California’s new CBD law is attracting attention from cannabis operators far beyond the Golden State.
They have 3.2 trillion reasons to care.
A legal change signed into law by Gov. Gavin Newsom last week opens the world’s fifth-largest economy (with an estimated $3.2 trillion gross state product) to makers of hemp-derived CBD products worldwide.
It’s a change that is grabbing attention from the CBD industry’s largest operators.
“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.
Canopy makes hemp-derived CBD products including Biosteel sports-drink mixes and a Martha Stewart line of CBD gummies.
But Canopy has been holding off on selling those products in California because the state that pioneered marijuana policy wouldn’t allow over-the-counter CBD sales – until now.
“This is the bill that opens up the California market,” Culver told Hemp Industry Daily.
“This is going provide that regulatory certainty for retailers in the state so that they’re not worried about products being confiscated.”
Long time coming
The road to legal over-the-counter CBD in California was bumpy.
Low-THC cannabinoid products have been on California retailers’ shelves for years with little safety regulation.
But a 2018 ban on hemp-derived CBD in foods, drinks and dietary supplements resulted in occasional raids and product seizures.
“We had early success in California, and we built a lot of relationships, and then we kind of had the rug pulled out from under us,” said Doug MacKay, senior vice president of scientific and regulatory affairs at CBD manufacturer CV Sciences.
The San Diego company sells hemp-derived CBD in CVS drugstores and other nationwide retailers, but it pulled products from brick-and-mortar shelves in its home state.
MacKay cited a “strong marijuana lobby” for the holdup in getting CBD in California stores, but he credited hemp and marijuana negotiators for keeping at it until a compromise was made.
“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,” MacKay said.
The new law also opens the door for hemp-derived products beyond CBD to be sold in California’s estimated 1,859 medical or adult-use marijuana retailers.
Those stores are projected to hit sales of $4.9 billion-$5.7 billion in 2021, according to the 2021 MJBizFactbook.
More negotiating to come
Not everyone is happy with the California CBD law.
Many hemp producers in the Golden State point out that the new law leaves intact a ban on smokable hemp, saying that those products can’t be sold until a new tax is enacted, a process that could take years.
“It severely hurts hemp farmers in the state of California who grow smokable-hemp flower,” said Larry Farnsworth, spokesman for the National Industrial Hemp Council, which criticized the bill last month for “picking winners and losers.”
“While this is a win for the hemp industry as a whole, farmers do lose in this legislation,” the Washington DC-based group said.
Some California hemp producers have threatened a lawsuit over the new law.
Another national hemp activist, Jody McGinness of the Washington DC-based Hemp Industries Association, argued that the change in California should be seen as a step in the right direction.
He pointed out that some California officials wanted to ban smokable hemp flower for good.
“Is the bill less than perfect? Sure. Crafting policy is a series of trade-offs,” he said.
“Finished legislation always falls short of where you want it to be, but we should take the time to celebrate this as a victory.”
Kristen Nichols can be reached at [email protected].