Earlier this month, Governor Gavin Newsom proposed new emergency restrictions on California’s hemp industry, citing an urgent need to protect children. His concern: a class of loosely regulated products that contain intoxicating levels of THC, the compound known to drive cannabis intoxication.
While many agree that some changes are necessary, many business owners and consumers worry that the governor’s new rules are too strict and will hurt a nascent industry just about to enter the mainstream.
The critics say that Proposed Regulations The bill would effectively outlaw a wide range of popular tinctures, capsules, beverages and other products made from industrial hemp, including those that contain mostly CBD, a non-intoxicating cousin of THC.
Such products — ranging from mild CBD sleep gummies to potent THC-filled beverages — are growing in popularity. Although their effects may be similar, these hemp-based products are different from those that contain cannabis-derived THC sold in many licensed dispensaries.
Cannabis-derived products are widely available at liquor stores, gas stations and smoke shops, which the governor cited as one of the key concerns motivating his action.
Newsom announces proposed state emergency rules On September 6thAfter a bill to regulate the cannabis industry failed in the state legislature, the regulations are still subject to administrative review; if they are enacted, it would become illegal for cannabis products to contain any “detectable” amount of THC.
The proposed rules also ban a list of about 30 “comparable” compounds known as cannabinoids, some of which are naturally occurring and others are synthetic chemicals that mimic the effects of THC (short for tetrahydrocannabinol).
Most cannabis industry advocates acknowledge that regulations need to change to ensure products are safe and available only to adults, but they said Newsom went too far by taking a zero-tolerance approach.
Among those concerned are Jacob and Lindsay Dunn, owners of So Eden Organics, which operates out of a small space in La Verne. They produce, package and ship a range of gummies and tinctures made from industrial hemp, which buyers consume to help them sleep better or to relieve pain, anxiety and other ailments.
When the Dunns, who have a 2-year-old son and another child on the way, first met a decade ago, Jacob was still working from his kitchen table, selling CBD capsules to medical dispensaries. Now his annual gross sales are about $500,000, but Jacob said new regulations could cut that total in half overnight because many of his products contain low doses of THC.
For example, each popular sleep gummy from Sleep Eden contains 2.5 mg of the compound. Many recreational cannabis products contain 5 to 10 mg or more each.
Jacob Dunn has several relaxation gummies from So Eden.
(Gina Ferrazzi / Los Angeles Times)
“This is absolutely a family-run small business,” Lindsay Dunn said Monday. “It’s hard to know if we can launch new products right now … it’s a big deal. It’s a huge expense.”
Newsom’s office and the state Department of Cannabis Control referred questions to the California Department of Public Health, which said the emergency rules were in response to “an increasing number of health incidents related to intoxicating cannabis products that state regulators have found being sold throughout the state.”
The agency said it has received “an increasing number of complaints about illegal, intoxicating industrial hemp products in retail environments.”
If approved by the state Administrative Law Office, the emergency regulations will remain in effect for at least 180 days. The governor has said that violating products should be removed from shelves immediately after the changes go into effect.
Both cannabis and THC remain strictly regulated under federal law. But hemp — a low-THC variety of the cannabis plant that has long been used in commercial products like paper and rope — got a boost from the 2018 Farm Bill, which loosened federal restrictions.
Across the country, states are grappling with how to regulate the growing interest in consumable products containing hemp-derived THC.
Some states have embraced the trend. In Minnesota, one estimate suggests cannabis beverages could eventually generate $200 million in sales per year. The state has implemented registration and testing requirements. Hemp Beverage Festival in Minneapolis In June, it allowed people to sample products from dozens of brands with signs that read, “Smoking is prohibited.”
Advocates say this approach limits adult access while helping the industry grow and prosper.
A lawsuit in Missouri helped the state to recover Less than two months after Governor Mike Parson announced an executive order regulating cannabis products, new restrictions also apply in New Jersey Facing legal challenges,
Jacob Dunn keeps So Eden’s essential oils in the refrigerator. Dunn worries that new regulations on the cannabis industry proposed by Governor Gavin Newsom could reduce his company’s sales by more than half.
(Gina Ferrazzi / Los Angeles Times)
Companies that make cannabis products say tighter restrictions are wrong.
“It’s devastating for a lot of people,” said Christopher Lackner, president of the Hemp Beverage Alliance, a Colorado-based trade group.
“Why should this be a controversy?” he said. “Regulate it, put it on the shelves next to beer, wine or hard seltzer, put an age limit on it, and tax it like an adult beverage, regulate it like an adult beverage. And everybody wins.”
Ajay Narain, chief executive of Beacon Beverages, based in the city of Campbell, near San Jose, said his company in February pivoted away from alcoholic beverages to mocktails containing hemp-derived THC and CBD.
Business started out slow, but picked up once Beacon’s alcohol-free Key Lime Margaritas and Gin & Tonics hit the shelves of major retailers like BevMo and Total Wine & More.
Now, Narayan says he worries Newsom’s “absurd” new rules will effectively “kill the industry” statewide.
“A lot of businesses are going to close,” Narayan said. “They’ve just pulled the carpet out from under them. And again, this is totally unnecessary. Regulate, don’t eliminate.”
Nationwide, states are at odds over how to regulate the growing interest in consumable products containing THC derived from hemp.
(Gina Ferrazzi / Los Angeles Times)
In 2021, Newsom approved a state law that limited the total concentration of THC to 0.3% in food, beverages, and cosmetics that contain hemp, and defined how such products must be tested and labeled.
But Newsom and members of his administration have claimed that many companies are exploiting a “loophole” that allows them to sell products with intoxicating levels of THC in places where minors might purchase them.
On a recent Tuesday evening, an assortment of cans in flavors including lemon lavender and a mock Old Fashioned cocktail were prominently displayed at the end of an aisle in front of the BevMo location in Torrance. Signs with the words “THC INFUSED” were affixed in bold letters beneath each row of beverages.
A study released this month by BDSA, a Colorado-based company that analyzes cannabis and hemp industry data, said these products have “carved out a lucrative niche that circumvents many of the challenges facing the regulated cannabis industry.”
“Unlike cannabis, these products … can be produced, distributed, and sold with minimal legal barriers, making them a popular commodity,” the report says.
Some players, such as the California chapter of the National Organization to Reform Marijuana Laws, or Cal Normal, say Newsom made the right decision in reining in sales at everyday retailers.
But they denounce the harm the proposed rules could cause to people with medical and mental health conditions who benefit from non-intoxicating products that would also be made illegal.
“We fully support keeping intoxicating cannabis products off the retail market … but they’re overstepping the mark. They’re going after these non-intoxicating cannabis medicinals that have been widely used for many years now,” said Cal Normal Director Dale Gieringer.
Cal Normal’s Dale Gieringer says the proposed regulations could harm people with medical and mental health problems who benefit from non-addictive products “that have been widely used for years.”
(Jeff Chiu/Associated Press)
Ted Whitney, chief beverage officer at Danville-based Cheech & Chong Global Holding Company — which sells recreational cannabis products as well as alcoholic cannabis-infused products — said cannabis could become a nine-digit industry within a decade if these changes aren’t adopted.
Whether the state can meet this optimistic forecast remains to be seen. The recreational market, sold at low prices by illegal dealers and burdened by heavy taxes and red tape, is struggling. compared to some states,
Whitney argued that marijuana is safer than other common products like tobacco and alcohol. He said the best way to keep kids safe and grow the state’s economy is to take a more balanced approach.
“We can improve safety, we can improve regulation, we can improve revenue,” he said. “Let’s make this a win-win instead of a lose-lose.”
