California issues emergency regulations to ban intoxicating hemp products

(This story was updated at 6:05 p.m. ET with more details and comments.)

California Gov. Gavin Newsom on Friday issued emergency regulations for intoxicating products derived from hemp.

The regulations, proposed by the California Department of Public Health (CDPH), would result in “complete retail prohibition on 90%-95% of popular hemp products for adults,” Jonathan Miller, general counsel of trade group Hemp Roundtable, said in a statement.

According to the CDPH, the regulations come in response to increasing “health incidents related to intoxicating hemp products” and include:

• Establishing a minimum age of 21 to purchase hemp products.
• Allowing no detectable levels of THC or other intoxicating cannabinoids per serving of hemp-derived food, beverage or dietary products intended for human consumption.
• Limiting the number of servings of hemp products to five per package.

Speaking at a news conference announcing the emergency action, California Health and Human Services Secretary Dr. Mark Ghaly said the CDPH encouraged the state to insist on undetectable levels of more than 30 cannabinoids.

“We need to look more deeply … at everything that today we know can be toxic to Californians – in particular, young people,” Ghaly said.

According to the state, the emergency regulations “will take effect immediately upon approval by the Office of Administrative Law.”

Hemp operators frustrated

Jonathan Black, CEO of Cheech and Chong’s Global Holding Co., said an outright ban on intoxicating hemp is unnecessary and unsupported by facts.

The Los Angeles-based celebrity brand has blanketed social media with its hemp-derived product offerings.

“Our products are explicitly designed for adult use and are not targeted at children,” Black told MJBizDaily via email.

“These products are not only tested but also come with accessible third-party lab results, ensuring transparency and trust.

“They are age-gated and marketed similarly to alcohol and tobacco, ensuring they are sold responsibly to adults.”

Adam Terry, CEO and co-founder of Massachusetts-based infused beverage company Cantrip, which sells its hemp-derived products in California stores such as Total Wine & More, expressed surprise that Newsom would effectively ban intoxicating hemp products after his amendments to Assembly Bill 2223 proved a death sentence for the legislation.

“That bill would have had similar effects in effectively tamping down the marketplace,” Terry told MJBizDaily on Friday, adding that the bill that floated through the Legislature earlier this year would have allowed more protections for CBD products.

That is one concern of Case Mandel, CEO of Cannadips in Humboldt County, who said consumers who rely on hemp-derived products to treat medical symptoms will lose access to the products they use daily.

“People who rely on tinctures or other products with full-spectrum CBD will have nowhere to turn,” Mandel told MJBizDaily via email.

“We are incredibly disappointed with Gov. Newsom’s proposed emergency regulations,” he said.

“They are overreaching and are a tactic to kill the hemp industry versus prevent youth use.”

Investing in hemp

Jordan Tritt, CEO and co-founder of The Panther Group, an advisory firm in Atlanta that assists cannabis companies seeking capital, said states will continue to crack down on “the Wild West” of intoxicating hemp.

But that does not deter him from wanting to invest in the space.

“You have to have that long-term view” when making investments, he said, adding that The Panther Group primarily makes investments in infrastructure.

“If we were to get involved in the hemp-derived side, we would be interested more in distribution and logistics,” he added.

Industry executive and longtime advocate Dustin Moore said regulations are needed to rein in the largely unchecked hemp marketplace.

“This action reaffirms the importance of a regulated, reliable supply chain that delivers on promises to consumers and communities,” the co-founder of Northern California-based marijuana retailer and cannabis events operator Embarc told MJBizDaily via email.

“The proliferation of the unlicensed, intoxicating hemp market severely undermines both the licensed supply chain and consumer confidence, while preying on those most vulnerable populations in our society.”

Allegations of underage sales

Terry of Cantrip said Newsom’s emergency regulations are misguided, since intoxicating hemp beverages primarily are sold through liquor stores such as Total Wine & More and, to a lesser extent, adult-use retailers.

“His claim that people are purchasing them somewhere where they’re selling to children and not carding is just not true,” Terry told MJBizDaily in a phone interview.

During Newsom’s news conference on Friday, he singled out a Cantrip delta-9 THC beverage, which is sold throughout the state, including liquor stores near the governor’s home in Marin County.

Terry expects his beverage brand, which uses childproof lids on all its cans, to pull its product off the shelves in California and take a financial hit.

“We’ll probably be taking a pretty big loss in pulling these products back.”

Justin Singer, CEO of Colorado-based Ripple, agreed manufacturers that are making safe hemp-derived THC products likely will pull out of California as a result of the emergency regulations, which will result in “bad actors” doubling down on their presence in the market.

“Unless you have a surveillance mechanism and active enforcement and knock people out for bad acting, you’re just opening the field for bad actors,” Singer said.

“I don’t know why so many Democratic governors think they can thread the needle between regulation and prohibition.”

Hemp regulations needed

But Michael Bronstein, president of the Washington, D.C.-based American Trade Association for Cannabis and Hemp, said he believes Newsom’s announcement reflects bipartisan governors’ increasing frustration with inaction at the federal level.

“It is going to really turn heads in Washington because we have a number of states that are grappling with this issue,” Bronstein told MJBizDaily.

“Not only are (these products) outside of state regulation, they’re outside of federal regulation, and it’s caused a lot of confusion,” he said.

Kate Lavin, Chris Casacchia, Margaret Jackson and Omar Sacirbey contributed to this report.