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Third Time’s A Charm: Will California Finally Manage To Regulate Hemp-Derived Products?

Although California has adopted one of the most robust medical and recreational marijuana programs (known as “cannabis” programs), and despite the enactment of the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), the state can’t seem to convene specific legislation around the regulation and oversight of hemp-derived products.

Following the passage of the 2018 Farm Bill, state lawmakers attempted to pass AB-228, which intended to forge a legal pathway for many hemp-derived ingestible products in the state. While the bill made it pretty far, it ultimately died toward the end of the legislative session partially due to strong opposition.

In 2020, at the very end of the legislative session, California lawmakers tried to revive this issue by introducing AB-2028, which also failed to gather sufficient support.

Then, on the eve of this new year, the state legislature introduced a new CBD bill entitled, AB-45. Like its predecessor bills, the goal of AB-45 is to “legalize” a plethora of hemp-derived products. AB-45 contains many concepts originally found in AB-228 but adds some provisions, which, while intended to reach a compromise with former opponents of AB-228’s predecessors, will most certainly encounter opposition from the hemp industry.

Here is a high-level overview of some of the key provisions of AB-45:

  1. Authority: The bill would give the California Department of Public Health (the CDPH) regulatory authority over hemp-derived products, which the agency would need to revise, if need be, once the Food and Drug Administration (the FDA) formerly develops a federal regulatory framework for these products. Despite the current lack of state regulations, the CDPH has released an FAQ in which it adopts the FDA’s position that conventional foods and dietary supplements infused with cannabidiol (CBD) as strictly prohibited and, as such, has taken consistent enforcement actions against in-state manufacturers, distributors and retailers of these products.
  2. Lawful Products: “Industrial hemp products”, which are defined as foods, food additives, dietary supplements, herbs, and cosmetics, for human or animal consumption, won’t be deemed unlawful provided they meet specific requirements. For instance, the products will need to have a certificate of analysis (COA) showing that they contain no more than 0.3% total THC and were derived from lawful hemp.
  3. Prohibited Products: The bill makes clear that hemp derivatives cannot be added to medical devices, prescription drugs, products containing nicotine, tobacco, or alcohol, or any other smokable product (including both smokable flower and vape products). This last category is sure to be an issue for the industry, and the most hotly debated provision during the legislative cycle, as many companies already manufacture and sell smokable hemp products across the state.
  4. Labeling and Advertisement:
    • Labeling: The bill contains fairly comprehensive labeling requirements that are largely consistent with other states’ requirements, including the use of a label, scannable barcode, internet website, or quick response (QR) code linked to the COA of the product batch by an independent testing laboratory that provides a wide range of information such as the concentration of cannabinoids marketed and the expiration date.
    • Advertising: Consistent with the FDA’s existing enforcement actions, manufacturers and retailers of hemp-derived products would be strictly prohibited from making false health claims regarding the therapeutic values of their products.
    • Age Requirements: The CDPH would have the ability to adopt age requirements for the sale of some products. This is an interesting feature of the bill. The state decided (so far) not to require that all hemp-derived products be sold to persons over 21 or 18. Instead, lawmakers propose to give the CDPH the discretion to decide this issue based on a product-by-product basis and based on scientific research. Nevertheless, the bill contains a provision that restricts advertising to people under 18.
  1. Registration Requirements: The following actors would need to register with the CDPH: (1) In-state manufacturers of hemp-derived products; (2) in-state and out-of-state manufacturers of raw hemp extract intended to be infused to finished products by in-state manufacturers; and (3) retailers of raw hemp extract and finished products.
  2. Manufacturing Requirements:
    • Good Manufacturing Practices: Food manufacturing facilities that make products containing hemp derivatives will need to comply with good manufacturing practices as defined by California law, and will be prohibited from using hemp in food products or dietary supplements unless it comes from a state or county that has adopted a hemp production plan in compliance with federal law and the cultivator at issue is in good standing under its jurisdiction’s laws. This, again, is fairly consistent with most states’ regulations of hemp-derived products.
    • Testing: Raw hemp extract would have to be tested to allow its use as an ingredient prior to being incorporated into a product. Testing would have to be completed by an independent testing laboratory. The COA issued by said laboratory would have to show the total THC concentration is below 0.3 percent and any other requirements the CDPH may adopt on this issue. For example, AB-45 provides that the CDPH “may regulate and restrict the cap on extract and may cap the amount of total THC concentration at the product level based on the product form, volume, number of servings, ratio of cannabinoids to THC in the product, or other factors, as needed.”

AB-45 is in its infancy so upcoming amendments are likely, especially to the provisions banning smokable hemp products. It will be interesting to see how California tackles its third attempt at regulating hemp-derived products and, hopefully, for the sake of Californian consumers, that state lawmakers finally succeed. Until then, consumers and companies of hemp-derived products should remember that the sale of these products remains unlawful in the state and that products found in California are not expressly regulated by the CDPH nor recognized as safe for human consumption.

Nathalie practices out of Harris Bricken’s Portland office and focuses on the regulatory framework of hemp-derived CBD (“hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She also advises domestic and international clients on the sale, distribution, marketing, labeling, importation and exportation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s Marketplace. For two consecutive years, Nathalie has been selected as a “Rising Star” by Super Lawyers Magazine, an honor bestowed on only 2.5% of eligible Oregon attorneys.  Nathalie is also a regular contributor to her firm’s Canna Law Blog.