California’s hemp industry is bracing for a potential shakeup as Governor Gavin Newsom pushes forward with emergency rules aimed at imposing strict limits on hemp products. These proposed regulations, driven by concerns over public safety and pressure from the regulated cannabis market, have sparked debate across the state. The restrictions could have a significant impact on California’s cannabis market and even ripple effects nationwide.
Bryna Dahlin, a partner at Benesch Law and chair of the firm’s cannabis industry group, provides insight into how these proposed restrictions could affect California’s cannabis market. According to Dahlin, the financial struggles faced by many regulated cannabis companies have contributed to the push for stricter rules on hemp. The introduction of cheaper hemp products has added further pressure on businesses already struggling to stay afloat.
Dahlin highlights the irony of this move, pointing out that California, often seen as the birthplace of cannabis in America, is now taking a protectionist stance to safeguard the legacy of cannabis over hemp. “It’s the same plant—Cannabis Sativa L—, so it flies in the face of CA’s culture to prohibit it, rather than regulate it when they were the first state to legalize medical cannabis,” she said.
The potential hemp restrictions in California raise broader implications for the national hemp and cannabis industries. Dahlin notes that these markets are closely intertwined, and California’s move could limit growth opportunities for both. “All the MSOs are getting into the hemp game now with versions of their best sellers that are infused with hemp-derived THC… so CA is making a move that limits their cannabis businesses,” Dahlin explained.
She also emphasizes the importance of THC-infused beverages, a popular segment in markets like Minnesota, where they are sold alongside alcohol. “THC beverages are the safest way to consume THC… they do very well when they are in liquor stores and treated like alcohol,” Dahlin said. However, the restrictions in California could lead to the collapse of this growing market segment. “No CA cannabis companies will invest in THC beverages, and any existing beverage manufacturers in CA will have to leave the state and go elsewhere to produce and sell their products,” she added.
Dahlin underscores the diverse regulatory landscape across the U.S. due to variations in state politics and culture. “I doubt you’d see KY and TX wanting to emulate CA’s laws,” she said, highlighting the differing approaches to hemp and cannabis regulation in states like Texas, Kentucky, and Illinois.
As the Benzinga Cannabis Capital Conference approaches, Dahlin’s insights provide a critical perspective on how California’s decisions could influence broader cannabis policies. With hemp and cannabis regulations constantly evolving, the industry will be closely watching to see how this plays out across the U.S.
