Don’t get too involved in California’s new hemp law just yet

Last week, AB-45 completed its run through the California legislature and was put up for signature to Governor Gavin Newsom, which is likely imminent. Once signed, the law will go into effect and will pave the way for legal CBD consumables while (at least temporarily) banning any type of inhalable hemp product. If you want to read our previous analysis of AB-45, check out this post.

If you know even a little about the twists and turns in California’s attempts to legalize CBD since 2018, you’ll appreciate how monumental this bill is, at least in theory. In 2019, AB-228 almost made it to the finish line but stopped due to resistance (see my posts here, here, here and here). In 2020, California lawmakers tried (and failed) to do the same with AB-2827 and AB-2028 twice. Personally, I’ve been telling people all year that even AB-45 doesn’t stand a great chance.

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Photo by Viviana Rishe via Unsplash

Now that AB-45 has passed, many people are partying while others (namely inhalable product advocates) are upset. All of these reactions may be premature as things are likely to change significantly in the coming months (assuming Newsom signs AB-45) when the California Department of Health (CDPH) enacts CBD regulations.

Before delving into these regulations, it is important to emphasize that CDPH hates CBD. In 2018, and with no law to back it up or going through any official rulemaking process, CDPH set out to ban CBD foods and beverages in the state through a website FAQ. You can read an older analysis from me on the position of the CDPH here. And at the beginning of this year, CDPH expanded its position to include current products through a revised FAQ.

With that in mind, here are some of the things CDPH can or must regulate under AB-45:

• Good manufacturing practice standards for manufacturers;
• The amount of THC that may be contained in raw hemp extract that is not intended for human consumption (i.e. hemp extract in processing);
• Minimum age for hemp products when an emergency is determined;
• Prohibition of human or animal products that CDPH deems harmful;
• Portion sizes;
• Recording standards;
• THC concentration and cannabinoid ratio for end products;
• Specific pollutant levels (apart from that, the pollutant level standards for California cannabis products are generally transferred to the hemp market via AB-45, and CDPH is free to add even more standards);
• Basically everything else that falls within the purview of AB-45, including things like labeling, license fees, etc.

I’ve worked on hundreds of matters related to CDPH cannabis problems and CBD problems in California prior to AB-45. I have seen (a) how tightly CDPH regulated cannabis and (b) how aggressively they pursued CBD for reasons that are still very unclear to me.

Photo by Anshu A via Unsplash

My only guess is that if – not if – CBD regulations are in place, CDPH will be extremely aggressive and basically outsmart anyone in the industry who doesn’t have the resources to spend tens of thousands of dollars or more on compliance. I firmly believe that the days of the “Wild West” are coming to an end here and companies trying to get into the California CBD industry need to raise serious money and focus on compliance rather than just marketing. I could be wrong, but I don’t think so.

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Also keep in mind that the first regulations are exempt from the State Administrative Procedure Act and are considered “emergency regulations” that come into force immediately while the public comments on them. CDPH could drop the regulations at any time, and if it does, there will likely be an initial period of chaos as people try to get their existing CBD businesses compliant. That too will be expensive.

Don’t get me wrong, all in all I’m glad AB-45 passed and that the state will no longer take an arbitrary and (in my opinion stupid) position on CBD. But we all have to be very tired of what the future holds and be ready to do a lot.

Griffen Thorne is an attorney with Harris Bricken, a law firm with attorneys in Seattle, Portland, Los Angeles, San Francisco, Barcelona, ​​and Beijing. This story was originally published on the Canna Law Blog and was republished with permission.