Legislative proposals are sweeping across U.S. statehouses to bust up nascent local hemp industries, while leaving carve-outs for their beverage siblings at the behest of major alcohol distributors. One of the most recent additions to that list is Senate Bill 1766 in Illinois, though the bill leaves smokeable hemp alone while bringing beverages under the state’s three-tiered system for alcohol.
The bill, introduced in last month by Sen. Bill Cunningham, would create a Hemp Beverage Commission within the Illinois Liquor Control Commission to oversee the manufacture and distribution of hemp beverages. The Senate Executive Committee must act on the legislation by an April 11 deadline for it to stay alive this session.
The bill would establish a three-tier distribution system for hemp drinks similar to that used for alcoholic beverages in Illinois. Hemp beverage manufacturers would only be allowed to sell to distributors, who would then sell the products to retailers.
In testimony before state lawmakers, the Illinois Healthy Alternatives Association (ILHAA) came out against SB 1766, and argued it unfairly singles out hemp beverages while leaving other hemp products unregulated.
“By restricting the regulation to only beverages, this bill neglects the many other hemp-derived products available to consumers, creating an inconsistent regulatory framework across the industry,” said ILHAA President Justin Ward, according to a press release from the group. “It’s essential that any regulatory approach covers all hemp products, ensuring both safety and fairness.”
Ward said the proposed three-tier system would especially harm small hemp businesses that rely on selling directly to consumers.
“The added layers of cost and complexity could significantly harm the ability of small businesses to thrive, hindering both innovation and access to market opportunities,” he wrote.
Under SB 1766, hemp beverages would be capped at 10mg of THC per 7.5oz serving and 60mg per multi-serving container. The bill also prohibits delivery of hemp drinks together with alcohol and bans happy hour promotions for hemp beverages.
Illinois lawmakers failed to pass hemp regulations in both the 2023 and 2024 legislative sessions due to disagreements among Democrats over how intoxicating hemp products should be regulated. A bill pushed by Gov. JB Pritzker in 2024 that would have imposed testing and packaging requirements on hemp products died amid the infighting.
Throughout that time, Chicago Mayor Brandon Johnson had been lobbying state legislators to oppose the current hemp regulation bill backed by Pritzker, Crain’s Chicago previously reported. Johnson wants more time to regulate the hemp industry in a way that maintains it as a revenue source for the city and state. The city is looking for a higher share of hemp tax revenue than the 3% it currently gets from legal cannabis sales.
At the same time, established marijuana industry interests have been pushing for restrictions on hemp products in several states in order to protect their state-based licensing and market share advantages ahead of potential federal marijuana rescheduling. Efforts to restrict hemp while carving out exceptions for marijuana companies and alcohol distributors have emerged in places like Missouri, Arkansas, Tennessee, Texas and Florida.
State hemp industries are largely made up of small in-state operators, compared to the marijuana industry, which is in many regions run by a small number of large multi-state operators. Hemp advocates generally argue ban bills would simply shutter small businesses and potentially strain a state’s unemployment rolls.
Most experts say the new hemp drink oversight bills in various legislatures, often copied from alcohol rules, are directly because of the rising popularity of cannabinoid-infused beverages.
However, advocates like ILHAA have been urging legislators to step back and craft more comprehensive hemp regulations that don’t pick winners and losers in a diverse hemp scene.
“Sensible, comprehensive regulations are key to fostering a safe, equitable, and competitive hemp market,” Ward said.
Senate Bill 1766 would leave smokeable hemp alone while allowing hemp-derived beverages to stay on the market under alcohol-like regulations. Read More
