By: Amanda Pirani
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ATHENS, Ohio (WOUB/Report for America) — A bill signed by Gov. Mike DeWine Friday will make big changes to Ohio’s hemp-derived THC industry.
The new law calls for intoxicating hemp products, now stocked in gas stations and grocery stores alike, to be sold only in Ohio’s legal marijuana dispensaries.
Lawmakers did include an exception for some hemp beverages, which DeWine used his line-item veto power to strike. He said the carve-out would create confusion for consumers regarding the drinks’ safety.
Joshua Crosier, co-owner of hemp beverage and flower company Appalachian Girls, said he expects someone will take legal action against the veto.
“It’s a direct attack on the industry, where we were left a little bit of scraps so that we could exist,” he said.
The legislature moved to pass regulations on hemp-derived THC products after the governor attempted to ban their sale in October, citing public health concerns. That order was later postponed by a Franklin County judge.
While a previous draft of Senate Bill 56 proposed creating separate hemp dispensaries, the law saw many changes after state representatives negotiated changes in a conference committee.
It now more closely mirrors a new federal standard included in the bill that reopened the government last month. Beginning in November 2026, hemp products with more than 0.4 milligrams of any kind of THC per package will be federally illegal.
Businesses say that excludes nearly all of the products they stock. Alex Schwartz, co-owner of Athens smoke shop Silver Serpent, said his best sellers typically have 25-50 milligrams of THC.
A federal executive order rescheduling marijuana, which now includes intoxicating hemp, could further complicate things. The state and federal changes have left business owners who sell the products uncertain about their future.
SB 56 will go into effect 90 days from its signing. After that point, any hemp-derived THC products must be sold within a licensed marijuana dispensary.
Legal marijuana will also see changes as a result of the law, which removes some legal protections for smokers and adds new rules around public consumption and out-of-state marijuana products. The law also releases what’s expected to be as much as $20 million in tax funds back to municipal governments hosting dispensaries.
Intoxicating hemp products entered the market after the passage of the 2018 farm bill, which removed hemp and cannabis derivatives with less than 0.3% of their dry weight in Delta-9 THC from the Controlled Substances Act.
As an unintended consequence of the language, businesses have been able to legally sell products with enough hemp-derived THC or other cannabinoids to produce an intoxicating effect.
The bill ending the government shutdown in November attempted to address this by redefining legal hemp by the total amount of THC in a product, instead of a percentage.
Any products with more than 0.4 milligrams of any kind of THC or similar cannabinoid will now be deemed illegal marijuana or THC regulated by the Controlled Substances Act.
In light of that change, state legislators moved to remove hemp products with more than 0.4 milligrams of THC from their definition of hemp. What state law now refers to as “hemp-derived cannabinoid products” can only be sold in dispensaries.
Athens business owner Alex Schwartz said the move is a big hit to small businesses like the smoke shop he co-owns, Silver Serpent Exotic Gifts.
“It’s already super hard for us to try to be the type of business that we want to see in the world, paying people fair, giving people benefits,” he said. “This is just like a one-two punch to us right now.”
The bill’s primary sponsor, Steve Huffman (R-Tipp City), said the change is meant to ensure people are consuming safe products.
“People who still want the THCs and the full spectrum, they can still get it,” he said. “They just have to go to a marijuana dispensary … it was really the concentration of the THC that gets concerning, and it makes it intoxicating.”
Schwartz said he is skeptical the regulations were truly due to safety concerns and believes the change was made under pressure from marijuana lobbyists.
“Nobody actually cares about if the products are safe or not,” he said. “It’s about money at the end of the day.”
Legal cannabis stakeholders have expressed support for increased regulations on intoxicating hemp and applauded the changes made in SB 56.
Ohio Cannabis Coalition Executive Director David Bowling said in a press release the law protects families and “reflects a clear commitment to public safety and a responsible marketplace.”
SB 56 could go into effect as soon as March. But Schwartz has no plans to pull intoxicating hemp products from his shelves anytime soon.
“They’re gonna have to arrest me to … get me to stop selling this stuff,” he said.
Small businesses producing craft hemp products in the region are likely to cease most or all of their operations in Ohio.
Nicholas Marie, owner of Buddy’s Bud Co., operates several lounges selling hemp-derived THC products. He said new regulations unfairly punished businesses like his due to bad actors in the industry.
“I’m referring to people who didn’t quality control their product, would not ID customers, and cash grabbed this opportunity despicably to ruin it for the rest of us,” he said.
Marie said he worked with three family farms and a graduate of culinary science to create high-quality products. He expects his storefront in Athens will have to permanently close in a few months.
“This move will hurt Athens on lost revenue,” he said. “It will hurt the five people who have worked for me for almost three years: my salaried manager and four other employees. Athens gets another vacant storefront.”
Joshua Crosier, co-owner of hemp flower and beverage company Appalachian Girls, said the change in Ohio’s regulations will push him to invest further in neighboring states like Pennsylvania, West Virginia and Kentucky.
“This weekend, we opened up five new shops in Pennsylvania,” he said. “We’ve expanded our territory to Tennessee, Kentucky and Indiana. … We believe that’s the only way … to survive in the short time, is having markets in multiple states.”
Marie will similarly continue to operate in neighboring states like West Virginia, which he said offers more reasonable regulations.
“They put an additional 11% sales tax on hemp products, made the age 21 to purchase, added labeling requirements and very importantly told us which cannabinoids are fair game,” he said.
Marie and Crosier could still try to sell their products in Ohio’s dispensaries. But Crosier said he’s doubtful the model will be viable for many hemp companies.
“Obviously people that go to dispensaries, they are looking for a higher milligram product,” he said. “So it just really depends on if your brand is recognizable enough to do well in that market.”
Selling in dispensaries would also be a huge cut to his sales. Right now, Appalachian Girl products retail in more than 300 stores — but the state only operates 146 licensed dispensaries.
Sara Gwin is a director at Southern Ohio Botanicals, a dispensary in Waverly. She said it’s difficult to say whether dispensaries would move to stock hemp products as the legal landscape continues to quickly change.
But, she said the products do offer some appeal for those who don’t necessarily want to consume high levels of THC.
“It’s nice getting (other cannabinoids) from hemp because there’s much less THC,” she said. “There’s people who don’t want that psychoactive effect.”
When it comes to hemp beverages, Crosier said nothing is final.
The Ohio legislature left the door open for drinks with less than 5 milligrams until next year, because legislators expect the federal government may soon move to establish regulations for the drinks.
Huffman, SB 56’s primary sponsor, said the exception also acknowledges that establishments selling alcoholic beverages are already accustomed to regulations around safety and health.
That would have allowed companies like Appalachian Girls to continue selling their lowest-dose beverages in places with a liquor license.
Crosier said the drinks that would have been allowed by the law are significantly weaker than those regular cannabis users consume.
“It’s just enough to give somebody with no tolerance a little bit of a buzz,” he said. “It’s relatively weak in strength and would require most heavy users of cannabis to drink four or five.”
However, DeWine used his line-item veto power to strike that exception, citing safety concerns.
“This can mislead consumers into thinking these products will have the same effect on them as alcohol, when there is no way to guarantee such claims,” he said.
A line-item veto allows the governor to reject a specific section of a bill, if that bill appropriates any funds.
Crosier said an effort is already underway to get an initiative on the ballot in November protecting hemp beverages, and he expects legal action to be taken against the governor’s veto in the meantime.
He did not comment on whether Appalachian Girls would be one of the parties taking legal action against SB 56.
Art Oestrike, co-owner of Jackie O’s Pub & Brewery, sells hemp beverages at his establishments and has been working to produce his own THC drinks.
With alcohol and beer sales down nationally, Oestrike said it makes sense for his brewery, and national brands, to look at alternatives like hemp-derived THC.
“People are looking for ways to utilize their equipment that they’ve got and they’ve had, and this is a good outlet,” he said.
He said he’s been supportive of regulations on hemp that promote safety, like age-gating, and is frustrated by the governor’s veto.
“You think you’re in the clear and you’re not,” he said. “This topic has gone back and forth 19 different times over the past year, and it’s just a little frustrating.”
SB 56 will also establish new regulations for legal marijuana in Ohio, to the mixed reception of some advocates.
The legislation creates some new restrictions for those who consume marijuana, prohibiting the possession of out-of-state products and criminalizing use in public places.
The law also rolls back some legal protections against adverse actions by landlords or employers as a result of marijuana use.
And it creates a legal pathway for those previously charged with offenses related to low-level possession to expunge their record.
Huffman said he believes that most marijuana users will benefit from the changes made.
“I truly believe that overall, the normal person that engages in marijuana is going to see, it’s going to be a better system,” he said. “They’re not going to see any big difference.”
For local governments, the law creates a welcome change: the official allocation of tax funds to communities that host dispensaries.
Issue 2, which legalized recreational marijuana use in Ohio, directed the state to allocate 36% of its 10% excise tax on marijuana to municipal governments that host dispensaries. However, the ballot initiative did not include language to appropriate the funds, leaving them tied up until the legislature moved to release them.
“It’s been long anticipated, and hasn’t been without a fair amount of angst from a lot of municipal leaders,” Athens Mayor Steve Patterson said.
The city of Athens hosts three marijuana dispensaries, one of which opened two years before the state’s passage of Issue 2 as a medical marijuana facility, Patterson said.
As much as $22 million could be allocated to communities that host dispensaries, according to an estimate from Ohio State University’s college of law.
“That could represent a significant amount of revenue coming back to the city,” Patterson said.
Amanda Pirani is WOUB’s Report for America Journalist covering Economic Livelihood. For more information about Report for America, you can click here.