*This article first appeared on SFGATE
California wants to permanently ban hemp THC from the state, making it illegal to sell hemp drinks and potentially costing the state more than 18,000 jobs and billions of dollars in lost revenue.
The California Department of Public Health proposed the ban Friday, which would make a controversial earlier emergency ban permanent, according to a CDPH document shared with SFGATE. It’s now in a 45-day comment period, with a public hearing planned next month.
Hemp is a legal category of cannabis plants that, according to federal law, can contain THC, the most common intoxicant in marijuana. Congress legalized hemp THC in 2018 and set off a booming and largely unregulated market, with hemp companies selling THC drinks, hemp THC vapes, and many other intoxicating products.
Gov. Gavin Newsom has spearheaded a ban on these hemp THC products, saying they are accessible to minors and pose a public health risk because they do not face the same safety standards as state-regulated marijuana products do. Newsom pushed for last year’s emergency THC ban and extended it in March. It is now set to expire in September.
Making the ban permanent will have a major adverse economic impact on the state, according to the analysis released Friday. The CDPH estimates that it will cause a $602 million decrease in revenue for California businesses for the first 12 months and a $3.14 billion decrease over five years. The ban will also cost 18,478 jobs over five years, force 115 businesses to close, and reduce state sales tax revenue by $192 million, according to CDPH’s estimate.
The analysis found that small, independent retailers like corner stores and grocery stores would be especially impacted over the first five years of the ban, with $1.9 billion in lost revenue and 5,567 lost jobs.
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Friday’s proposal to permanently ban hemp THC comes after years of complaints from California’s licensed marijuana industry, which has claimed that it faces unfair competition from unregulated hemp companies. Marijuana companies face sky-high regulatory costs, especially in California, and can only sell their products through state-licensed retailers. Hemp companies, on the other hand, face almost no regulations and have historically been able to sell their intoxicating drugs almost anywhere, including liquor stores, grocery stores, and online.
This disparity between the two industries has created pressure on governors like Newsom to protect their state-regulated cannabis companies. In California, these businesses are already increasingly failing under the weight of the high taxes and expensive regulations overseen by Newsom. Other states with robust state-licensed marijuana markets have also restricted hemp THC, including Oregon and Washington.
Licensed cannabis companies would gain $69.8 million and 232 jobs over the first five years of the proposed ban, according to the CDPH analysis. The department said “these numbers are comparatively low to retail sales lost in other sectors” because demand for hemp THC drinks is minimal at state-licensed stores.
The department also said illicit sales will probably fill the void if hemp THC products are permanently banned. “Out-of-state businesses and the illegal market will supply the California THC hemp market,” the report said.