By: Counsel Tomas Ortiz

Almost four years after the passage of the 2018 Farm Bill, California is taking another significant step toward regulating hemp-derived CBD. Legislative efforts to regulate CBD in California have failed, until last year, when the state finally passed Assembly Bill – 45, which allowed for the inclusion of hemp and CBD extracts in food, beverages, dietary supplements, cosmetics and other products. However, since the passage of AB-45, nothing has really happened. That will change soon.

The California Department of Public Health (CDPH) has proposed emergency regulations. These emergency regulations lay out the terms of licensing and registration for CBD manufacturers, the registration and application fees and terms for the production of CBD products. The types of products manufactured will determine the types of registration and fees.

The key points of the regulations are as follows:

• Hemp product manufacturers will be granted different types of registrations, licenses, and/or authorizations from the CDPH, depending on the type of product they make. Those that make many different types of hemp/CBD products may need numerous registrations.
• Out-of-state hemp/CBD manufacturers that want to import products to California will need to register with the CDPH.
• Manufacturers will need to obtain separate “enrollment and oversight authorization” at each location (location specific), lasts one year, and cannot be transferred.
• Applicants requesting oversight authorization must provide detailed information about not only the type of product, but sources, extract methods, and other regulated details. These must be signed under penalty of perjury – as manufacturers of THC rich cannabis product.
• Fees are based on gross revenue accrued in the 12 months prior. New applicants will need to estimate their fees, and the formulas for calculating them are a bit complex. There are two separate fee structures – one for extract manufacturers and the other for all other types of CBD product manufacturers. Application and registration fees will be dependent on an applicant’s gross revenue in the trailing 12 months, requiring new applicants to calculate and then estimate their fees utilizing a fairly complex formula.

More in-depth regulatory guidelines are expected to be issued for things like advertising and marketing, as well as consumer sales.

The emergency action by the CDPH is currently awaiting a 30-day public comment period which runs through the end of May 2022. Stakeholders are strongly encouraged to submit comments to any part of the regulations they find objectionable. The CDPH has posted guidance for submitting comments.

Sources:

AB-45:

The emergency regulations:

The CDPH steps for comments to the proposed regulations: