Illinois Hemp Retailers Fight New THC Limits as Court Hearing Nears (Chicago, IL) — Illinois’ new hemp restrictions could force some CBD shops to close and leave larger retailers considering layoffs, according to an industry leader who says the law reaches beyond the intoxicating drinks and gummies that have drawn public scrutiny.
In an interview with The Chicagoland Journal, Craig Katz, president of the Illinois Healthy Alternatives Association, described a market facing the loss of products, suppliers and customers. Katz is also the government relations and compliance manager for M&G Brands, the parent company of CBD Kratom.
His association and five businesses are asking a federal judge to block provisions of the Illinois Hemp Act. The restrictions took effect Nov. 12, although state officials agreed to hold off on enforcement against the plaintiffs and specified association members through Nov. 19.
The law draws the line at 0.4 milligrams of total THC per container.
Under state guidance, consumable and topical products exceeding that amount are reclassified as cannabis and can be sold only through the licensed cannabis system. The limit applies to the container, not each serving. Products that remain within the hemp definition can still be sold outside dispensaries if they meet the law’s other requirements, including testing, labeling and packaging rules.
Katz argues that the cutoff also threatens CBD products containing small amounts of THC, including creams customers purchase for their wellness routines. He said moving those products into the cannabis market would not guarantee that dispensaries would stock them.
Gov. JB Pritzker’s administration has defended the law as a response to misleading labels, products packaged to resemble familiar candy and other risks to children. When signing the legislation in June, Pritzker said Illinois was acting to “protect consumers of all ages, especially children.” The measure immediately imposed restrictions on sales to people under 21, ahead of the November changes.
Katz agrees that the market needs stricter oversight.
“We agree that there are products out in the marketplace that should not be out in the marketplace,” he said.
He supports a minimum purchasing age of 21, independent laboratory testing, accurate ingredient and cannabinoid labels, and child-resistant packaging. Testing, he said, should identify contaminants such as heavy metals as well as establish what a product contains.
Several of those safeguards already appear in the state’s legislation. The disagreement concerns whether additional oversight should allow existing hemp businesses to keep selling these products or require them to operate within the cannabis licensing system.
Federal regulators have documented reasons for concern. The Food and Drug Administration warns that delta-8 THC can be intoxicating, that some products are marketed in ways that appeal to children, and that manufacturing processes can introduce harmful contaminants. It has not approved delta-8 products for safe use.
Questions about potency also complicate the industry’s description of its products.
Asked what he meant by “low potency,” Katz cited the 0.3 percent delta-9 THC dry-weight standard that helped establish the hemp market under the 2018 Farm Bill.
“People do not buy our products for the purpose of getting high,” he said, describing customers who seek products for sleep, stress or chronic discomfort.
A percentage by dry weight measures concentration; it does not establish the amount of THC in a serving or package. Katz did not offer a separate milligram-per-serving limit during the interview.
For businesses, the immediate concern is whether enough inventory can remain on the shelves to cover operating costs.
Katz pointed to Cubbington’s Cabinet, a Chicago CBD retailer and one of the businesses participating in the lawsuit. He described it as a small operation with two or three employees whose business depends on CBD and low-THC products.
“They’d have to close down entirely,” he said.
At the other end of the scale, Katz said M&G operates 16 stores in Illinois and employs more than 100 people in the state. Losing a substantial share of its hemp inventory could reduce revenue enough to require layoffs, he said.
The court agreement provides limited time for the businesses covered by it. A Nov. 6 joint status report says state officials agreed not to take enforcement action against the plaintiffs, including association members identified on a membership list as of that date, through Nov. 19. The agreement leaves the underlying law in place and does not decide whether it is constitutional.
Katz said an emergency hearing was scheduled for Nov. 19, when the businesses would seek a temporary restraining order. They are also pursuing longer-term relief.
Their Commerce Clause argument concerns the effect of moving hemp products into Illinois’ cannabis system. In their court filing, the plaintiffs contend that the system’s in-state sourcing and licensing restrictions would exclude out-of-state manufacturers and prevent existing Illinois retailers from continuing to buy from those suppliers.
Illinois’ timetable also differs from the federal enforcement schedule. The Illinois Department of Revenue says the state’s Nov. 12 enforcement date applies despite a federal delay until Dec. 11.
Moving products to dispensaries poses practical problems beyond obtaining licenses, Katz said. He argued that lower-margin CBD products would compete for limited shelf space with more profitable cannabis products, potentially leaving consumers with fewer choices. He also predicted that reduced competition from hemp shops could raise prices.
State guidance requires both the dispensary and the product to comply with cannabis law. Reclassifying an existing hemp product does not, by itself, make it eligible for dispensary shelves.
Katz cited an industry-commissioned study by Whitney Economics as the basis for estimates of roughly $500 million in Illinois hemp business activity and about $30 million in sales-tax revenue.
He argues that a regulated retail market could preserve those businesses while allowing lawmakers to impose additional taxes.
Katz also described the dispute as a question of who can afford to own a business. He estimated that a hemp shop might cost $100,000 to open, compared with several million dollars for a cannabis dispensary, and said higher entry costs could shut out smaller operators, including women and minority entrepreneurs.
The state, meanwhile, has presented the legislation as an effort to expand opportunity within the licensed market. Among its provisions is authority to issue 45 previously unallocated infuser licenses in January 2027 to applicants with prior social-equity experience.
For Katz, that leaves the question of what happens to the businesses already operating outside that system. He said his association wants lawmakers to negotiate rules that address safety while preserving a place for those retailers.
Under the law as written, he said, “they’re basically keeping an entire group of people from having access to business opportunities.”
Illinois Hemp Retailers Fight New THC Limits as Court Hearing Nears
