California Now Permits the Manufacture and Retail Sale of Hemp-Derived Products — Including CBD

By Andrea Golan, David Kramer

Oct 6, 2021

On October 6, 2021, Governor Newsom signed AB-45 into law. The bill, which takes effect immediately, permits the sale of food, beverages, dietary supplements, pet products, and cosmetics containing hemp-derived ingredients, including CBD. (Though, of course, the Food and Drug Administration still maintains that CBD is not permitted in food and dietary supplements.) The passage of AB-45 overrides the California Department of Public Health’s infamous FAQ prohibiting sale of all CBD products in California. The official announcement can be found here. 

Below is a high-level summary of AB-45’s key provisions: 

General Permissibility of Hemp Products

• The sale of dietary supplements, food, beverages, cosmetics, or pet food cannot be restricted based solely on the inclusion of industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp.

• Subject to AB-45’s requirements, a dietary supplement, food, beverage, cosmetic, or pet food is not adulterated by the inclusion of industrial hemp or cannabinoids, extracts, or derivatives.

Registration with the California Department of Public Health (CDPH) and General Manufacturing Requirements

• Manufacturers and manufacturing facilities that produce, package, label, or hold a hemp food, beverage, cosmetic, or a raw hemp extract, must register with the CDPH Food and Drug Branch and comply with good manufacturing practices. 

• Out-of-state manufacturers importing raw hemp extract into California must register with the CDPH Food and Drug Branch. 

• A manufacturer of pet food must register with the CDPH as a company that processes pet food and comply with good manufacturing practices.

• In addition to registering with CDPH, hemp manufacturers must obtain an “industrial hemp enrollment and oversight authorization” from the CDPH. Manufacturers have a three month grace period from the law’s effective date to obtain the enrollment and oversight authorization. 

• Industrial hemp can only be used in dietary supplements or food products if all of the hemp-derived parts used in such products: 

  • (1) “come from a state or country that has an established and approved industrial hemp program that inspects or regulates hemp under a food safety program or equivalent criteria to ensure safety for human or animal consumption” and 

  • (2) the hemp grower is in good standing and compliance with the laws of the state or country of origin.

• Although AB-45 generally applies in equal force to human and animal products, the term “animal” excludes livestock or a “food animal.”

• Industrial hemp cannot be included in any products containing nicotine, tobacco, or alcohol. 

Regulation of Cannabinoids

AB-45 regulates which cannabinoids can be used and at what concentrations. For example:

• Cannabinoids produced through chemical synthesis are excluded from the definition of “industrial hemp.” 

• Hemp products cannot include THC isolate as an ingredient. 

• The definition of “THC” includes THCA and “any tetrahydrocannabinol” including delta-8, delta-9, and delta-10. Because AB-45 states that hemp products (and hemp extract in its final form) must have a “total THC” concentration of not more than 0.3%, these provisions mean that hemp products (and hemp extract in its final form) cannot have more than 0.3% of any and all forms of THC, as measured in the aggregate. 

• Subject to administrative rulemaking, the CDPH has the discretion to include in the definition of “THC” any cannabinoid (other than CBD) that it determines may cause intoxication. 

Testing Requirements for Raw Hemp Intended to be Included in a Food, Beverage, Dietary Supplement or Cosmetic and Finished Hemp Products

• The testing requirements for contaminant levels will be the same as those for cannabis. 

• Raw extract in final form must be tested before being incorporated into any product.

• Any hemp products distributed or sold in California must be accompanied by documentation establishing that the raw extract, in its final form, does not exceed permissible THC concentrations and that the hemp product was tested for any hemp derivatives identified on the product’s label or in the product’s marketing materials.  

Inhalable Products

• California manufacturers of inhalable products may only sell their product out-of-state until a tax on inhalable products is enacted by the Legislature. Once such tax rates are established, inhalable products can be sold to California consumers who are at least 21 years old. 

• The term “inhalable products” is not defined.

Labeling and Advertising

• Manufacturers, distributors, and sellers of hemp products generally cannot make untrue “health-related statements.” 

• Advertising can only be displayed where at least 70% of the audience is reasonably expected to be 18 or older.

• The hemp product must contain specific statements set forth in Health & Safety Code §§ 111926.2 and 111926.3.

Other Areas Where CDPH Has Discretion

• The CDPH may determine maximum serving sizes and the number of servings per container. 

• The CDPH may cap the amount of THC concentration at the product level based on the type of product, volume, number of servings, the ratio of cannabinoids to THC, or other factors. 

Integration with the Cannabis Supply Chain

• No later than July 1, 2022, the Department of Cannabis Control (DCC) is required to prepare a report outlining the steps necessary to incorporate hemp into the cannabis supply chain, including allowing hemp as an ingredient in manufactured cannabis products and the sale of hemp-only products at cannabis retailers. 

Ensure your products are compliant with hemp and cannabinoid regulations in all 50 states with this compliance guide

The above is not intended to be a complete summary of AB-45. Please contact a member of the VS team if you wish to discuss AB-45 in greater detail.