Ohio THC beverage law drives brands to Kentucky

Estazzi co-founder Ryan Horan stood in a dimly lit warehouse, his eyes fixed on several pallets stacked with around $150,000 worth of THC-infused beverages.

“I’m standing in our warehouse right now watching my partner prepare our entire inventory to ship out of state,” Horan told LINK nky.

The plan? To move as much inventory as he could from Ohio into Kentucky.

Horan was preparing for Friday, March 20, when THC-infused drinks are officially removed from shelves at retailers in Ohio, including bars, breweries, grocery stores, gas stations and convenience stores, as enforcement of Ohio Senate Bill 56 will take effect.

Since launching in March 2025, Horan said the brand has experienced tremendous growth, expanding into roughly 250 accounts throughout Cincinnati and Northern Kentucky. Following that, Estazzi inked a contract with Heidelberg, a major alcoholic beverage wholesaler in Ohio and Kentucky, to distribute his product. With the agreement in place, Horan said Estazzi was well-positioned for expansion.

Then, the rug was pulled out from underneath him.

“Heidelberg really intended to do this thing right,” Horan said. “They were approximately four selling days into the (hemp-derived THC beverages) category in Ohio before (Gov. Mike) DeWine announced in October his intention to ban the category.”

Last December, Ohio Gov. Mike DeWine signed Senate Bill 56, which officially updated the regulatory framework for legal cannabis and intoxicating hemp. Ohio lawmakers crafted the legislation to address concerns about unregulated hemp-derived THC, particularly high-potency products like gummies and vapes sold at convenience stores and other loosely regulated venues. The legislation also governs hemp-derived THC beverages.

Initially, the legislation targeted high-potency items but permitted lower-dose THC beverages, typically under five milligrams. However, DeWine used a line-item veto to eliminate important provisions that would have permitted the beverages to remain available in standard retail stores.

Under the new law, any intoxicating THC product, including THC-infused beverages, may only be sold through state-licensed cannabis dispensaries.

Nationally, legal sales of THC-infused beverages surpassed $1 billion in 2024, while alcohol consumption is declining, with only 54% of Americans claiming to drink alcohol on occasion – a 90-year low, according to a 2025 Gallup poll. This trend has led several notable Cincinnati-area breweries, such as Rhinegeist and 50 West, to develop their own THC-infused beverage lines.

For emerging brands like Estazzi, the legislation has essentially disrupted their growth trajectory. Entrepreneurs like Horan are feeling the brunt of the stress created by the situation.

“It’s awful,” Horan said. “The highs and lows of running any business have been replaced with just a series of body blows that the state is deciding to deliver on this category, and I think that it’s capricious, I think that it’s unfair, and I think that it’s unpredictable.”

Micah Dennison, the general manager of Party Source in Bellevue, said that limiting THC-infused beverage sales to state-licensed dispensaries in Ohio reduces sales volume, as dispensaries are not generally suited for high-volume transactions.

“In my opinion, moving it to dispensaries in the state of Ohio is the equivalent of banning it outright. It’s not the same consumer,” he said. “The person that’s going to a dispensary is not the person that’s buying these THC beverages.”

Dispensaries function as controlled retail environments that follow strict security procedures. Due to this, coupled with limited floor space, dispensaries typically have slower transaction times compared to gas stations or liquor stores. Dispensaries also tend to attract a different kind of consumer compared to traditional alcohol retailers, as customers typically visit less frequently, but purchase larger quantities, Dennison said.

With March 20 looming, some THC-beverage producers in Cincinnati are seeing Kentucky as a viable alternative market. Since liquor stores and beverage distributors must remove these products to comply with the new law, they face a choice: move their inventory to Kentucky before the deadline or destroy it.

“They’re definitely trying to move more of this product over into Kentucky just to make sure it doesn’t have to get dumped,” Dennison said.

Kentucky’s THC-infused beverage market may stand to benefit from Ohio’s new law since the Bluegrass State’s regulations are considered more favorable to retailers. Currently, Dennison said that THC-infused beverages are a small but growing sales category at Party Source, making up roughly 2.5 to 3.5% of total sales.

In early 2025, Kentucky lawmakers introduced Senate Bill 202, which would have effectively banned all hemp-derived THC beverages from the market. However, after facing pushback from the hemp industry and businesses, lawmakers moved away from an outright ban and instead focused on implementing market-regulating restrictions.

The regulations capped the amount of THC per serving to five milligrams per serving, restricted sales to people aged 21 and older, and required beverages to be sold only through licensed package liquor stores instead of bars or general retail outlets.

“One thing I will say is that Kentucky, in a lot of ways–maybe up front, they didn’t–but in the end, I feel like they got a lot of things right,” Dennison said. “They curbed the risk of these products being available to anyone. They set up some good standards to make sure that the products themselves are safe.”

Moving forward, Horan expressed his faith in the THC-infused beverage industry, telling LINK nky that his product is more than a novelty.

“I love the fact that we have a product that appeals across the spectrum of consumers,” he said. “Those are the voices that I think the state (Ohio) is failing to listen to.”

In the coming week, Horan said he is traveling to Washington, D.C., to meet with members of Congress to discuss the industry and, hopefully, carve out a viable path forward.