AB-45 is largely a creation of paid lobbyists and out of state CBD corporations developed without consultation from California hemp farmers, retailers, or manufacturers/processors and will disadvantage California based businesses and potentially put hundreds out of business and thousands of Californian’s out of work.
1. Costly and complex regulatory burdens that exceed those required in other states for all California and out of state producers.
- In state and out of state manufacturers must obtain an annual Industrial Hemp Enrollment and Oversight authorization permit and pay authorization and renewal fees to cover the actual cost of implementing this regulatory program including authorization activities, oversight, inspection and enforcement activities as well as a U.C. research fee.
- Extraction, infusion, packaging, labeling, processing, preparing, holding, storing hemp compounds and ingredients all fall under regulated products.
- Out of state manufacturers, including those that produce raw hemp extract, must come from a state that inspects and regulates hemp under a food safety program similar to California’s in order to import product to the state.
- Out of state manufacturers must reimburse the “department” for onsite inspections, travel and other expenses related to this regulation.
2. Criminalizing products that currently sustain existing businesses and giving unrealistic time frames to comply with the law.
- Manufacturers have three months to sell remaining product before needing to comply with the new law.
- Smokable hemp flower and smokable hemp flower products will no longer be able to be manufactured or sold in the state IMMEDIATLY.
- Industrial hemp is prohibited in alcoholic beverages.
- All food that contains industrial hemp must be prepackaged and labeled. Bakeries, coffee shops and restaurants will be unable to sell freshly prepared industrial hemp food items or freshly prepared beverages with CBD.
- Products that fall under industrial hemp manufacturing include pet food, cosmetics, food, food additives, beverages, dietary supplements or herb. Hemp seed is excluded.
3. Hard to understand labeling, testing and dosage requirements for a non-psychoactive federally approved farm commodity, unlike any other dietary supplement, herbal product or food on the market.
- Raw extract final form, batch testing and final form product testing will be required by an approved independent testing laboratory.
- Specific labeling requirements with bar codes linking to test results online is required as per this law.
4. A ban on smokable hemp will be expensive.
- Texas banned smokable hemp in 2019. Shortly thereafter, hemp companies filed lawsuits against the Texas Department of State Health Services claiming the ban was unconstitutional. Plaintiffs cited that they would unjustly incur significant costs related to relocation outside of the state, lost profits during partial closures and reestablishment efforts, and additional labor costs associated with new operations and activities in other states.
- The Plaintiffs in Texas have been successful so far, but not without having incurred significant legal fees and while a Texas Trial Court declared the smokable hemp ban unconstitutional, appeals from the State are anticipated.
- The State of Texas has incurred significant legal fees, all financed by citizen tax dollars. Similar costs would be incurred by the State of California, as well as California companies, forcing businesses to potentially close or move out of state.
5. Big brother comes a knocking.
- The “department” may adopt regulations for record keeping standards and may inspect those records.
- The state has siezure and embargo powers as well as recall powers with respect to industrial hemp products.
- The “department” may inspect financial data, sales data and personal data as needed to enforce the law.
- Samples can be taken by local, state and law enforcement officials at any point along the supply chain and test for verification.