Should Iowa bars, restaurants that sell THC drinks face greater liability?

DES MOINES — Iowa bars, taprooms and restaurants that serve alcohol would face greater civil liability and insurance requirements if they also sell hemp-derived beverages under a proposed bill that advanced this week out of a Senate subcommittee.

Senate Study Bill 3195 would expand the state’s “dram shop” laws, which impose civil liability for selling alcohol to a visibly intoxicated or underage persons, to apply to consumable hemp products.

Dramshop insurance covers liabilities associated with the sale of alcohol, specifically for over service resulting in intoxication. The law allows people who were victims of someone's drunken behavior to file a lawsuit against bar owners and their employees if a patron is overserved and kills or injures others in crashes or other mishaps after leaving the bar. The bill would expand the applicability of Iowa’s dramshop act to include bars, restaurants and other establishments licensed to serve alcohol that also serve THC drinks or edibles.

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Current law caps non-economic damages for pain and suffering awarded to a person injured by an intoxicated person who is overserved at $250,000, unless a jury determines there is a substantial or permanent loss or impairment of a bodily function, substantial disfigurement or death. Economic damages, such as compensation for lost wages or medical expenses, are uncapped.

The bill would increase the cap to $500,000 for those that serve consumable hemp products, such as a hemp-based THC-seltzer, to an intoxicated person who is overserved and hurts someone after leaving the establishment.

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Sen. Dan Dawson, a Republican from Council Bluffs who chaired the subcommittee, said he is concerned about how combining alcohol and THC-infused drinks can have a different effect on drinkers than those who consume just alcohol. Sometimes called crossfading, the mixing of the two intoxicants can intensify the effects of both.

“It just seems appropriate that the establishments that are selling these types of products have a higher liability than the normal alcohol (establishment) out here, because they are selling a product that we don't have a whole lot of information on at this point in time right now,” Dawson said. “ … This is a different product. There's a delayed reaction there. This works differently compared to (alcohol) so that the retailers have to have some liability on this if they're going to sell these.”

Big Grove Brewery, Iowa’s top craft beer brand by sales, purchased a majority share in Climbing Kites, Iowa’s first cannabis-infused sparkling water. The brand, currently available at Big Grove Brewery taprooms and other retail locations in Iowa, gives consumers a new way to get a buzz without alcohol, thanks to its federally legal THC derived from hemp. The drink was launched in 2024 by Des Moines’ Lua Brewing team and co-founder, Scott Selix.

Eric Goranson, a lobbyist representing the Iowa Restaurant Association — which was founded the same year Prohibition ended initially to address the new dram shop liabilities — raised concerns over how establishments would provide training to detect if someone is intoxicated on THC, as well as the impact of the legislation on insurance premiums for Iowa bars, restaurants, taverns and the like.

“We are hoping that this conversation matures and we don't have to reinvent the wheel,” Goranson said. “We'd like to see what other states are doing on this as far as, how does the current standard of training (for employees who) directly serve to visibly intoxicated person relate to this when there's so many more variables involved in THC and where it can be purchased and where and how it impacts the body?

“We feel like we should be responsible for what we should be responsible for. With all the extra variables here, I feel like if we don't do this really well, we're going to be responsible for all kinds of behaviors that have nothing to do with what we’re doing.”

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Sen. Bill Dotzler, a Democrat from Waterloo who served on the subcommittee, said he had mixed emotions about the proposed bill, citing potential impact on bar business from increased insurance rates and concerns about mixing THC and alcohol. Dotzler said he’s tried a hemp-based THC drink and noted his family ran a bar for 40 years.

“I didn't even know a thing about it until the last bill,” Dotzler said of separate legislation to limit the potency of hemp-derived cannabis products sold in Iowa. “So I went, got one and saw how it worked. And I was surprised, but I wasn't hammered, so to speak.”

Dotzler noted the drink had a delayed effect, which can create “an opportunity to consume more before it all hits you.”

Hemp, legalized federally in 2018 by the passage of the Farm Bill, opened the door to commercial production of hemp-based products. Most drinks on shelves today offer THC in doses of 5 to 10 milligrams. While hemp is limited by its THC concentration, there’s no limit on the number of milligrams an individual product can be made with.

House File 2605, which passed out of the House and is pending in the Senate, would set a limit of 4 milligrams of THC per serving and 10 milligrams per package on consumable hemp products sold in the state.

Threase Harms, a lobbyist with Consumable Hemp Advocates, urged lawmakers to clarify definitions of consumable hemp products to address intoxicating vs. non-intoxicating products that include non-psychoactive CBD and low amounts of THC, the main chemical in marijuana that causes the “high.”

Harms said several states have restricted or banned products over 10 milligrams per serving, and that the World Health Organization, National Institutes of Health and other organizations “recognize that there is some therapeutic value” in low-potency CBD products.

“If you can provide definitions for these, then it can get to the issue of what you're trying to control, which is these high-potency drinks that are only THC,” Harms said.

Leslie Carpenter, with Iowa Mental Health Advocacy, said the group supports the bill.

“I feel that there needs to be a responsibility of anyone selling these products and making money on them, because too many people have no idea of the risks,” she said.

She said in other states where high-potency THC drinks are legal, there have been increased incidence of impaired driving and car crashes, and “people going into psychosis, people developing schizophrenia, even when they don't have a family history of mental illness in their family.”

Dawson said he intends to amend the bill, but was still having conversations as to what that would entail. The bill is now eligible for consideration by the full Senate Ways and Means committee.

Elijah Decious of The Gazette contributed to this report.

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