The ban is part of a wide-ranging cannabis and hemp regulation bill signed by Gov. JB Pritzker in June. Under the new rules, hemp-derived THC products that exceed federal potency limits must be sold only at state-licensed cannabis dispensaries and taxed at the same rate as cannabis. In Chicago, excise taxes on cannabis purchases range from 22% to 37%, depending on product potency, according to the Illinois Department of Revenue.

For Marz Community Brewing Co., the change is existential. The McKinley Park-based brewer recovered from the post-pandemic downturn largely on the strength of its hemp-derived THC beverages — a line that includes low-dose and high-potency seltzers with names like Bong Water and High Tea. Those drinks now account for nearly half of the company's production across its headquarters and its Logan Square nanobrewery and taproom.

“It truly rescued our business and allowed us to expand,” said Marz founder Ed Marszewski. “We're going to have to lay people off. We won't have enough income to pay them.”

Strong local demand even pushed Marz to relocate some beer production to Louisville, Kentucky, where its partner Against the Grain Brewery has co-packed and brewed several Marz beers in recent years.

Hopewell Brewing Co. launched its lemon-lime-flavored Choom THC drink in 2024 and later expanded into sparkling waters and teas. The company is now winding down inventory, offering 50% off Choom products at its Logan Square headquarters, where it also co-manufactures THC beverages for other brands.

“Our state legislators have missed the mark here, and this decision directly damages local craft businesses like ours,” said Jonathan Fritz, a partner at Hopewell. He noted that Illinois businesses must exit the category a month before competitors in neighboring states, putting local breweries at a disadvantage.

Hopewell's THC line has been carried at Parson's Chicken & Fish, Foxtrot, and other stores, accounting for nearly a third of its on-premises sales, the company told the Sun-Times last year.

Revolution Brewing, Chicago's largest independent craft brewer, halted production of its Reverb THC beverage line in the summer. Owner Josh Deth hopes Congress can find a resolution and that Illinois lawmakers follow suit by allowing distribution through licensed liquor establishments, a carve-out strongly favored by alcohol suppliers, distributors, and retailers.

“There's clear customer demand for low-dosage THC beverages for both drinking at home and going out, and we'd love to keep innovating within the THC drink space if we are allowed to,” Deth said.

The market potential is enormous. London-based research firm Euromonitor International estimated the hemp-based THC beverage market will skyrocket to $4.1 billion by 2028, a 1,615% increase from $239 million in 2023.

Humboldt Park-based Perfectly Dosed makes THC emulsion ingredients for about 50 Illinois beverage brands, breweries, and restaurants. It is planning to move some warehousing and fulfillment services out of state if restrictions are prolonged. Several of its partners and suppliers extract hemp in Colorado, which has emerged as a potential build-out site due to its safe harbor laws.

“We do have to consider that as an option,” said co-founder Glenn McElfresh. “The question that a lot of businesses are facing, including ourselves right now, is where do we invest that future CapEx for our business?”

McElfresh's assessment of the Illinois market has changed drastically since about a year ago, when he told the Sun-Times that Chicago could become the heart of the hemp beverage industry. “Because of the law, we can't definitely say we're going to build in Illinois,” he said.

Perfectly Dosed plans to apply for a newly established hemp product manufacturing license administered through the Illinois Department of Agriculture. Licenses will be required for any business or person handling, processing, and extracting hemp in Illinois, as well as manufacturing any product with hemp-extracted cannabinoids or any hemp-derived product. Manufacturing licenses will be issued after applications and on-site inspections are completed and a $5,000 fee is paid.

The department did not share how many businesses have already applied but said in a statement that it is working with “several applicants as they complete the process” and is “accepting applications for both hemp manufacturing and industrial hemp processor licenses on a rolling basis, with no application deadline.”

On Thursday, the Illinois Healthy Alternatives Association and a group of hemp businesses filed an emergency motion for a temporary restraining order, arguing the law is unconstitutional and would “obliterate the businesses of thousands of Illinois farmers, infusers, distributors, and retailers.”

The state's timetable mimics federal guidelines set in President Donald Trump's 2025 spending bill, which also outlawed hemp potency limits beyond 0.4 milligrams of THC per container. Previously, hemp-based THC products were federally defined as having less than 0.3% THC. In September, the federal deadline was extended to Dec. 11, but Illinois has stuck with the original November deadline.

Some in the regulated cannabis industry see opportunity. Cresco Labs CEO Charlie Bachtell said the Chicago-based company supports regulatory standards for all THC products. “Consumers deserve to know what they're buying and that they can rely on production and testing standards for products they ingest,” he said.

Tim O'Hern, chief operating officer of Nature's Grace and Wellness in Fulton County, expects several products sold outside licensed cannabis channels to transition into the regulated market. “THC beverages represent one of the fastest growing product categories in the regulated cannabis industry,” O'Hern said.

Cannabis product sales in Ohio's regulated market increased significantly since the state implemented a hemp products ban in March, benefiting companies like Chicago-based Verano Holdings, which operates six stores in the state. “According to state data, total receipts were up 25% at the end of the third quarter versus the end of the first quarter, a notable positive trend that correlates with the start of the hemp ban, which indicates hemp consumers are shifting towards licensed dispensaries,” Verano founder and CEO George Archos told analysts last month.

But Marszewski believes there is no marketplace for hemp-infused beverages at dispensaries, which lack shelf and inventory space and primarily sell high-potency flower, pre-rolls, vapes, and edibles. Infused beverages typically account for about 1% of dispensary sales, according to industry insiders and sales data.

“The majority of those businesses are vertical monopolies, and they will not purchase anyone else's products,” Marszewski said. “They will never sell a Marz product in their facility.”

Retailers are also pulling inventory. River North-based Green Thumb Industries, one of the largest vertically integrated cannabis companies in the country, helped push mainstream adoption of hemp drinks at music festivals, concerts, and sports venues, with key distribution partnerships at Lollapalooza, the United Center, and Salt Shed. The United Center and Salt Shed were the first major U.S. arenas and music venues to carry THC-infused drinks.

“In compliance with the upcoming change to federal law and new Illinois regulations set to take effect, the United Center will no longer offer beverages that include hemp-derived THC as of November 12, 2026,” a company spokesperson said in a statement.

Despite consumer demand, the Salt Shed will also comply, said Sam Shechtman, senior manager of business development at 16 on Center, the venue's parent company. Last year, the hospitality company expanded THC beverage offerings at Thalia Hall in Pilsen and the Empty Bottle in Ukrainian Village.

“We look forward to future legislative changes that will establish a clear, regulated pathway for THC beverages to return to venues like Salt Shed,” Shechtman said. “In the meantime, we look forward to continuing our strong partnership with Green Thumb Industries at the Salt Shed.”

Green Thumb's Rolling Meadows-based subsidiary, Rythm, operates the Rise hemp dispensary at Salt Shed. Rythm this month reported in its third-quarter earnings that hemp-derived product sales increased 15% to $6.4 million during the quarter. It said legislative changes “would prohibit the Company from selling its current hemp-derived THC products in their existing form, including through the retail and venue channels,” such as Riot Fest, United Center, and Navy Pier, where it is the official THC beverage partner.

“THC beverages are emerging as a fourth adult beverage category, alongside beer, wine and spirits, earning national shelf space and a presence at major entertainment and cultural venues,” Rythm chairman and interim CEO Ben Kovler said in a news release. “Consumers continue to embrace THC beverages despite the forthcoming changes to federal law. We believe their future depends on drawing a clear line between regulated and unregulated products through a responsible regulatory framework that protects consumers and provides a viable path forward.”

At South Loop Market's Logan Square location, owner Anas Masoud said the popularity of hemp-derived THC beverages helped offset years of declining beer sales. Demand prompted him to dedicate two cooler doors to the infused beverages, which account for about 20% of sales in its wine and spirits department. Masoud is stocking up on inventory as he weighs other revenue streams, including the return of CBD drinks or hemp-infused beverages that comply with new federal requirements.

“This is hurting all the small business owners,” he said. “We're still a small mom-and-pop retailer.”