AB 2223 Creates Challenges Rather than Solutions for Hemp and Marijuana Industry

California’s cannabis and hemp industry is poised for a seismic shift with the proposed AB 2223 bill if it were to be passed as it is currently written. This legislation aims to regulate hemp-derived cannabinoids, a move that has sparked widespread concern among various stakeholders in California’s hemp and marijuana industry. From licensed marijuana growers to parents of children reliant on CBD for medical reasons, the potential implications of this bill are far-reaching and complex.

AB 2223

AB 2223, introduced and sponsored by Assemblymember Cecilia Aguiar-Curry, is designed to regulate commercial activities surrounding hemp-derived cannabinoids. However, recent amendments from Governor Gavin Newsom’s office have introduced significant changes, as brought to light by a recent Marijuana Moment article.

These changes bring both hemp and marijuana under the DCC’s control, require that licensed dispensaries sell hemp products containing THC or other intoxicating cannabinoids, and ban synthetic cannabinoids and retail sales of hemp flowers.

Stakeholders from different sectors have voiced their worries about AB-2223. Licensed marijuana growers fear the influx of out-of-state hemp products into California’s cannabis system, which would create unfair competition. The hemp industry is concerned about the stringent regulations that could potentially stifle innovation and growth. Parents of children who rely on CBD for medical purposes are worried that the bill will limit access to life-saving treatments.

Impact on the Hemp Industry

The hemp industry stands to face severe repercussions if AB 2223 passes in its current form.

The bill would impose strict regulations on hemp products, making it difficult for hemp companies to operate. This includes mandatory sales through licensed dispensaries and compliance with stringent THC limits. Such regulations are more severe than the federal 0.3 percent THC limit that currently defines hemp products.

Hemp product retailers have argued that the proposed bill could lead to the closure of businesses, resulting in job losses and decreased state revenue. During yesterday’s Senate Appropriations Committee meeting, Patrick Shatzer from Sunmed expressed concerns about AB-2223. He emphasized that the bill, discussed during this hearing only in terms of its fiscal impacts and not its political ramifications, jeopardizes $250 million in sales tax revenue and threatens over 41,000 jobs.

For parents of children using CBD to manage medical conditions, the bill could be a nightmare. The stringent regulations could block access to products they rely on, forcing families to make difficult choices, such as moving out of state or risking criminal charges.

Here’s a video from yesterday’s Senate Appropriations Committee meeting on AB 2223. During the session, only opponents of the bill shared their views, and only members of the hemp industry represented it. The committee concluded by placing the bill in suspense without any objections.

Impact on the Marijuana Industry

Licensed marijuana growers in California also have significant concerns regarding AB-2223.

Allowing out-of-state hemp producers to sell in California’s cannabis market creates an uneven playing field. Licensed marijuana cultivators will face competition from these out-of-state companies, which benefit from lighter regulations.

This bill opens the door to regulated interstate commerce for hemp products but excludes state-legal marijuana, which raises concerns among farmers who fear being sidelined. Additionally, it grants exclusivity in interstate import and export to cannabis distributors, favoring some players in the market while putting others at a disadvantage.

Critics argue that integrating hemp into the marijuana supply chain would require substantial resources from the DCC. Amber Senter, executive director of Supernova Women, recently questioned whether this proposal is the best use of the department’s time and resources. Speaking at a webinar overview of AB 2223 by Supernova Women and the Origins Council, she referred to the proposal as “the biggest change to our regulatory system since Prop. 64,”.

Senter expressed concerns that the governor’s plan would open the door to interstate commerce without incorporating crucial equity components. “If we are going to be setting up interstate commerce, we should do it the right way versus the rushed way,” she stated. “We should provide opportunities for small businesses and equity businesses to sell directly to consumers, starting with hemp products.”

The proposed changes aim to create market parity between hemp and cannabis products. However, significant regulatory disparities between hemp and cannabis agriculture remain. These disparities could negatively impact small, legacy cannabis cultivators, further disadvantaging them in the market.

Public Input Needed

Advocacy groups have played a crucial role in voicing concerns and rallying against the bill. For instance, the Origins Council has called for a full public legislative vetting process, emphasizing that the current timeline leaves little opportunity for review by the public or legislative committees.

Ross Gordon, a member of the advocacy group Origins Council, called the proposed changes “tremendously impactful” in an email to Marijuana Moment and urged “at the minimum, a full and public legislative vetting process” of the bill. He noted that the changes were introduced near the end of the California’s legislative session—with lawmakers set to adjourn on August 31—leaving “little opportunity for review by the public or legislative committees.”

AB-2223 presents a complex challenge for California’s hemp and marijuana industries. While the bill aims to regulate hemp-derived cannabinoids, we cannot overlook its potential impact on various stakeholders. It raises significant concerns regarding economic consequences, market parity, and medical access that require our attention.