There's a difference between something being illegal and being able to enforce that law.

OpenRouter and other inference providers won’t be able to openly host the models, for starters. That should cut most (or at least a significant share of) non-local inference, and local inference only works with smaller, less capable models, plus the hardware is hella expensive when you don’t have scale to saturate.

In addition, most companies don’t want to be in a position where a disgruntled employee can report them to authorities and rack up massive fines or worse, even if it’s hard to tell from the outside.

I don't know man. Marijuana is/was banned in most of the US. LOL, how do you ban a plant?