California’s AB 45 Opens the Door to Manufacture and Sale of Industrial Hemp Products

Hanson Bridgett LLP

Hanson Bridgett LLP

On October 6, 2021, Governor Gavin Newsom signed Assembly Bill 45 (AB 45) into law. AB 45 permits the manufacture and sale of a wide range of products containing regulated amounts of industrial hemp. Below is a brief overview:

What is industrial hemp?

“Industrial hemp” is defined as cannabis plants that have no more than 0.3% tetrahydrocannabinol (THC).

What products qualify?

Products manufactured with industrial hemp will no longer be classified as “adulterated” under the California Sherman Food, Drug, and Cosmetic Law simply because they contain industrial hemp, cannabinoids, extracts, or industrial hemp derivatives. The following categories of products may now be manufactured and sold:

  • Dietary supplements
  • Food
  • Beverages
  • Cosmetics
  • Pet foods
  • Inhalable products*

*Inhalable products may be manufactured in California for sales outside of the state, but may not be sold within California until the California Department of Public Health (CDPH) establishes a tax for these products. Although AB 45 does not establish a taxation format, if the recreational marijuana taxation scheme is any indication, manufacturers and consumers can expect to pay taxes at the state and local level.

What products are not included?

AB 45 continues to prohibit the inclusion of industrial hemp in:

  • Medical devices
  • Prescription drugs
  • Tobacco or nicotine products
  • Alcoholic beverages

Who will regulate?

Under AB 45, the CDPH will serve as the primary regulatory agency. The CDPH will work with the California Department of Food and Agriculture and the Department of Cannabis Control to develop licensing, compliance, and enforcement procedures. Both manufacturers of products containing industrial hemp and their facilities will need to be registered with the CDPH.

What about federal hemp laws?

The FDA has yet to establish any binding regulation for the manufacture and sale of processed hemp-derived CBD products. However, the FDA’s non-binding guidance asserts that manufacture or sale of CBD products remains illegal. Manufacturers and distributors of hemp-derived products will continue to be at risk of federal enforcement actions until the FDA’s position is clarified.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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