California Bill May Change State’s Cannabis and Hemp Industries

On February 7, 2024, California Assembly Member Aguilar-Curry introduced AB 2223. The bill, if passed, would significantly change the state’s cannabis and hemp industries – for better or worse. Today, we’ll take a look at how AB 2223 could change both the cannabis industry and hemp industry in the Golden State.

First though, a brief caveat. AB 2223 was just proposed. The bill is certain to undergo changes as it winds its way through the state legislature. Those changes could be so significant that we end up with a different law at the end of the day. And of course, the bill may not end up becoming law. So take all of the following with a bit of a grain of salt.

#1 The cannabis industry could be allowed to use hemp

AB 2223’s most significant change would be a change to MAUCRSA (the state’s cannabis law) that allows cannabis licensees from selling or incorporating products that include industrial hemp or its derivatives. Manufacturers could procure industrial hemp or derivatives from California Department of Public Health (CDPH) registered persons (including potential out-of-staters), and eventually would be able to procure a CDPH registration at the same premises once regulations are adopted.

Products containing industrial hemp would still have to comply with all legal requirements for cannabis products and would have to be tracked and traced as separate batches. If the law passes, the state has until July 1, 2025 to implement regulations.

#2 The battle over “synthetic cannabinoids” will be fought

If AB 2223 passes, cannabis licensees could not use “incorporate delta-9 tetrahydrocannabinol that has been converted from a hemp-derived cannabinoid.” Additionally, retailers would be forbidden from selling “cannabis, a cannabis product, or an industrial hemp product that contains converted delta-9 tetrahydrocannabinol.” Similarly, the term “industrial hemp” (with respect to existing hemp regulations” will be defined to exclude any “synthetically derived cannabinoid”.

Anyone in the hemp industry is well aware over the myriad issues concerning the precise definition of “synthetic” (see here or here, for example). So it probably won’t come as a surprise to learn that AB 2223’s proposed definition is complicated. Let’s take a look:

“Synthetically derived cannabinoid” means a substance that is derived from a chemical reaction that changes the molecular structure of any substance separated or extracted from the plant Cannabis sativa L. A synthetically derived cannabinoid does not include any of the following:

(1) A naturally occurring chemical substance that is separated or extracted from the plant by a chemical or mechanical extraction process, as long as that naturally occurring chemical substance does not undergo a change in molecular structure.

(2) Cannabinoids that are produced by decarboxylation from a naturally occurring cannabinoid acid.

(3) Any other chemical substance approved by the department in regulation.

This is a lot to unpack, but the bottom line is that changes in molecular structure would deem a cannabinoid synthetically derived. Simply processing hemp won’t count unless there’s a molecular change. With respect to exception (2), decarboxylation alone won’t deem things like THCA converted into THC “synthetic.” But that’s not the end of the story for THCA, nor does it mean it’s legal here. You can read here for some of my thoughts on THCA’s legality. And notwithstanding these exemptions, the CDPH would have authority to exempt even some cannabinoids that meet this definition by regulation.

#3 California reinforces its restrictive total THC standards for the hemp industry

Anyone in the hemp industry is also familiar with the many problems that arise from the USDA’s definition of total THC. California’s last major hemp law (AB 45) adopted a definition that is much more restrictive: the sum of THC + THCA, with THC defined to include any THC (delta 8, 10, etc.) or any other cannabinoid that the CDPH deems “intoxicating.” Ab 2223 reworks these provisions, which essentially appear to have the same effect.

In sum, a product with a high level of any cannabinoid that is intoxicating will be very likely to have a total THC in excess of the state’s 0.3% limit. This means that virtually any hemp produced product (such as THCA flower or delta 8) will be banned. It appears that California is going out of its way to make clear that the state won’t stand for intoxicating hemp products.

#4 New product requirements for the hemp industry

AB 2223 would impose some new standards for hemp food and beverages as follows:

(1) A single serving of an industrial hemp product shall be based on the amount of food or beverage customarily consumed in one eating occasion for that food or beverage.

(2) A single serving of an industrial hemp dietary supplement in pill, tablet, or capsule form shall be one unit.

(3) A product shall not exceed five servings per package.

The bill would also put a total THC cap on final form products, but the drafters forgot to fill in the specific number! (“An industrial hemp final form product shall not have a level of total THC that exceeds _______. A qualified testing laboratory shall establish a limit of detection of ______ or lower for total THC and a sample shall pass if total THC does not exceed the limit of detection.”) In all likelihood, the state will put a low limit on there to once again restrict intoxicating products.

Conclusion

I won’t break down all of the provisions of AB 2223 today, for the reasons I expressed above. The point of this post was to highlight some of the key provisions and to show how it will affect both the cannabis industry and hemp industry. Stay tuned to the Canna Law Blog for more updates on this proposed bill.

Note: Section 2 of this post was updated to clarify statements concerning THCA.