Industry Voices: Newsom’s hemp proposal goes too far

On Friday, Governor Gavin Newsom announced emergency regulations that could deliver a significant blow to California’s multi-billion-dollar hemp industry. Citing a statewide emergency due to youth access to intoxicating hemp products, the governor issued a sweeping ban on all hemp products containing any residual THC, and limited serving sizes to five servings. He also imposed an age restriction of 21 and over for purchasing these products. These drastic measures threaten to completely obliterate the hemp industry, potentially forcing manufacturers to shut down—even those that primarily sell out of state. The suddenness of this decision raises serious questions: Why the emergency, and why such a severe response to an industry worth billions?

I’ve been in the marijuana industry in California since 2008, during the early days of medical marijuana. I continued to work in the industry while earning my MBA from Humboldt State University, combining my education with hands-on experience to launch Cannadips—the original cannabis and hemp pouch aimed at helping people quit nicotine and tobacco. Timing was on our side, as we launched just before the rise of nicotine pouches like Zyn. I was also one of the first licensees in the recreational marijuana market under Prop 64. Over the years, I’ve run several marijuana businesses, and my hemp business has placed products in over 7,000 stores nationwide, including some of the largest C-store chains in America. This dual experience gives me a unique perspective on the current crisis, and I am not limited by what benefits me personally—unlike many others in the industry.

Governor Newsom’s use of emergency powers is alarming. It appears he is leveraging a youth health crisis as a cover to push policies that favor the marijuana companies that have been lobbying him since the beginning of legalization. In my opinion, this is a veiled attempt to rescue an industry he helped dismantle through a series of policy failures. California’s cannabis industry has been disastrous for the vast majority of businesses involved. In Humboldt County, the epicenter of cannabis cultivation, I’ve witnessed countless farmers and manufacturers lose their life savings, their farms, and, ultimately, their livelihoods. The number of dispensaries in California has drastically declined, with over 50% of counties banning dispensaries altogether, making legal access difficult for consumers. And the culprit behind these failures? Gross over-taxation. The industry is taxed at every level of the supply chain—from a flower tax to a 15% excise tax—resulting in products that are far more expensive than what can be obtained on the black market. Legalization, rather than curbing illicit sales, has fueled their growth, leaving many legacy operators struggling to survive. Newsom’s recent actions feel more like a bailout for the cannabis industry, rather than a genuine concern for public safety.

The tension between the hemp and cannabis industries has been brewing for years, and my LinkedIn feed has become a daily battleground, with operators from both sides trading blows. What makes my perspective unique is that I have a foot in both camps, so I understand both sides more clearly than most. Cannabis operators in California, in particular, are a beaten-down group who’ve been fighting for survival since 2018. I can’t fault them for being frustrated. They resent the hemp industry because it doesn’t face the same heavy taxation or the burdensome regulations, like the flawed METRC track-and-trace system. Under the 2018 Farm Bill, hemp companies can sell products containing up to 0.3% THC by weight, which allows for edibles and drinks with more THC than some products found in dispensaries. While cannabis operators have valid concerns about this disparity, their opposition is often rooted in self-interest rather than what’s best for consumers—who deserve access to safe, affordable options.

Governor Newsom made some valid points regarding the hemp industry on Friday, but if his goal were truly to address those concerns, he would follow the normal political process. I agree that all intoxicating hemp products should be restricted to consumers 21 and older, and I fully support regulations ensuring child-resistant packaging and strict testing for pesticides and contaminants—something my company has done voluntarily since entering the market in 2019. These regulations should be developed in collaboration with the industry and based on frameworks like Senate Bill AB 45, rather than being pushed through under an emergency declaration. The truth is, there is no actual emergency regarding intoxicating hemp products in California. The real issue lies in the state’s inability to enforce its existing regulations. What we’re witnessing is an abuse of power, and I hope the inevitable legal challenges will rein in this overreach.

For the past seven years, California’s cannabis industry has been trapped in a “Hunger Games” scenario, where only best-resourced operators have managed to survive. Now, the war on hemp is the latest front in a battle to consolidate power among a select few, further squeezing out entrepreneurs and small businesses. If the governor’s proposed regulations go into effect, they will do little to address the supposed problem. Enforcement of these rules is unlikely, and all they will do is stifle innovation, kill jobs, and push more business into the black market. As someone who employs over 25 people in Humboldt County, where job opportunities are increasingly scarce due to the collapse of the cannabis industry, these regulations could force us to reevaluate our operations. This isn’t just about what we can sell in California—where, notably, we don’t even sell intoxicating products—but what we can sell nationwide, protected under the 2018 Farm Bill. If these rules go into effect, we may have no choice but to relocate our business to another state, where we can continue our fight against Big Tobacco without such restrictive and unreasonable constraints.

I hope Governor Newsom will reconsider and work with the industry to develop a regulatory framework that truly serves the best interests of Californians. The current approach benefits only a select few, and unless more sensible solutions are found, the consequences will be felt across the state—not just by businesses, but by consumers and workers as well.

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Case Mandel is the CEO of CannaDips.

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