California hemp bill could provide new opportunities for marijuana firms

California marijuana legislation

Two bills in the California Legislature that would establish a new regulatory framework for hemp-infused goods – including CBD-infused foods and drinks – are poised to become law this year, which could jump-start the state’s nascent hemp industry and likely give marijuana businesses an opportunity to expand into a federally legal crop.

But few in the hemp and marijuana industries are happy, and the bills are likely to be amended.

Assembly Bill 45 and Senate Bill 235 – which are identical and moving along parallel paths – have the support of Gov. Gavin Newsom and many legislators, sources told MJBizDaily.

Assembly member Cecilia Aguiar-Curry, the primary sponsor in the lower chamber, gave the measures a “95%” chance of becoming law this year.

If either bill passes, the state’s hemp market could grow significantly, and if they’re amended, as advocates hope, licensed marijuana businesses could have more opportunity to capitalize on hemp and CBD products. 

“These bills will be game changers as far as opening up the broader hemp industry in the state of California,” said Eddie Bernacchi, director of the California Hemp Council, noting that passage could pave the way for hemp-infused goods to be sold at convenience stores or in supermarkets.

Yet, several provisions will likely elicit amendments, according to hemp and marijuana executives.

Problematic provisions

For hemp farmers, a proposed ban on smokable hemp flower is a major problem.

“The approach has been, ‘We will give you regulation of CBD, if you will give us a smokable-flower ban …'” said Josh Schneider, the CEO of San Diego-based Cultivaris Hemp.

“That is not a trade the farmers are interested in doing, because it won’t be comprehensive enough to actually deliver benefits to the farmers growing hemp.”

Schneider said an April survey of 34 farmers by the Hemp Farmers Guild found most believed a ban would drive them out of business, given that smokable hemp flower comprises most of their profits.

There were 479 licensed hemp farmers in the state as of 2020, according to the California Department of Food and Agriculture.

“We need to be careful that the medicine being proposed here, the cure can’t be worse than the disease, and right now, unfortunately, that is the case,” Schneider said.

“It’s going to be hard to get hemp farmers to compromise with a gun to their head, and that’s what they – that’s what I – feel like the smokable hemp flower ban is.”

But Assembly member Aguiar-Curry indicated that eliminating the ban might be a deal breaker for Gov. Newsom, who sources said was the reason the provision was included.

“You have to realize that we have to make sure we can get this bill through with the governor, and smoking, vaping, he doesn’t support smoking,” Aguiar-Curry said.

“I want to support whichever way we can make this work. But I think we have to be really honest with ourselves, knowing the stance of the governor, will he or will he not allow a bill to go through that has smokables in it? That’s one of those hurdles that we have.”

Bernacchi said the Hemp Council is proposing an amendment that would clarify that licensed marijuana businesses are allowed to grow, manufacture and sell hemp goods. Marijuana businesses are currently prohibited from doing so unless they set up separate hemp companies.

Marijuana concerns

Trade associations for the marijuana industry want their own amendments.

In an April 13 letter to Aguiar-Curry and state Sen. Ben Allen, the primary sponsor of SB 235, a coalition of marijuana businesses led by the Humboldt County Growers Alliance (HCGA) outlined three issues to address:

  • Loopholes that could allow for hemp products with psychoactive properties comparable to marijuana to hit the legal market, either by including delta-8 THC or by underestimating the actual level that 0.3% THC could mean for hemp-infused goods.
  • Mandatory lab testing parity to require hemp products undergo the same rigorous testing as marijuana goods.
  • Required product labeling to clearly state which cannabinoids are included in products.

The psychoactive loopholes are perhaps the largest concern for marijuana companies.

Many see that as potential competition. They also are concerned the loopholes could accidentally allow for THC-infused goods that are far more powerful than legal marijuana-infused products.

For instance, in both bills, beverages and foods could contain up to 0.3% THC by weight, which is the common legal threshold for hemp.

But in a 16-ounce beverage – a common size for infused drinks sold to consumers – that would equate to more than 1,300 milligrams of THC, which far outstrips the maximum legal limit of 100 milligrams for marijuana-infused drinks.

Marijuana topicals, by contrast, are allowed to contain up to 1,000 milligrams of THC.

“There’s going to be hemp products that are stronger than cannabis” if the bills aren’t amended properly, said Kenny Morrison, the president of the California Cannabis Manufacturers Association.

But Aguiar-Curry said that’s another area in which she’s dedicated to getting the language of the bills corrected.

“I want to make sure we don’t allow loopholes for psychoactive hemp products, so we’re working on that,” Aguiar-Curry said.

A political football

The bills have become political hot potatoes, with trade associations and individual companies logging their support or opposition with the sponsors.

According to legislative analysis, opponents of SB 235 include a variety of marijuana trade groups:

  • Coachella Valley Cannabis Alliance Network
  • Long Beach Collective Association
  • San Francisco Cannabis Retailers Alliance
  • Santa Ana Cannabis Association
  • United Cannabis Business Association

Supporters of AB 45 and SB 235, meanwhile, include a mix of hemp and marijuana businesses and trade associations:

  • California Cannabis Industry Association
  • California Hemp Council
  • Caliva
  • Canopy Growth Corp.
  • Charlotte’s Web
  • Cronos Group
  • Eden Enterprises
  • U.S. Hemp Roundtable

The divide in the hemp and marijuana industries over the bills has led to finger-pointing by both sides and political battle lines being drawn within the MJ industry.

But some, including Aguiar-Curry, are hopeful a compromise can be reached.

“If we can’t, within our own state, figure out how to work with what should be a supportive sister industry … California will see an extinction-level event five times greater than it has through any other pivotal moment in time,” predicted Pamela Epstein, general counsel for Hayward-based Eden Enterprises, a licensed marijuana business that also has hemp interests.

John Schroyer can be reached at [email protected].