Exploring the impact of California’s new hemp regulations on the cannabis industry
California’s Hemp-Derived Cannabinoid Ban: Impacts on the Cannabis and Hemp Industry
California’s cannabis industry is undergoing significant regulatory changes following the state's recent ban on hemp-derived intoxicating cannabinoids. Governor Gavin Newsom's emergency regulations, approved on September 23, 2024, have triggered both legal challenges and concerns from industry stakeholders. The ban, aimed at protecting public health and keeping intoxicating products out of the hands of minors, has sparked a heated debate within the cannabis and hemp communities. Since intoxicating hemp does compete with regulated cannabis, what is the impact on state licensed cannabis businesses? Click here for business listing opportunities.
New Regulations and Restrictions
Under the new regulations, hemp-derived products, including food, beverages, and dietary supplements intended for human consumption, must have no detectable THC or any comparable cannabinoid per serving. These rules, proposed by the California Department of Public Health (CDPH), require all hemp products sold outside of the licensed cannabis dispensary market to be free of intoxicants, impose an age restriction of 21, and limit servings to five per package.
The restrictions have been positioned as part of an effort to close legal loopholes and prevent unregulated THC-containing hemp products from being sold at gas stations, liquor stores, and other retail outlets without appropriate oversight.
Legal Challenge by the Hemp Industry
Despite the intent behind these regulations, the hemp industry has voiced strong opposition. Shortly after the regulations took effect, hemp businesses filed a lawsuit to block the ban. However, on October 11, 2024, Los Angeles County Superior Court Judge Stephen Goorvitch denied the request for a temporary restraining order that would have allowed continued sales of these products while the lawsuit progressed.
In his ruling, Goorvitch emphasized the potential harm to public health, particularly for children, as a reason to keep the ban in place. He argued that the request was a “drastic remedy” and that the risks of lifting the ban outweighed the financial harm that businesses may face in adapting to the new regulations
Public Health vs. Industry Survival
Governor Newsom and state officials maintain that the emergency regulations are necessary to safeguard youth from exposure to THC, and the regulations align with similar efforts being pursued in other states, such as Missouri. Supporters of the ban, including the California Department of Cannabis Control (DCC), claim that these rules are essential for aligning hemp product sales with the state's original intent for cannabis regulation
While businesses can still sell hemp products that contain no detectable THC, many fear that these restrictions will destroy small businesses reliant on sales of hemp-derived cannabinoids. Click here for licensed dispensaries for sale.
What’s Next?
The trial setting conference for the ongoing lawsuit is scheduled for November 2024, where the hemp industry will continue to press for a revision of the regulations. The emergency ban will remain in place until March 2025, unless further action is taken
In the meantime, patients who rely on hemp-derived THC products for pain relief and other medical conditions will still be able to access them through licensed cannabis dispensaries. This move reinforces the role of regulated dispensaries in ensuring safe, adult-use access to both CBD and THC products.
Conclusion: The Path Forward for Hemp and Cannabis
California's regulatory shift reflects the growing tension between public health concerns and the survival of the intoxicating hemp industry versus the regulated cannabis industry. As regulators push for stricter oversight, the legal battle between the state and hemp stakeholders is set to continue. For cannabis greenhouses and dispensaries, these developments may open new opportunities to capture a portion of the market that previously relied on hemp products sold outside licensed dispensaries.
As the industry navigates these regulatory changes, stakeholders should stay informed of the evolving legal landscape to best position themselves for future compliance and market opportunities. Email us for compliant cannabis business and real estate opportunities today!
Comments