California hemp fight signals long-term struggle with marijuana

The scene at Total Wine & More in Corte Madera, California, reflects a growing trend nationwide.

Gummies infused with 100 milligrams of THC are sold in one corner of the store, while cans of Cantrip root beer infused with 10 milligrams of hemp-derived THC are displayed in another.

Both are being sold at a mainstream retailer – outside of the state’s strict regulations for marijuana products – and both are ostensibly legal under the 2018 federal Farm Bill.

What’s less typical is who lives nearby: California Gov. Gavin Newsom and his four school-age children, the oldest of whom is an incoming high school freshman.

The governor’s physical proximity to one example of the poorly regulated market for intoxicating hemp-derived products – and his concern that youth under 21 can access them – help explain Newsom’s involvement in a last-ditch effort to regulate hemp products under the state Department of Cannabis Control (DCC), several sources in the state capital told MJBizDaily.

‘Hemp should be regulated like cannabis’

Newsom spokesperson Izzy Gardon did not address that question directly in a statement to MJBizDaily.

But Gardon did note that Newsom “is actively exploring further action to close loopholes, increase enforcement and prevent children from accessing unsafe hemp and cannabis products.”

“They should be subject to reasonable health and safety regulations,” he continued, “just like similar cannabis products.”

California lawmakers’ failure to rein in hemp products during an Aug. 15 hearing – and hemp advocates’ subsequent celebration – are the latest indicators that the current status quo is untenable for government and public-health regulators as well as the marijuana and hemp industries.

At some point, most observers agree, hemp and marijuana will be subject to the same regulations.

But when that that will occur and what those regulations will be is another question.

Setback for hemp regulation

Last Thursday, a state Senate committee declined to call Assembly Bill 2223 for a hearing.

That meant the bill’s proposal to regulate hemp products under the DCC – and subject them to the same product-safety regulations and taxes – is shelved for now.

It also means hemp advocates are celebrating, as the setback maintains the status quo for intoxicating hemp-based cannabinoids in California, as evidenced at the Total Wine in Marin County.

The now-defunct bill addressed two related but distinct quandaries, said Ross Gordon, policy director with the Origins Council, a Mendocino County-based advocacy organization for small cannabis farmers.

“Hemp products sold at gas stations and liquor stores” such as Total Wine “is one issue,” Gordon told MJBizDaily.

“Whether and how to integrate hemp into the cannabis supply chain is a different issue.”

Observers believe both issues will haunt state and federal lawmakers and regulators until they’re answered.

Inevitable hemp integration?

The Origins Council staunchly opposed an earlier version of AB 2223, in part because it would have allowed hemp-derived cannabinoids into the state’s DCC framework for marijuana.

That would mean “first-time” competition from out-of-state hemp cultivators for marijuana farmers, whose struggles under heavy taxes and onerous regulations are well-documented and having a notable impact: Sales have declined 16% across the board since 2021, according to one analysis.

Notably, that same proposal was supported in part by the California Cannabis Industry Association (CCIA), a Sacramento-based lobby for large cannabis companies.

Some CCIA members would like to follow the leads of marijuana multistate operators such as New York-based Curaleaf Holdings, which has launched hemp-derived product lines to complement its regulated marijuana products, the agency said earlier this month.

In an Aug. 9 letter in support of the bill, the CCIA noted that AB 2223 “fulfills a longstanding commitment to allow for the integration of hemp cannabinoids into the regulated cannabis supply chain.”

“This will provide an opportunity to substantially enhance consumer access to safe and high-quality products while reducing costs for legal cannabis businesses,” CCIA board President Caren Woodson wrote, in part.

That letter claims that “integration is already a well-established trend across the country” and identifies 18 states where marijuana and hemp products are sold under the same regulatory framework.

Those states include Minnesota, where low-THC beverages derived from hemp are expressly allowed, as well as New York, where critics say hemp-derived products are widely sold outside of age-gated supply chains – a sign of how much work needs to be done to reconcile hemp and marijuana laws.

Hemp at the gas station

With more than four months left, 2024 might yet deliver stricter rules for hemp companies.

Newsom could attach elements of AB 2223 to budget-trailer legislation due at the end of August.

But until a regulatory framework appears that reduces the burden on every seller of THC, regardless of its origin, the fight between marijuana and hemp is likely to continue.

One obvious consequence is preservation of the status quo on display at Total Wine, along with dissatisfaction among power brokers such as Newsom.

The Origins Council’s Gordon noted: “If the focus (of AB 2223) had been narrowed on what to do about hemp at the gas station, it would have had most people agreeing.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com