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This story is republished with permission from Crain’s Chicago Business and written by Justin Laurence.

The fight to regulate the hemp industry officially moved into City Hall today as administration officials began laying out a licensing and enforcement scheme, while opponents warned that legitimizing intoxicating hemp products would see the city’s minority-owned cannabis shops go up in smoke.

The city has yet to unveil a comprehensive regulatory framework to address concerns about where intoxicating hemp products are manufactured and how they are sold — despite resisting efforts at the state level that some argued would create a de facto ban on hemp gummies, vapes and other products with delta-8 and delta-9. These products have grown in popularity because of their relative availability and lower price compared to legal marijuana.

Marijuana and hemp come from essentially the same plant, but hemp has very little of the chemical THC associated with the high from marijuana. The 2018 federal Farm Bill allowed production of hemp with 0.3% THC or less, but people quickly began concentrating it to create synthetic marijuana, often known as delta-8.

Mayor Brandon Johnson helped defeat state legislation to regulate these products, a bill that was approved by the Illinois Senate in the spring but was not called for a vote in the House. Johnson and his City Council allies want to preserve a potential new tax revenue stream, while seeking to impose stiffer standards on the industry without banning intoxicating hemp products or, like the state bill, limit their sales to state-licensed cannabis dispensaries.

Advocates argue any ban would put existing companies in the city out of business and imposing additional taxes on hemp products could be a boon to the city’s beleaguered budget.

Opponents include those who warn the products are not safe and have been marketed to children. Cannabis operators, meanwhile, say if hemp products are legitimized, they should be held to the same strict standards as marijuana – which is mandated to be grown in Illinois and is closely monitored from farm to the point of sale.

During a subject-matter hearing today, city officials began to lay out the regulatory framework they’ve been crafting for months, but questions remain on how much establishing oversight would cost and whether the city has the ability to monitor hemp manufacturing. No tax revenue estimate was provided during the meeting.

“Licensing and regulation will provide businesses with the stability and resources needed to invest confidently, drive, innovation and create jobs,” said Ivan Capifali, the city’s acting commissioner of the Department of Business Affairs & Consumer Protection.

Capifali said businesses selling hemp-derived cannabinoid products such as delta-8 and delta-9 would be required to have a city-issued hemp license, with the application process similar to the existing tobacco license – a standard that is much less restrictive than a state-issued cannabis license.

Local aldermen would be provided notice of a potential license in their wards and able to provide input on hours of operation. Shops would not be permitted within 100 feet of daycare centers and primary schools, with a 500-foot restriction from high schools.

Other requirements would include:

• Additional location restrictions for smoke shops permitting on-site consumption
• Prohibition on sales to anyone under the age of 21
• Point-of-sale warning information to educate consumers on potential risks
• Product and labeling requirements at the wholesale level
• Maximum concentration limits
• Prohibition on packaging geared towards children, including mimicking existing candies and cartoon characters

The Chicago Police Department, the Business Affairs team and the Department of Public Health would share enforcement powers that would include:

• A three-strike rule on bad actors
• Scalable fines
• License suspension and revocation powers
• Ability to confiscate illegal products
• Sting operations to monitor sales to minors

“By taking the first step to proactively regulate this industry, we can create jobs, we can drive sustainable growth and enhance the quality of life of our residents all while prioritizing health and safety,” Capifali told the committee.

The city’s health commissioner, Dr. Olusimbo Ige, said testing has found “products having mold, having all kinds of contaminants,” and without regulation, she fears they’d continue to be sold to consumers. But Ige acknowledged the city does not typically monitor the manufacturing of any consumer product and would look to partner with the state or Cook County to do so.

Members of the City Council zeroed in on the city’s ability to regulate a product without the help of the state or federal government on the front end.

“We do food inspection. We test the chicken based on the standards for chicken, we don’t test to see that it is chicken,” said Ald. Bennett Lawson, 44th. “We don’t have those capabilities in the city right now.”

Ensuring the complicated process that converts hemp into an intoxicating product sought by consumers is fraught with pitfalls, Lawson said.

“I’m also concerned about the cost to set this up,” he said. “We are setting ourselves up to really go down the rabbit hole with what it’s going to take to find a chemist and hire them if we’re going to be able to test this stuff at the wholesale level.”

Freshman Ald. William Hall, 6th, who has led the city’s effort to regulate the industry, chaired the meeting. Afterward, he said, “Prohibition is not the answer.”

“Nobody objected to safety around labels, safety around content, safety around 21 and under, safety around kids,” he said.

Hall said the administration would go back to the drawing board after today’s hearing and he hopes to have an ordinance ready to be voted on by the spring.