- Ohio retailers and producers say the state’s hemp-derived THC beverage ban has led to layoffs, lost revenue and stalled expansion plans, with some businesses reporting losses in the millions.
- Companies including Estazzi and Fifty West have shifted operations and sales efforts to Kentucky, but say the smaller market cannot replace lost Ohio business.
- Industry leaders remain optimistic about the long-term future of THC beverages and are continuing lobbying efforts to overturn Gov. Mike DeWine’s veto and restore the Ohio market.
Fifty West Brewing CEO Bobby Slattery said his Cincinnati brewery has lost millions of dollars in revenue opportunities since Ohio prohibited the sale of hemp-derived THC beverages outside of licensed cannabis dispensaries earlier this year.
In late 2024, Fifty West launched its line of hemp-derived THC beverages, Sunflower, which generated substantial revenue for the company throughout the following year. Since Ohio’s restrictions on the beverages took effect this March, Fifty West halted expansion plans and was forced to lay off workers.
“It’s just our modern-day version of prohibition,” Slattery said.
Last December, Ohio Gov. Mike DeWine issued an unexpected line-item veto of Senate Bill 56—legislation that updated the regulatory framework for THC and intoxicating hemp products—eliminating provisions that would have permitted the beverages to remain available in standard retail stores.
DeWine’s veto essentially prohibited selling hemp-derived THC drinks in retail outlets, such as liquor stores, bars and convenience stores. Under the law, any intoxicating THC product, such as THC-infused beverages, must be sold through state-licensed cannabis dispensaries, effectively limiting the availability of these drinks to large swaths of the consumer base.
The unexpected ban, which took effect on March 20, caught producers and retailers of hemp-derived THC drinks flat-footed, prompting them to either shift production to other states or destroy their inventory and exit the market altogether. Kentucky benefited as brands shifted production and retail focus, thanks to the state’s proximity to Ohio and more favorable laws regulating hemp-derived THC beverages.
Estazzi founder Ryan Horan was among those who saw the writing on the wall. Before the March deadline, Horan and his team aggressively moved into the Kentucky market, transporting hundreds of thousands of dollars’ worth of inventory into the Bluegrass State.
Currently, Estazzi’s sales in Kentucky are booming, Horan said, as the brand has seen growing consumer interest. Estazzi is available in the largest consumer markets in the state, such as Louisville, Northern Kentucky and Lexington.
Despite this, Horan said that even with the business boom south of the Ohio River, Kentucky’s smaller market size and lower profit margins cannot offset the revenue lost due to Ohio’s ban. Ohio has about 7.5 million more people than Kentucky, with Ohio residents having a higher per capita personal income, theoretically giving them access to more disposable income.
“Our margins in Kentucky are half of what our margins are in Ohio,” Horan said. “It has not, and practically speaking, it will not ever cover our operational loss just in losing Greater Cincinnati.”
The situation has compelled Estazzi to tightly control operational costs and restrict investments that typically support growth. Horan had to put the company’s expansion plans on ice because it now lacks sufficient capital to grow its sales and marketing teams.
For Fifty West, Slattery said the brewery is operating at roughly 20% of what it would have been if THC beverages had remained legal in Ohio.
Before the law changed, Fifty West was in the process of building out a full-scale operation around THC beverages, including production, distribution and sales teams.
While the loss of revenue was a setback for Fifty West and Slattery, he acknowledged that what truly gutted him was the staffing reductions and organizational changes implemented after losing access to the Ohio market.
“The hard part for me, though – dollars are dollars, people are people. We had a team of people here that were coming in every day, watching this thing grow, and it’s a fun thing to be a part of. I think that’s the real loss here,” Slattery said.
In the wake of the March ban, Slattery shifted Fifty West’s sales focus for hemp-derived THC beverages to Kentucky. As with Horan, Slattery said that although the company’s sales in Kentucky have increased significantly since March, the market is not large enough to compensate for the loss of the Ohio market.
“If they shake you off in Ohio, people will drive across the river, and sales will spike, and so the sales coming out of the Kentucky side has obviously been a win for us,” Slattery said.
The impact has also been felt by retailers. Well-known Cincinnati-area taproom and bottle shop Cappy’s has incurred $75,000 in lost sales revenue dating back to Ohio’s ban on hemp-derived THC beverages.
At its peak, Cappy’s founder Ben Capodagli said his Loveland store generated $376,000 in revenue from the sale of THC beverages, which helped support the salaries of two full-time employees. Since the ban, Cappy’s has lost over 20% of its carry-out business, in addition to suffering from a cash flow wipeout from sales generated earlier in the work week.
“My cash flow from Monday to Wednesday as a business operator has completely disappeared,” he said. “ I’ve never seen anything like that in my life.”
To keep his businesses afloat, Capodagli was forced to diversify into unrelated product categories, such as Pokémon and Magic: The Gathering cards, in an effort to offset losses and avoid layoffs.
“Since I was 23 years old, I’ve had my own company—I’m 48, and this is by far the most challenging thing I’ve ever had happen outside of the beginning of COVID,” Capodagli said.
The fight isn’t over
In response to the ban’s implementation, Slattery and other producers launched a grassroots lobbying effort to persuade Ohio legislators to restore the state’s hemp beverage market. Save Ohio Bevs, a consortium of Ohio-based producers lobbying the state government, pledged to override DeWine’s line-item veto. So far, Slattery said that nearly 17,000 residents have sent messages to elected officials as part of their advocacy campaign to overturn the veto.
Slattery and Horan are both bullish on the future of the hemp-derived THC beverage industry in Ohio. Horan said Estazzi is currently in “wait and see” mode, and the gears of governmental progress grind slowly. Regardless, a change in regulation would be a boon in business for Ohio-based producers.
“It’s still very much a wait and see,” Horan said. “However, internally we are frankly accelerating our conversations about what additional moves we can make as a brand that keep us ready. My personal view is that the 12 to 24 month picture for THC beverages is as bright as can be, and to the extent I’m putting money down, I’m putting money down on the category.”
For Ohio-based retailers like Cappy’s, overturning the veto would carry significant professional and personal stakes.
“It would be a tremendous boon,” he said. “I mean, I wouldn’t have to worry about letting people go at the end of this year. I wouldn’t have to work 65 hours a week while my dad is fighting pancreatic cancer, because I can’t hire enough people this summer, because, quite frankly, the money isn’t there.”
