Brewers who bet on THC drinks are now facing a financial meltdown
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The new congressional spending plan may have reopened the government, but thanks to a last-minute provision, it may bankrupt an entire industry.
The big picture: Republicans closed a loophole in the 2018 Farm Bill that made hemp products legal, and more specifically, hemp-derived THC products.
- This includes drinks, edibles and related products that were previously illegal.
- The new provision recriminalizes hemp-derived THC products, taking away companies' ability to sell and, more importantly, use the federal banking system.
Why it matters: The new rule threatens to shut down Illinois' billion-dollar hemp industry.
Zoom in: Hemp has become big business for the brewing industry, which started making THC drinks as the craft beer bubble busted. They expanded shops, created new products, and made distribution deals with alcohol companies.
- Chicago's Hopewell Brewing Co. told the Sun-Times that THC seltzers and drinks make up 30% of its business.
- "It was shitty to implement a ban without a transparent debate and discussion to address all arguments pro and con about the use of hemp-derived THC," Marz Brewing's Ed Marszewski tells Axios. "Slipping the ban into this legislation demonstrates why so many people in our country don't trust our politicians."
The fine print: The change means breweries selling hemp THC products won't be able to use banks, which means they can't deposit money, pay off investments or even pay mortgages.
What they're saying: "You can't bank, you can't borrow to grow your business, and now all these local companies that actually have invested millions of dollars to scale up, they're going to lose all that money," state Rep. LaShawn Ford tells Axios.
Reality check: Many beverage companies have asked the government for regulation, especially to legitimize their products versus bad actors who are creating hemp-derived THC products marketed toward children, an issue Chicago's City Council has tried to address. And the new rule says the ban won't go into effect for a year, giving Congress time to theoretically find a compromise.
- "This isn't a ban — it's a one-year shot clock to finally get the rules we've always wanted," CANN co-founder Jake Bullock tells Axios.
- "High-potency, synthetic products have no place in the market. We're ready to lead this next chapter, with the good actors who care about real regulation. Alcohol has been doing this for nearly a century, and we should leverage their rules as a model for these adult beverages, to create smart, sensible rules that let this category thrive responsibly."
Friction point: Illinois and the City of Chicago have tried to regulate hemp THC products but haven't been able to pass any laws.
- "In Illinois, these companies are worse off, because we haven't legalized them. So they can't be in the regular cannabis dispensaries," Ford said.
What's next: Marz and CANN are hopeful they can convince a divided Congress to come up with a regulatory plan in the next year.
Plus: State lawmakers will likely pick up legislation in the 2026 spring session. The prevailing thought, and a plan that seemed to be backed by Gov. JB Pritzker, would be to incorporate hemp THC businesses into the state's legalized cannabis regulations.
The bottom line: Congress's move could cost Illinois businesses millions of dollars, but there's hope for some to get the regulation they've always wanted.