California Hemp Retailers Say New Bill Risks Business Closures

California Hemp Retailers Warn of Bill’s Economic Impact

California hemp product retailers have raised significant concerns about the potential economic impact of Assembly Bill 2223 (AB 2223), a piece of legislation supported by Governor Gavin Newsom. In recent testimonies before a legislative committee, industry representatives warned that the bill’s proposed restrictions on hemp-derived cannabinoids and hemp flower could have devastating effects on their businesses, leading to widespread closures, job losses, and decreased state and local revenue.

Impact on Businesses and Revenue

During a hearing held by the Senate Appropriations Committee, the focus was primarily on the financial repercussions of AB 2223 rather than its policy implications. Critics of the bill, including the U.S. Hemp Roundtable and Sunmed, argue that it could jeopardize approximately $250 million in sales tax revenue and threaten over 41,000 jobs within the hemp industry.

The bill aims to regulate hemp-derived cannabinoids by integrating them into the state’s marijuana supply chain. Specifically, it mandates that hemp-derived THC products be sold exclusively through licensed dispensaries. Critics argue that these provisions could have a harsh impact on compliant businesses, potentially reducing tax income and disrupting the market.

Concerns and Legislative Process

The bill’s proposal to funnel hemp products into the marijuana supply chain is a major point of contention. Opponents worry that this shift could significantly disrupt the market and limit access to essential products, particularly for medical users who rely on hemp-derived cannabinoids for their health needs.

The Senate Appropriations Committee has scheduled a suspense hearing to decide which bills will advance before the legislative deadline. The outcome of this hearing will be crucial in determining the future of AB 2223 and its potential impact on the hemp industry.

Governor’s Amendments and Industry Reactions

Governor Gavin Newsom’s amendments to AB 2223 are aimed at tightening controls on both the hemp and marijuana markets. These changes include stricter THC limits and new regulatory requirements designed to curb the proliferation of unregulated hemp products. However, industry stakeholders argue that these measures could be detrimental to the hemp sector, potentially stifling business growth and reducing access to products that consumers and patients rely on.

Advocates for the cannabis and hemp industries are calling for a more balanced approach to regulation. They urge lawmakers to conduct a thorough review of the bill’s potential economic impact and consider alternative solutions that would not adversely affect compliant businesses.

The debate over AB 2223 underscores the complex balance between regulatory oversight and economic vitality in California’s hemp industry. As the legislative process continues, the concerns raised by hemp retailers and industry advocates highlight the need for careful consideration of how regulatory changes might impact businesses, jobs, and revenue. The outcome of the upcoming suspense hearing will be pivotal in shaping the future of hemp regulation in the state.