If you can’t beat them, join them. That seems to be the approach of some cannabis companies as the hemp industry has cut into their market.
One of the largest cannabis companies in the country, Green Thumb Industries, announced Friday that it will open a hemp products store selling edibles and margaritas at the Salt Shed concert hall in Chicago.
The announcement comes days after Illinois lawmakers tried and failed to regulate hemp products, leaving the industry largely unregulated and continuing to grow quickly. The opening of a hemp products store by a cannabis company at such a large concert venue is believed to be unique in Illinois.
“Cannabis and music are inextricably linked, and the ability to purchase these products on site to elevate the concertgoing experience is long overdue,” GTI founder and CEO Ben Kovler said.
Chicago-based GTI and Curaleaf, of New York, are two leading cannabis companies that entered the hemp market last year, along with a few smaller businesses.
Curaleaf previously had promoted hemp products at the Salt Shed, but doesn’t sell them there. The company does sell and provide home delivery of intoxicating THC hemp gummies and seltzers, marketed as an alternative to alcohol, under its The Hemp Co. brand.
Unlike cannabis, which can be legally sold only in state-licensed stores, hemp generally can be sold anywhere, except in several states which have banned it.
While cannabis was legalized at the state level in Illinois in 2020, hemp was legalized nationwide by federal lawmakers in 2018. Hemp is defined as cannabis with less than .3% delta-9 THC, the cannabinoid that gets pot users high. Lawmakers had intended for hemp to be used to create non-intoxicating products such as CBD.
But hemp processors figured out how to use hemp to derive a host of products that get users stoned, such as delta-8 THC and THC-O. As a result, smoke shops, convenience stores and gas stations have begun selling the products, which have no legal age restriction or requirements for testing and labelling, as licensed cannabis companies face.
Gov. JB Pritzker recently pushed for a law to strictly license and tax hemp, but the bill failed after hemp business owners said it would put them out of business. Cannabis companies have also asked federal lawmakers to close the loophole that allows hemp sales. Hemp business owners instead have proposed less restrictive regulations and taxation.
Cannabis companies aren’t the only ones reaching into the hemp market. Tilray Brand Inc., which owns multiple beer brands, also announced in September that it was joining the hemp THC business, and multiple craft breweries have jumped on the bandwagon.
Alcohol use generally has declined somewhat since COVID, with more people becoming interested in non- and low-alcoholic drinks, or alternatives such as cannabis or hemp.
With increased public attention to alcohol alternatives, and GTI’s experience running a music festival at its dispensary in Mundelein, “The stars aligned,” said Natalie Labriola, director of business development & sponsorships at 16 On Center, the hospitality collective that runs the Salt Shed.
The collective also sells hemp products at some of its other smaller venues, such as the Empty Bottle, Thalia Hall, and The Promontory, but not at a separate onsite retail outlet.
Since it opened in 2022 the Salt Shed — which is slated to host 145 shows this year, drawing 600,000 people — has attracted an older demographic, with 85% older than 25. Half are married, and about two-thirds have kids, so they sometimes are looking for alternatives to alcohol, especially on weekdays, Labriola said.
“Providing that choice outside alcohol was important to us,” she said.
Alcohol has fallen more out of favor with some consumers, especially younger adults, as cannabis use has increased, and following the U.S. attorney general’s recent warning that alcohol is related to increased occurrence of cancers.
In Illinois, due partly to its high taxes, tax revenue from cannabis has surpassed that from alcohol.
The trends point long-term to more cannabis use and less alcohol, according to Aaron Grey, an analyst for Alliance Global Partners, who wrote, “The long-term thesis of cannabis becoming a mainstream CPG (consumer packaged good) product remains intact.”
