.

“We believe we can do both, and we are doing both,” he said.