California's hemp industry faces potential upheaval as Gov. Gavin Newsom moves to enact emergency rules that would place strict restrictions on hemp products.
The proposed regulations sparked debate across the state, driven by public safety concerns and pressure from the regulated cannabis market. These regulations could not only reshape California's cannabis market, but also have ripple effects across the country.
Impact on California market
Brina Dahlin, a partner at Benesch Law Firm, chair of the firm's cannabis industry group, and a speaker at the Benzinga Cannabis Capital Conference, asked what these proposed regulations would mean for California's cannabis market. He expressed his opinion on whether it could have an impact. Darling said the financial difficulties of many regulated cannabis companies are contributing to the push for stricter regulation of cannabis.
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“Newsom's emergency rule is the result of pressure from California's regulated cannabis businesses, which have been in financial crisis for many years for a variety of reasons,” Darling said. The introduction of cheaper hemp products is putting additional strain on businesses already struggling to stay afloat. Darling said the state's “culture” as America's birthplace of cannabis may also play a role in this protectionist stance aimed at preserving cannabis' heritage. did.
However, Darling highlighted the irony of the move, saying, “This is the same plant, Cannabis sativa L., so instead of regulating it when it was the first state to legalize medical marijuana, California It would be a ban that goes against the culture of the state.” . ”
broader impact
California's potential cannabis regulations also raise questions about how other states will respond and whether these changes could impact national regulations. Darling noted that the hemp and cannabis industries are closely intertwined, and this move could limit growth opportunities for both markets.
“All MSOs are now getting into the hemp game with their best-selling versions infused with hemp-derived THC…so CA is moving to restrict cannabis businesses,” Darling explained.
She also emphasized the importance of popular THC-infused beverages sold alongside alcohol in markets such as Minnesota. “THC beverages are the safest way to ingest THC…When treated like alcohol at a liquor store, THC beverages are highly effective,” Darling said.
However, California regulations could lead to the collapse of this growing market segment. “California cannabis companies will not invest in THC beverages, and California's existing beverage manufacturers will have to leave the state and go elsewhere to make and sell their products,” she said. added.
Differences in regulations by region
Dahlin emphasized that the U.S. hemp and cannabis industry is primarily shaped by state politics and culture, leading to vastly different regulatory environments across the country. She pointed out that states like Texas, Kentucky and Illinois have clear biases against hemp and cannabis based on how they enter the market. “I don't think Kentucky and Texas would want to copy California's law,” Darling said.
As the Benzinga Cannabis Capital Conference approaches, Darling's insights will be critical to understanding how California's decision could impact broader cannabis policy. As hemp and cannabis regulations continue to evolve, the industry will be closely monitoring how this plays out across the United States.
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