AB45, or Assembly Bill 45, has officially been signed into law by Gov. Gavin Newsom of California last week, opening the state to producers of hemp-derived CBD products worldwide. With California’s estimated $3.2 trillion gross state product, this change has garnered attention from the CBD industry’s largest operators. CBD companies in California could see some changes to the size of the California CBD market with new laws opening to global operators.
CBD, or cannabidiol, which is found in everything from oils, foods, skincare products and more – is available for purchase at thousands of stores nationwide. In California, the CBD industry alone accounted for some $730 million in sales in 2019, more than any other state in the US.
The Consumer quoted David Culver, head of lobbying for cannabis behemoth, Canopy Growth in Ontario, Canada, “We’ve been working on this bill for the last two-plus years…This is going to provide that regulatory certainty for retailers in the state so that they’re not worried about products being confiscated,” Canopy Growth, which produces brands that go as mainstream as a Martha Stewart line of CBD gummies, has a firm grasp on the cannabis and hemp markets.
CBD Regulatory System in the California CBD Market
The demand for a regulatory system to monitor CBD products in California has carried on for years amongst ongoing turmoil between the interconnected worlds of the hemp and cannabis industries. A major dispute surrounds whether to allow inhalable hemp products, a hot topic in the cannabis industry, which overwhelmingly disagrees with this idea. However, an area which both industries can agree on is that there needs to be regulations in place to clean up the messy, unregulated market’s operations. This way, the “bad players” – or those producers lacking integrity or not following the recognized standards, are penalized by losing access to the largest wellness market in the US.
Senior VP of scientific and regulatory affairs for CBD manufacturer CV Sciences, Doug MacKay stated, “What this bill really marks a clear unambiguous pathway to market that gives retailers a very clear way to work with responsible CBD companies that are willing to follow the laws and have the right labeling,” But the bill barely addresses the hot button issue and the current, temporary ban on smokable hemp flower. Smokable hemp flower contains less than 0.3% THC and is non-psychoactive, allowing its users to benefit from the therapeutic properties present within the hemp without worrying about the heady effects produced by THC.
Understanding the Bill for CBD Companies in California
The bill has left a bad taste in the mouths of many hemp farmers who feel as though their lawmakers eschewed their needs in favor of larger hemp producers. They are so dissatisfied with these new stipulations that some are poised to take legal action with the state. The main cause of animosity stems from the new bill’s language that smokable hemp products can’t be sold until a new tax is in place, a process that could take years, leaving hemp farmers behind as other sectors cash in.
For some background on the issue, in 2018, Congress passed the 2018 federal Farm Bill that removed hemp – which is defined as cannabis and derivatives of cannabis with extremely low concentrations of THC, from the definition of marijuana in the Controlled Substances Act (CSA). Despite it’s removal from the CSA, the Farm Bill preserved the FDA’s authority over hemp products. This oversight by the FDA means that hemp products must meet any and all applicable FDA standards. Prior to this, the hemp industry was hopeful that hemp-derived cannabinoids, primarily CBD – would soon be introduced to products such as food, beverages, and dietary supplements, but their hopes were not met by the FDA, which squarely denied this request.
The FDA concluded that it was unlawful under the FD&C Act to include CBD foods and dietary supplements in interstate commerce. Making this bill a major shift in California rhetoric.
California’s AB45 would establish funds to enforce regulations and give state public health officials the authority to seize products that fail testing standards. The bill goes further, creating a database of licensed manufacturers, centralizing information, in turn, making it easier for enforcement officials to monitor whether products in stores are approved. The capability to regulate the industry is a welcomed shift, as recent studies conducted by the FDA and private companies showed that less than half of 147 products it randomly tested contained the amount of CBD advertised on the label.
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