California Public Health Department Aims to Make Hemp THC Ban Permanent

OG article

June 17, 2025

On June 13, 2025, the California Department of Public Health (CDPH) proposed a permanent ban on hemp-derived intoxicating cannabinoid products, including those containing trace amounts of THC. According to the CDPH’s economic analysis, this regulatory measure is projected to result in the closure of 115 businesses, the loss of 18,478 jobs, and a revenue shortfall of $3.14 billion over the five years following implementation.

The California Department of Tax and Fee Administration (CDTFA), in its comprehensive 22-page notice of proposed rulemaking, highlights the significant economic challenges posed by the proposed regulations: “Revenue declines undermine the financial stability and economic sustainability of businesses, limiting their ability to maintain adequate monthly cash flow to cover operational and overhead expenses.” The CDTFA emphasizes that small businesses are disproportionately impacted by these financial pressures.

The California Department of Public Health (CDPH), under emergency regulations issued by Governor Gavin Newsom in September 2024, currently mandates that industrial hemp-derived food, beverages, and dietary supplements intended for human consumption contain no detectable THC or comparable cannabinoids per serving, restrict sales to individuals aged 21 and older, and limit packaging to a maximum of five servings. These measures conflict with the 2018 Farm Bill, which permits hemp to contain up to 0.3% delta-9 THC on a dry-weight basis during pre-harvest testing, while allowing states to implement stricter regulations for their hemp programs.

The emergency regulations, set to expire on September 23, 2025, are now the subject of a CDPH proposal, announced on June 13, 2025, to permanently prohibit hemp products containing detectable levels of intoxicating cannabinoids, including THC. This proposal has entered a 45-day public comment period, during which the CDPH will review all submissions, objections, and recommendations. A public hearing is scheduled for July 28, 2025, at 10:00 a.m.

The CDPH acknowledges the potential economic fallout but maintains that the proposed regulations are essential to “safeguard public health and safety, particularly for consumers under 21 years of age, by reducing the risks of illness, injury, or death,” as outlined in its June 13 notice. This position aligns with Governor Newsom’s September 2024 statement, in which he emphasized the need to address regulatory loopholes and strengthen enforcement to prevent minors from accessing unregulated and potentially hazardous hemp products. “We are committed to protecting our children from dangerous, unregulated THC-containing hemp products sold in retail settings,” Newsom declared.

Under the proposed rules, access to hemp-derived CBD products would be curtailed, though individuals under 21 with qualifying medical conditions could still obtain products through California’s medical cannabis program. The CDPH estimates that only a limited number of non-intoxicating CBD products would remain available outside the licensed cannabis market.

Compliance with both the emergency and proposed regulations requires manufacturers to use purified CBD isolates that eliminate all traces of THC—a costly process. The CDPH notes, “CBD isolates and other cannabinoid isolates free of detectable THC are expensive. Prior to the emergency regulations, no hemp products in California reliably met the no-detectable-THC standard. Many products marketed as ‘CBD’ contained trace amounts of THC, rendering them noncompliant with the proposed standards.”

The CDPH projects that approximately 100 of the state’s 115 licensed hemp manufacturers would exit the market, with 15 remaining. Of those, an estimated 10 manufacturers would face relabeling costs averaging $20,000 per business, with a total of 50 businesses incurring such expenses. Prior to the September 2024 emergency rules, intoxicating hemp products were widely available at vape shops, gas stations, and convenience stores without age restrictions or protections against marketing to minors. The CDPH cites instances of hemp products using packaging that mimicked popular candies and snacks, appealing directly to children.

Following the implementation of the emergency rules, Governor Newsom reported in May 2025 that 99.7% of state-licensed alcohol establishments were compliant. However, compliance data for unlicensed retailers remains unreported. The CDPH estimates annual enforcement costs for the proposed regulations at $785,000.

To mitigate economic impacts, the CDPH has evaluated alternative approaches and invites public input on proposals that could reduce adverse effects. Submissions may be sent via email (regulations@cdph.ca.gov), fax (916-636-6220), or mail (California Department of Public Health, Office of Regulations, 1415 L Street, Suite 500, Sacramento, CA 95814).

The CDPH projects that carry-out retailers will bear the brunt of the economic impact, facing a $2.02 billion revenue decline over the first five years. Manufacturers ($615 million), food service retailers ($268 million), and wholesalers ($227 million) will also experience significant losses. Additionally, the CDPH anticipates that many of California’s approximately 70,000 regular hemp product consumers may turn to out-of-state mail-order purchases, further eroding the competitiveness of in-state businesses. The CDPH warns, “Affected businesses will face reduced market competitiveness, with hemp product manufacturing and processing likely shifting to out-of-state entities or the illicit market, which will dominate California’s THC hemp market.”

As part of the rulemaking process, the CDPH is required to demonstrate that no reasonable alternative, whether considered internally or submitted by the public, would more effectively achieve the proposal’s objective of protecting public health and safety.