California's CBD Market Opens To The Global Market
Legalizing over-the-counter CBD in the world's fifth-largest economy is a huge win for hemp. But, as with all legislation, adjustments are likely needed.
Legalization

California’s Newly Opened CBD Market Is Enticing A Global Market

Legalizing over-the-counter CBD in the world's fifth-largest economy is a huge win for hemp. But, as with all legislation, adjustments are likely needed.
Legalization

California’s Newly Opened CBD Market Is Enticing A Global Market

Author James Eason
Published Oct 19, 2021
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For years in California, low-THC, high-CBD products had been on retailers’ shelves with little regulation. A 2018 ban on hemp-derived CBD in foods, drinks, and dietary supplements attempted to regain control and resulted in raids and product seizures. This made many retailers leery of selling their CBD products in California – but since the signage of Assembly Bill 45, the tides are beginning to change.

When Governor Gavin Newsom signed California AB-45 into law, he opened the CBD retail market to hemp-derived CBD producers. With an estimated $3.2 trillion gross state product, having access to the world’s fifth-largest economy is enticing to the national CBD industry.

“We’ve been working on this bill for the last two-plus years,” said David Culver, head of lobbying for cannabis giant Canopy Growth in Ontario, Canada. “This is going provide that regulatory certainty for retailers in the state so that they’re not worried about products being confiscated,” Culver continued. Canopy makes a Martha Stewart line of CBD gummies and hemp-derived CBD Biosteel sports-drink mixes.

“What this bill really marks [is] 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,” said Doug MacKay, senior vice president of scientific and regulatory affairs for CBD manufacturer CV Sciences.

San Diego-based CV Sciences had been selling its hemp-derived CBD in CVS drugstores everywhere except California. Passage of AB-45 now allows CBD to be sold in medical and adult-use marijuana retailers in California, which CV Sciences will certainly be excited about. According to MJBizFactbook, those stores are projected to have sales of $4.9 – $5.7 billion in 2021 alone.

The bill doesn’t come without concerns for other areas of California’s lucrative cannabis industry, though.

“While this is a win for the hemp industry as a whole … It severely hurts hemp farmers in the state of California who grow smokable-hemp flower,” said Larry Farnsworth, spokesman for the Washington DC-based National Industrial Hemp Council.

The bill hardly addresses the current temporary ban on smokable hemp – flower cultivated for smoking which contains less then 0.3% THC; AKA, it’s non-psychoactive, just therapeutic. The bill stipulates that those products can’t be sold until a new tax is in place, a process that could take years.

The bill has left many hemp farmers feeling that lawmakers sacrificed them in favor of larger CBD manufacturers. Some California hemp producers are even considering legal action.

“We have already started working on [a lawsuit to halt AB 45’s implementation,]” said Josh Schneider, president of the California Hemp Farmers Guild. “We don’t know all the ramifications of this bill, but there are at least as many really bad things that will be caused by it as good things.”

For other hemp activists, they’re focusing on the glass being half full (and maybe that there’s now a glass at all) – especially considering some California officials have advocated banning smokable hemp flower for good.

“Is the bill less than perfect? Sure. Crafting policy is a series of trade-offs,” said Jody McGinness of the DC-based Hemp Industries Association. “Finished legislation always falls short of where you want it to be, but we should take the time to celebrate this as a victory.”

Legalizing over-the-counter CBD in the world’s fifth-largest economy is a huge win for hemp. But, as with all legislation, adjustments are likely needed.

“Some of the onerous and impractical restrictions in this bill are going to create significant problems for manufacturers and farmers alike,” said McGinness. “As an industry, we should celebrate this as the major victory it represents, but already be contemplating how it can be improved in the next session.”

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