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AB45 SIGNED BY GOVERNOR NEWSOM, WITH MAJOR IMPLICATIONS FOR HEMP AND CBD PRODUCTS



**Originally posted October 7th, 2021 by Lauren Mendelsohn on the Law Offices of Omar Figueroa blog. View Original**

Yesterday, California Governor Gavin Newsom signed Assembly Bill 45 (AB45), which has big implications for the hemp, CBD, and cannabis industries. The bill, sponsored by Assemblymember Aguiar-Curry, was an urgency measure, meaning it went into effect immediately upon the Governor’s signing. It adds and repeals 26013.2 of the Business and Professions Code; and amends, adds, and repeals various sections of the Health and Safety Code. Below is an overview of the measure.

New Definitions

AB45 changes the definition of “hemp” and “industrial hemp” in the Health & Safety Code to mean “an agricultural product, whether growing or not, that is limited to types of the plant Cannabis sativa L. and any part of that plant, including the seeds of the plant and all derivatives, extracts, the resin extracted from any part of the plant, cannabinoids, isomers, acids, salts, and salts of isomers, with a delta-9 tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis.” Health & Safety Code § 11018.5. This reflects the current definition of hemp under federal law.

Under AB45, “industrial hemp product” or “hemp product” have been defined to mean a finished product containing industrial hemp that meets all of the following conditions:
(A) Is a cosmetic, food, food additive, dietary supplement, or herb.
(B) (i) Is for human or animal consumption.
(ii) “Animal” does not include livestock or a food animal as defined in Section 4825.1 of the Business and Professions Code.
(iii) Does not include THC isolate as an ingredient. Health & Safety Code § 111920(g)(1).

Additionally, the term “industrial hemp product” excludes “industrial hemp or a hemp product that has been approved by the United States Food and Drug Administration or a hemp product that includes industrial hemp or hemp that has received Generally Recognized As Safe (GRAS) designation. For purposes of nonfood applications, “industrial hemp product” does not include a hemp product that contains derivatives, substances, or compounds derived from the seed of industrial hemp.” Health & Safety Code § 111920(g)(2).

Furthermore, in the context of industrial hemp products, “THC” or “THC or comparable cannabinoid” means any of the following:

(1) Tetrahydrocannabinolic acid.
(2) Any tetrahydrocannabinol, including, but not limited to, Delta-8-tetrahydrocannabinol, Delta-9-tetrahydrocannabinol, and Delta-10-tetrahydrocannabinol, however derived, except that the department may exclude one or more isomers of tetrahydrocannabinol from this definition under subdivision (a) of Section 111921.7.

(3) Any other cannabinoid, except cannabidiol, that the department determines, under subdivision (b) of Section 111921.7, to cause intoxication. Health & Safety Code § 111920(l).

Note how this definition includes the popular and controversial Delta-8 THC.

“Total THC” is defined in AB45 as “the sum of THC and THCA. Total THC shall be calculated using the following equation: total THC concentration (mg/g) +/- the measurement of uncertainty, as defined by the United States Department of Agriculture.”

Incorporation of Hemp into the Cannabis Supply Chain

AB45 requires the Department of Cannabis Control to prepare a report outlining how hemp-derived cannabinoids can be incorporated into the cannabis supply chain by July 1, 2022. Additionally, the legislature has stated their intent to take this report into consideration and make a determination about whether (and if so, how) to incorporate hemp into the cannabis supply chain no later than the 2023-2024 legislative session. Business & Professions Code § 26013.2.

Governance

CDPH has the ability to issue regulations necessary to effectuate AB45, and can do so via regular or emergency rule making. Initial regulations governing industrial hemp will be exempt from the Administrative Procedures Act (APA). Health & Safety Code § 110065. California’s laws and regulations for industrial hemp products will remain in effect until applicable federal regulations are adopted, at which point CDPH will issue new regulations that reflect this. Health & Safety Code § 110036.

Manufacturing

Cosmetics, dietary supplements, food and beverages would not be considered “adulterated” simply because they contain hemp-derived CBD, provided that they satisfy certain requirements, including that the hemp was grown in accordance with a state’s or country’s industrial hemp program. Health & Safety Code §§ 110469, 110611, 111691. This is important because the California Department of Public Health (CDPH) issued two memos over the past few years in which they took the position that CBD couldn’t be included in these types of products for this reason.

Notably, the US Food and Drug Administration (FDA) does not currently approve the use of CBD and other cannabinoids as food additives, dietary supplements, or drugs. Thus, there is a discrepancy between the federal government’s position and this new California law.

Registration

AB45 requires that manufacturers of certain types of industrial hemp products register for a license from the CDPH. Health & Safety Code §§111923.3. These include manufacturers of:

An industrial hemp product that’s a food or beverage
An industrial hemp product that’s a cosmetic
An industrial hemp product that’s processed pet food
A wholesale food manufacturing facility that makes products containing industrial hemp
Raw hemp extract (in-state, or with the intent to import into the state)

An authorization fee and renewal fees will be charged. Health & Safety Code §§ 110469, 111923.3, 111923.5, 111923.7, 111923.9. Hemp manufacturers or retailers who operate in good faith with the rest of AB45 can continue doing so for three (3) months without authorization. Health & Safety Code § 111923.7.

Testing

AB45 requires that industrial hemp-derived ingredients be tested in raw or final extract/distillate form by an independent testing laboratory for total THC content (which must be below 0.3%) and contaminant levels before being incorporated into products. Health & Safety Code § 111925.2. Manufactured hemp products also have to be tested for total THC content. Health & Safety Code § 111925. The testing levels for contaminants are the same as for cannabis. Health & Safety Code §§ 111925, 111925.2, 111925.4. Remediation of industrial hemp product batches would be possible. Health & Safety Code § 111925.6.

Advertising and Labeling

Companies who make, distribute, or sell industrial hemp products must follow applicable packaging and labeling laws, some of which are contained in AB45 and others which exist outside of this measure. The packaging and labeling requirements go into effect 90 days after the law is enacted. Notably, the bill contains similar age-related restrictions on advertising to those imposed on cannabis businesses. Health & Safety Code § 111926, 111926.2.

Inhalable Products and Other Restrictions

AB45 also prohibits the sale of inhalable hemp products within the state until regulations for them are created. Health & Safety Code §§ 111921.5, 111929.4. This includes smokeable hemp in raw plant form, as well as concentrates containing hemp-derived substances (such as CBD) that can be vaporized and inhaled. Once inhalable products are allowed to be produced and sold to customers in California, they can’t be sold to anyone under the age of 21 and can’t contain anything listed in Health & Safety Code § 111929.2.

Industrial hemp is also not allowed to be included in any of the following: medical devices, prescription drugs, products containing nicotine or tobacco, or alcoholic beverages. Health & Safety Code § 111921.5.

Enforcement

CDPH can inspect, seize, embargo, and recall industrial hemp products. Health & Safety Code § 111927. They can also inspect financial data, sales data, and personnel data as needed. Health & Safety Code § 111927.2. Fines and penalties apply in the event of a violation. Health & Safety Code § 111927.4.

The above notes are only a summary — contact an attorney with questions about how AB45 will impact your business.

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Author:

Lauren Mendelsohn

Senior Associate Lauren Mendelsohn is an activist at heart who enjoys helping individuals and businesses navigate regulatory regimes and the justice system. She was named a Northern California Rising Star by Super Lawyers® in 2020 and 2021.

Lauren focuses on cannabis permitting and licensing, regulatory compliance, intellectual property, government affairs (including drafting local ordinances and citizen initiatives, lobbying decision-making bodies, and appearing for clients at administrative hearings), and post-conviction relief.

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