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Update: Here’s What AB 45 Means For the California Hemp Industry

As we mentioned in our last post, many bills are headed to Governor Gavin Newsom’s office to be signed into law. One of them is Assembly 45, which is a measure to create a formal pathway and legal use of hemp-based CBD in foods, beverages, cosmetics, and other products in the state. from California.

The majority of people in the cannabis and hemp industries are excited about this bill, seeing it as a huge win and an opportunity to open up the retail market as well as small farmers and businesses across the state. . Eventually, this would lead to allowing cannabis companies to sell hemp products alongside their cannabis supplies.

However, the bill also includes a temporary ban on hemp products intended to be smoked, including CBD flower to help kick-start the rise of CBD-infused products, which could generate up to $1 billion. dollars from fresh sales. With that in mind, many hemp growers are completely against Assembly Bill 45.

A coalition of hemp growers is preparing a lawsuit that would stop the implementation of the bill. Since smokable products will be banned, hemp pre-rolls and cigarettes, concentrates and flowers would be illegal for sale in California. While the bill would allow California hemp growers to sell these products out of state, they won’t be able to do so in California until the legislature establishes a new tax system.

Assemblywoman Cecilia Aguiar-Curry has previously explained the issue, saying she plans to submit a tax bill next year to compensate. However, there is a good chance that the legislature will not approve the proposed bill for several years.

Many hemp and CBD growers in California are small businesses that may not be able to wait that long. The coalition’s main complaint is that this bill would sacrifice these small farms for the benefit of larger CBD manufacturing companies.

Josh Schneider, president of the California Hemp Farmers Guild, said, “We have already started work on (a lawsuit to stop the implementation of AB 45). We don’t know all the ramifications of this bill, but there will be at least as many bad things to come out of it as good things.

Before the bill was amended, it provided for a complete ban on smoking hemp products. Therefore, moving to a temporary ban was a small victory, but having the ability to sell their inhalable products is still essential for the future of hemp growers. There will be significant impacts on the marijuana and hemp industries.

Those who will be most affected will be those in the hemp industry. In 2018, the state Department of Public Health banned hemp additives in consumer products, including food and beverages. AB 45 reverses this ban and turns the California consumer market over to huge manufacturers of hemp products.

As for legal cannabis businesses, the bill will crack down on unlicensed CBD stores that may have sold marijuana and intoxicating hemp products. It could also create an uptick in sales of high-CBD cannabis, transferring up to $1 billion to the cannabis industry and taking more from the hemp industry.

Many cannabis growers and dispensaries can even start cultivating their own strains of CBD since only they will be able to supply it. As unlicensed CBD stores are pushed out of business under AB 45 regulations, more market share opportunities will be created for licensed cannabis retailers.

Another opponent of the bill, the Humboldt County Growers Alliance (HCGA), is also concerned about testing standards for smoking hemp products. There’s a huge disconnect between the testing standards for cannabis and hemp, and HCGA policy director Ross Gordon said that, as written, AB 45 “n’t doesn’t quite get there.”

Smokable hemp should be tested to the same standards as cannabis, as the hemp industry is going to change drastically. As currently worded, this issue has not even been addressed.

As for the next steps, the Ministry of Health will have to establish emergency regulations for the implementation of the bill in the coming months. The Department of Cannabis Control should have a report ready by next July outlining how newly legal hemp products will be overseen.

Lawmakers will also have to consider the possibility of a new tax on smokable hemp products that may be politically difficult to agree on. There are many objections to new taxes in any capacity.

However, proposing a tax measure for hemp while reducing some of the taxes on cannabis could make it more accessible. Broader tax reform could gain more support.

Ultimately, time will tell what happens with AB 45. Farmers can take legal action to suspend the bill to protect their businesses, but if the bill does eventually pass, it will take do a lot to help regulate the industry with taxes and remove the temporary ban. on smokable hemp products.

[OCTOBER 2021 UPDATE]: The truth about the new AB-45 laws

Since the original publication date of this article, Assembly Bill 45 has been signed into law. This closely watched bill was heavily lobbied to push it through. The bill offers a long list of positives and negatives, which we’ve broken down below. Here’s everything made legal or illegal by AB 45

  • AB 45 amends the Sherman Food, Drug, and Cosmetic Act so that the presence of CBD and hemp derivatives does not render supplements, foods, beverages, cosmetics, or pet foods considered harmful. adulterated. In January 2021, CBD was considered a dangerous additive because the FDA does not regulate it. This amendment exempts CBD from the definition of THC. However, Delta-8 THC, along with THCA, Delta-9, and Delta-10 THC, are still considered THC and are now illegal in finished hemp products.
  • It establishes new registration requirements, employs new testing laws, governs packaging and labeling, and bans the manufacture and sale of smoking hemp products until taxes are enacted.
  • Before being incorporated into a product, all finished hemp products must be tested in raw extract form by an independent testing laboratory.
  • If a batch fails the tests, it can be reprocessed or corrected. It cannot be sold until it has passed all testing requirements.
  • AB 45 ensures that all hemp products must be made with hemp from tested and regulated hemp programs in other states or countries.
  • AB-45 also gives the California Department of Public Health the authority to add additional regulations, such as imposing an age requirement on the purchase of hemp products or setting cap on maximum power levels.
  • AB 45 legalizes the sale of non-smokable hemp products in California retail stores. However, this requires the health department to prepare a report for the governor and the legislature outlining what will need to be done to include hemp cannabinoids in cannabis dispensaries.
  • AB 45 imposes a temporary ban on smoking hemp products in California until the legislature establishes a new tax system, which could take years.
  • AB 45 does NOT prohibit the manufacture of inhalable hemp products for sale in other states, as long as other state laws permit.
  • AB 45 requires hemp products to be sold with a certificate of analysis from a laboratory confirming that the product contains less than 0.3% THC and does not contain hemp derivatives such as delta-8 THC.
  • AB-45 requires manufacturers of hemp-infused products to register with the Department of Health, just as any other food or cosmetic manufacturer would.
  • AB 45 prohibits manufacturers or sellers of hemp from making health-related claims about hemp products. It also prohibits marketing to children and pregnant or breastfeeding people.
  • AB 45 describes the elements that must appear on product labels, including the name of the products, a label for the test results, the name and telephone number of the manufacturer, seller or distributor, the batch number, potency information, contaminant information, an expiration date, compliance statements for children and pregnant or nursing women, and a text statement “THE FDA HAS NOT EVALUATED THIS PRODUCT FOR SAFETY OR EFFECTIVENESS.”
  • Manufacturers must pay for a license and obtain industrial hemp registration and oversight permission from the Ministry of Health to manufacture hemp products. Fees paid will go into a fund used for licensing activities and monitoring, inspection and enforcement activities.
  • AB 45 also ensures that the California Department of Food and Agriculture, the State Department of Public Health and the Department of Cannabis Control can work together on compliance and enforcement against unlicensed manufacturers.

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