The day after California Gov. Gavin Newsom's emergency ban on all cannabis-derived THC products went into effect, a group of cannabis-related businesses, including Cheech & Chong's cannabis company and the U.S. Hemp Roundtable, filed a lawsuit in Los Angeles County Superior Court on Tuesday seeking to overturn the new rule.
Governor Newsom's ban effectively halts the sale of hemp products across California, including popular items like hemp THC beverages and medical CBD products.
“Importantly, at the heart of the Department's emergency regulations are provisions that go far beyond the limitations contemplated in AB 45 by banning all hemp products unless they contain detectable levels of THC,” the complaint states.
Previously, AB 45 created a regulatory framework for the manufacture and sale of hemp products in 2021. However, Newsom argued that these regulations allowed minors to access intoxicating products containing hemp-derived THC.
Ted Whitney, chief beverage officer for Cheech & Chong Global Holding Company, known for its rigorous testing procedures, said earlier that the proposed ban ignores the preferences and rights of adult consumers.
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“While we agree with the Governor's office on the importance of public safety, we firmly believe a blanket ban is misplaced. Coordinated regulation involving both industry and state agencies will more effectively protect public safety and respect consumer choice,” Whitney said. “It is unfortunate that the proposed amendment and its potential to generate $210 million in tax revenue was overlooked. This oversight not only deprives Californians of a legal and safe market, but also inadvertently benefits illegal operations.”
Related article: Cheech & Chong Brand CEO talks cannabis retail expansion and design that “resonates with 52-year heritage”
Litigation
The plaintiffs added that the new regulations are “draconian” and will deal a devastating blow to small businesses in the emerging industry.
“This is the equivalent of demanding that candy no longer contain sugar starting tomorrow,” the plaintiffs said in the complaint. “Plaintiffs and their members will suffer millions of dollars in losses from existing, in-production, and future sales of cannabis and cannabis products that legally contained THC under California and federal law but were prohibited overnight by the emergency regulations.”
The plaintiffs said California's “inaction over the past three years is not sufficient grounds to declare a sudden emergency and circumvent the thorough process of regular rulemaking.”
According to the lawsuit, Governor Newsom's “emergency” rules violate California and federal law. “In formulating and issuing these rules, the Department acted entirely outside the bounds of applicable California law,” the lawsuit states.
What's next?
The plaintiffs plan to file another petition on Wednesday seeking a temporary restraining order, which is expected to halt enforcement of the ban while the legal proceedings continue.
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