Online marketplaces: illicit cannabis: reporting and liability.

(1) Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA) , an initiative measure, authorizes a person who obtains a state license under AUMA and any applicable local ordinances to engage in commercial adult-use cannabis activity pursuant to that license, if conducted as prescribed. Existing law, 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, until January 1, 2028, requires a social media platform to create and post a policy statement regarding the use of the social media platform to illegally distribute controlled substances, including a link to the social media platform's reporting mechanism for illegal or harmful content or behavior on the social media platform, if one exists, and a general description of its policies and procedures for responding to law enforcement inquiries. This bill, beginning on July 1, 2026, would require an online cannabis marketplace, as defined, to address in its terms of service whether it permits Californians to view the advertisements and business information of unlicensed sellers of cannabis or cannabis products on its marketplace and whether the marketplace verifies the licenses of sellers of cannabis or cannabis products whose advertisements and business information are viewable on its marketplace, as specified. The bill would require an online cannabis marketplace that does not verify those licenses to display a clear and conspicuous graphic that warns the consumer that the marketplace may be displaying, storing, or hosting unlicensed sellers of cannabis or cannabis products. This bill would require an online cannabis marketplace to establish a clear and conspicuous mechanism within its internet-based service that allows an individual to report to the online cannabis marketplace the display, storing, or hosting on the marketplace of advertisements from, or business information about, an unlicensed seller of cannabis or cannabis products. The bill would require the mechanism to provide the individual who submits a report with written confirmation of receipt of the report, periodic updates, and final written determination, as specified. This bill would impose certain penalties and relief depending on the violation of these provisions, as specified. (2) The Sherman Food, Drug, and Cosmetic Law regulates the packaging, labeling, and advertising of food, beverages, and cosmetics and authorizes the State Department of Public Health to adopt regulations for the enforcement of that law, as specified. That law imposes various requirements specific to the manufacture and sale of industrial hemp products that are food or beverages, including a requirement for a certificate of analysis from an independent testing laboratory that confirms that the THC concentration does not exceed a specified amount. 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, beginning July 1, 2026, would require an online hemp marketplace, as defined, to establish a clear and conspicuous mechanism within its internet-based service that allows an individual to report to the online hemp marketplace an advertisement for an intoxicating hemp product on the marketplace, as specified. The bill would define "intoxicating hemp product" to include an inhalable hemp product, as further defined, with a detectable THC concentration. The bill would require the mechanism to provide the individual who submits a report with written confirmation of receipt of the report, periodic updates, and final written determination, as specified. The bill would impose specified penalties and relief for violations of these provisions. (3) Existing law imposes strict liability upon persons who place a defective product on the market, including retailers engaged in the business of distributing goods to the public, for injuries caused by the product. Existing law also provides that each person is responsible for an injury occasioned to another by that person's want of ordinary care or skill, commonly known as negligence, in the management of their property or person, unless the injured person has, willfully or by want of ordinary care, brought the injury upon themselves. This bill, beginning July 1, 2026, would prohibit an online marketplace from engaging in unlawful paid online advertising related to unlicensed sellers of cannabis or cannabis products or intoxicating hemp products, as specified. The bill would impose joint and several liability on an online marketplace that violates that prohibition, and is a substantial factor in an unlawful transaction between a consumer and an unlicensed seller of cannabis or a cannabis product, or between a consumer and a seller of an intoxicating hemp product, for damages caused to the consumer by the cannabis, cannabis product, or intoxicating hemp product, unless specified conditions are met. The bill would increase the amount that a prevailing plaintiff may recover depending on what the online marketplace had actual knowledge at the time of the unlawful transaction and whether the harm was suffered by a child, as described. The bill would provide various affirmative defenses to an action brought under these provisions, and would authorize an online marketplace to seek indemnification against an advertiser of cannabis, cannabis products, or intoxicating hemp products that misrepresented to the online marketplace that they were licensed or registered to sell that product, as specified. (4) This bill would state that its provisions are severable.