Last week, California lawmakers passed AB-45, a bill that expressly permits the manufacture, distribution, sale, and marketing of finished products containing nonintoxicating hemp-derived extracts and cannabinoids, including cannabidiol (CBD). Finished hemp products include foods, dietary supplements, and cosmetics intended for human or animal consumption that do not contain THC isolate.
If signed into law by Gov. Gavin Newsom, AB-45 would go into effect immediately and would change California’s love-hate relationship with finished hemp-derived products. If you follow this column, you may recall that in July 2018 the California Department of Public Health (CDPH) issued an FAQ on its website in which the state agency took the position that CBD ingestibles (i.e., foods, beverages, dietary supplements, and animal products) were adulterated, and thus, deemed unlawful under California law — this position aligned squarely with that of the FDA. CDPH later revised its FAQ to expand its policy to CBD cosmetics as well. In the past two and a half years, CDPH, along with local departments of public health, took consistent enforcement actions against these products without ever going through the proper rule-making process.
If the bill is enacted — Newsom is expected to sign this bill any day now but has until October 10 to do so — AB-45 would force CDPH and other local agencies to finally regulate these products, help the industry blossom, and offer Californian consumers the peace of mind that these popular products are safe.
As of the date of this post, companies wishing to lawfully enter the California market would have to comply, at a minimum, with the following requirements:
Registration With CPDH And Manufacturing Practices
Manufacturers that produce, package, label, hold, or store a hemp-derived food, beverage, or cosmetic intended for human or animal consumption, or raw hemp extract will have to register with CDPH and meet current good manufacturing practices. Out-of-state manufacturers who plan on importing raw hemp extract into Callifornia would also be required to register with CDPH. In addition, manufacturers would need to obtain an annual “industrial hemp enrollment and oversight authorization” from the state agency.
Authorized Products
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AB-45 permits the use of hemp and hemp extract in food products, cosmetics, and dietary supplements intended for human and animal consumption. That said, hemp can only be used in dietary supplements or food products if all of the hemp used in these products comes from a state or country that has an established and approved hemp program that inspects or regulates hemp under a food safety program or equivalent criteria to ensure safety for human or animal consumption; and the hemp grower is in good standing and compliance with the laws of the state or country of origin.
Until the State Senate and Assembly enact a tax on inhalable products, these products will only be permitted for out-of-state sale. Following the enactment of such tax, CDPH would be required to regulate these products, which would then become available to consumers 21 or older. Although AB-45 does not define “inhalable products,” it expressly prohibits the manufacture and sale of hemp-derived products that contain nicotine and tobacco.
Other prohibited products include medical devices, prescription drugs, alcoholic beverages, products containing cannabinoids produced through chemical synthesis, products containing THC isolate as an ingredient, and any other product that CDPH may deem to pose a risk to human or animal health through its future regulations.
Testing Requirements
Raw hemp extract will have to be tested before being incorporated into a finished product. Any hemp-infused product distributed or sold in California will need to have:
- A certificate of analysis from an independent testing lab that confirms both that the industrial hemp raw extract, in its final form, does not exceed any allowable THC concentration CDPH may determine during the rule making process and that the mass of the extract used in the final product does not exceed a THC concentration of 0.3 percent.
- The hemp product was produced from hemp grown in accordance with California law or, for out-of-state products, in accordance with USDA requirements.
Additionally, AB-45 will require contaminant testing at the same levels for state-regulated marijuana (known as “cannabis” in California). This is significant because many other states do not require such stringent contaminant testing.
Labeling And Advertising Requirements
In addition to complying with the general labeling and marketing requirements imposed under the State’s Health & Safety Code, manufacturers, distributors, and sellers will need to ensure that the packaging and labeling of their products include a label, scannable barcode, internet website, or QR code linked to the certificate of analysis of the final form product batch by an independent testing lab that provides specific information, such as the concentration of cannabinoids present in the product batch, including, at minimum, total THC and any marketed cannabinoids or ingredient, as required by CDPH in future regulations and the levels within the product batch of contaminants. It is worth mentioning that these requirements will only apply to products manufactured 90 days or more after the enactment of AB-45.
Companies will also need to ensure that any advertising or marketing placed in broadcast, cable, radio, print, or digital communications is only displayed where at least 70 percent of the audience is reasonably expected to be 18 years of age or older.
Lastly, companies will be prohibited from making any false health-related statements.
CDPH may — and is highly likely to — adopt regulations imposing additional, more stringent requirements than those found in the bill, such as an age requirement and maximum serving sizes for these products.
As mentioned earlier in this post, CDPH has been aggressive, even hostile, toward the CBD industry, so I anticipate the state agency will take a similar approach following the passage of AB-45. Moreover, given the fact that some California marijuana stakeholders opposed the bill and prior iterations on the grounds that it proposed more lax laws than those that apply to marijuana (i.e., “cannabis” under California law) — hence many of the changes that apply marijuana-type restrictions on hemp-derived CBD products, it is reasonable to expect CDPH will aggressively regulate these products.
All of this is to say that while the upcoming enactment of AB-45 is a positive thing for CBD companies and California consumers, the industry should closely monitor both the effective date of the law and any regulations proposed or issued by CDPH to ensure compliance with any future hemp regulations that would impact their business operations in the state. In addition, stakeholders should fully expect that such regulations will come and that they will be restrictive.
Nathalie Bougenies chairs Harris Bricken‘s hemp CBD practice group and focuses her practice on health and wellness, in addition to corporate transactions and regulatory compliance. For the past three years, Nathalie has helped clients navigate the complex regulatory landscape of hemp products intended for human consumption and advises domestic and international clients on the sale, distribution, marketing, labeling, and importation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s “Marketplace.” She also authors a weekly column for “Above the Law” that features content on cannabis policy and regulation and is a regular contributor to her firm’s “Canna Law Blog.” For three consecutive years, Nathalie has been named Rising Star by Super Lawyers.