'What Newsom Is Proposing Will Crater The Hemp Industry': Could California's Restrictions Spread Nationwide?

California's recent emergency rules aimed at limiting hemp products have ignited concerns within the cannabis industry.

Governor Gavin Newsom's decision to tighten regulations raises questions about how these restrictions will affect the market in California and across the U.S. As one of the nation’s most influential states for cannabis policy, California's approach could set the tone for other states, with potentially far-reaching consequences for businesses and consumers alike.

Jason Paredes, director, and architect at Hearst, spoke about these new regulations and the challenges they may bring for both hemp and cannabis operators ahead of his appearance at the Benzinga Cannabis Capital Conference.

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California's Missed Opportunity?

Paredes expressed concerns that California's restrictive policies could undermine the state’s role in the broader cannabis industry. “Governor Newsom is missing, in my opinion, an opportunity to support the largest emerging industry our country has, one of which his state pioneered,” he said. Paredes pointed out that California has been a trailblazer in cannabis reform, and Newsom's decision could hurt the industry at a critical time.

Paredes highlighted the difficulties cannabis and hemp operators face in the state, mentioning that wholesale prices have dropped by more than 50% in recent years. “It's hard to be an operator in the state whether it's hemp or cannabis,” he noted, pointing out that high taxation and increased regulation are making it difficult for businesses at every level—from cultivation to retail—to thrive.

Nationwide Impact

Paredes warned that California's new regulations could have a ripple effect across the country. “If approved, [the regulations] will serve as a negative example for other states to follow and will allow the further spread of misinformation for the industry,” he said. With other states often looking to California for policy leadership, these restrictions could influence the regulatory landscape on a national scale, particularly as the industry grapples with the slow progress of federal cannabis reform.

Additionally, Paredes stressed that without proper reforms to ensure quality control at the federal level, state-by-state approaches like California's could further fragment the market. "Other states will likely follow California's lead just like they have with environmental, food, energy, and other sectors," he said, suggesting that inconsistent regulations across the U.S. could make it harder for businesses to operate efficiently and fairly.

A Call for Balanced Reform

As California's hemp restrictions come into effect, the conversation surrounding cannabis and hemp policy is likely to intensify. While states like California look to tighten regulations, Paredes emphasized the need for a balanced approach that supports both industries.

“What Governor Newsome is proposing will crater the hemp industry in California,” he warned, pointing to the potential economic and health benefits a healthy, competitive hemp market could provide.

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