California Bans Hemp Derived CBD

On July 6, 2018 the California Department of Public Health (CDPH) and the Food and Drug Branch (FDB) released new guidance on how CBD can be used in food produced in, or shipped into the state of California.  

California defines “food” as follows:

  • (a) Any article used or intended for use for food, drink, confection, condiment, or chewing gum by man or other animal.
  • (b) Any article used or intended for use as a component of any article designated in subdivision (a).

800,000 high CBD hemp starts

California’s new CBD regulation prohibits the use of CBD as an additive in food or use as a dietary supplement.  Until the FDA rules that CBD products can be used as an additive, California is executing their state rights to create oversight into this rapidly growing CBD industry.  Unfortunately, this will shatter hundreds of California CBD companies who are creating tinctures, edibles, and dog treats. These new rules also impact the hemp growers and the CBD processors creating crude, distillate and isolate whose sales channels are severely disrupted.

This rule feels like an emergency measure intended to support the legal Cannabis industry.  CBD infused products are still available through Recreational stores, where you can use Cannabis derived CBD in edibles, vapes, rubs etc.  The new rules also seem to allow for CBD to be sold for vaporization, and as topicals. Due to the clever individuals working in Cannabis and Hemp, I expect to see some high potency topicals that can be eaten.  We have seen this strategy taken in other markets, such as Washington, where this strategy is used to overcome new potency restrictions on edibles.

California is the first of many states to self regulate their CBD industry.  With the 2018 Farm Bill looming, and the expectation of Hemp and CBD to be de-scheduled, we should anticipate a regulatory shift in what is largely an unregulated market.  Legalization will spur huge opportunity, and also a need to regulate. This transition period where states react to the new legal environment for Hemp and CBD will be a market disruption.  Be prepared, these shifts can start occurring before the upcoming harvest.

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