Cannabis: cannabinoids: industrial hemp.

(1) The Sherman Food, Drug, and Cosmetic Law regulates the packaging, labeling, and advertising of food, beverages, and cosmetics and makes it a crime to distribute in commerce any food, drug, device, or cosmetic if its packaging or labeling does not conform to these provisions. Existing law establishes a process for the embargo, condemnation, and destruction of a food, drug, device, or cosmetic that is adulterated, misbranded, or falsely advertised, gives the authority to place items under embargo to authorized agents of the State Department of Public Health, and requires the department to take specified actions. Violation of the Sherman Food, Drug, and Cosmetic Law is a misdemeanor. The Sherman Food, Drug, and Cosmetic Law regulates, among other things, industrial hemp and requires a hemp manufacturer who produces an industrial hemp product that is a food or beverage to register with the State Department of Public Health, as specified. Existing law prohibits an industrial hemp product from being distributed or sold in the state unless the industrial hemp contains a total THC concentration that does not exceed 0.3 percent on a dry-weight basis. This bill, beginning on January 1, 2026, would prohibit industrial hemp raw extract from being incorporated into food, food additives, beverages, or dietary supplements unless the industrial hemp raw extract has a purity level greater than 99 percent and does not contain any tetrahydrocannabinols or synthetic cannabinoids. The bill, beginning January 1, 2028, would revise and recast various provisions in conformity with that prohibition. The bill would also specify that beginning on January 1, 2028, retail of industrial hemp includes online sales to customers in the state. By creating a new crime, the bill would impose a state-mandated local program. (2) Existing law, the California Uniform Controlled Substances Act, categorizes controlled substances into 5 designated schedules, and specifies various penalties for the unlawful possession or sale of cannabis, as specified. Existing law excludes industrial hemp from the definition of cannabis for purposes of the act, and specifies that industrial hemp is not subject to the act. Existing law defines industrial hemp for these purposes to mean, among other things, a product derived from the cannabis plant, as provided, with a delta-9 tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis. This bill, for purposes of the California Uniform Controlled Substances Act, would instead define industrial hemp to mean a product derived from the cannabis plant with a total tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis, as specified. The bill would prohibit the sale or delivery of hemp flower and hemp prerolls for consumption within the state under the California Uniform Controlled Substances Act. (3) The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA) , an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) , among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities and requires the Department of Cannabis Control to administer its provisions. Existing law exempts industrial hemp, as defined, from the definition of cannabis under MAUCRSA, but requires the Department of Cannabis Control to prepare a report, on or before July 1, 2022, to the Governor and the Legislature outlining the steps necessary to allow for the incorporation of hemp cannabinoids into the cannabis supply chain. Existing emergency regulations require that industrial hemp, food, food additives, beverages, and dietary supplements intended for human consumption have no detectable THC per serving. This bill would revise the definition of industrial hemp for purposes of MAUCRSA to conform to the definition of industrial hemp used in the California Uniform Controlled Substances Act, as described above. The bill would subject industrial hemp that enters the licensed market under MAUCRSA or is used in a cannabis product to the regulatory requirements of cannabis or cannabis products under MAUCRSA, including identification in the track and trace program, security and transportation safety requirements, quality assurance standards, testing by a licensed testing laboratory, and advertising and marketing restrictions. The bill would prohibit an industrial hemp cultivator from transferring or selling industrial hemp to a licensee under MAUCRSA if a banned pesticide was used in its cultivation. The bill would specify that MAUCRSA does not apply to products that contain no cannabinoids other than CBD isolate, as defined, and would make conforming changes to the California Uniform Controlled Substances Act. This bill, until January 1, 2028, would allow a licensed manufacturer to use cannabinoid concentrates and extracts that are manufactured or processed exclusively from cannabis obtained from a licensed cannabis cultivator, and would prohibit a licensee from possessing, transporting, distributing, manufacturing, or selling industrial hemp on or from a licensed premises, except as specified. This bill would prohibit a person from selling, offering, or providing a product in the state that is an inhalable cannabis product containing THC derived from industrial hemp, hemp flower or a preroll that contains hemp flower or hemp-derived cannabinoids, whether infused or not, a cannabis product manufactured outside the licensed market, or a product containing synthetic cannabinoids, as defined. This bill would revise and recast the enforcement provisions for cannabis, industrial hemp, and cannabis products, and would authorize the California Department of Tax and Fee Administration (CDTFA) , the State Department of Public Health, the Department of Cannabis Control, and other state and local law enforcement agencies to inspect, seize, and destroy, among other things, cannabis products or products not authorized under MAUCRSA, the Sherman Food, Drug, and Cosmetic Law, or specified federal or tribal laws, as provided. (4) Existing law, Cigarette and Tobacco Products Licensing Act of 2003, regulates and licenses manufacturers, importers, distributors, wholesalers, and retailers of cigarettes and tobacco products in the state. This bill would prohibit a person that is engaged in the business of selling cigarettes or tobacco products from possessing, storing, owning, or making a retail sale of cannabis, cannabis products, or a product presumed to be cannabis, as specified, and would make a violation of that prohibition subject to a specified fine and license suspension or revocation, as applicable. (5) Existing law, the Cannabis Tax Law, imposes an excise tax upon purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the gross receipts of any retail sale by a cannabis retailer. The Cannabis Tax Law requires the CDTFA to administer the cannabis excise tax, directs all revenues, less refunds, derived from the cannabis excise tax to be deposited into the California Cannabis Tax Fund, a special fund, and continuously appropriates that tax fund for specified purposes. The Cannabis Tax Law defines cannabis and cannabis products to have the same meaning as those terms are defined in the California Uniform Controlled Substances Act, which excludes industrial hemp from those definitions. This bill would narrow the definition of industrial hemp under the California Uniform Controlled Substances Act, thereby expanding the definition of cannabis and cannabis products under both the Cannabis Tax Law and the California Uniform Controlled Substances Act and subjecting those materials covered by that expansion to the cannabis excise tax. The bill would make conforming changes related to implementation of that tax. The bill would additionally subject any product presumed to be cannabis or a cannabis product to the cannabis excise tax and a specified penalty, as provided. By increasing the amount of tax moneys into the California Cannabis Tax Fund, a continuously appropriated fund, the bill would make an appropriation. The bill would require any person seeking to be relieved of the penalty imposed on any product presumed to be cannabis or a cannabis product to file with the CDTFA a signed statement setting forth the facts upon which they base the claim for relief. The bill would make a person who signs that statement that asserts the truth of any material matter that they know to be false guilty of a misdemeanor. By creating a new crime, this bill would impose a state-mandated local program. (6) The Cannabis Tax Law authorizes the CDTFA or a law enforcement agency to seize cannabis or cannabis products in certain circumstances, including if the cannabis or cannabis products were not reported in the track and trace system or are in the possession of an unlicensed person, as specified. Existing law deems any cannabis or cannabis products seized by a law enforcement agency or the department to be forfeited, and makes a violation of these provisions a misdemeanor. Existing law excludes "industrial hemp" from the definition of "cannabis" under the Cannabis Tax Law, and generally defines "industrial hemp" as an agricultural product that is any part of the plant Cannabis sativa L., including cannabinoids, with a delta-9 tetrahydrocannabinol concentration of no more than 0.3% on a dry-weight basis. This bill would authorize the CDTFA or a law enforcement agency to seize a product if the agency presumes the product is cannabis or a cannabis product due to the product containing or purporting to contain a cannabinoid, as specified, and the product is possessed, stored, offered for sale, or sold by an unlicensed person or at an unlicensed premises. The bill would additionally authorize the CDTFA to seize alcoholic beverages that contain or purport to contain cannabinoids, including synthetic cannabinoids. By expanding the items authorized for employees of the CDTFA or a law enforcement agency to inspect and seize, the bill expands the scope of a crime and imposes a state-mandated local program. (7) Existing law requires edible cannabis products, cannabis cartridges, and integrated cannabis vaporizers that contain cannabis or a cannabis product to be marked with a universal symbol, as determined by the department and subject to specified requirements. Existing law makes the use or possession of the universal symbol in connection with a commercial activity, other than licensed commercial cannabis activity, a violation of MAUCRSA, as described. Existing law defines use or possession of the universal symbol in connection with a commercial activity to include, but is not limited to, possession of any package, label, or advertisement of any kind bearing the universal symbol, whether or not that package, label, or advertisement is affixed to, or otherwise associated with, cannabis or cannabis products. This bill would make it a violation of MAUCRSA to use or possess any package, label, or advertisement of any kind bearing any likeness or simulation of the universal symbol in connection with a commercial activity, regardless of whether it is in connection with licensed commercial cannabis activity. The bill would also prohibit altering or cropping the universal symbol, except as specified. (8) This bill would incorporate additional changes to Sections 26051.5 and 26067 of the Business and Professions Code proposed by SB 861 to be operative only if this bill and SB 861 are enacted and this bill is enacted last. (9) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. (10) This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.