'Get Ready For A Nationwide Game Of Whack-A-Mole': What California's Hemp Ban Means For The Industry

California’s cannabis industry is facing uncertainty after Governor Gavin Newsom’s emergency rules that could severely limit hemp products.

The move, which could remain in effect until March 2025, has caused ripples throughout the hemp and cannabis communities, with some wondering how these restrictions will impact both industries. The broader implications of the regulations could extend beyond the state, affecting national markets and future policy decisions.

Seth Yakatan, co-founder of Katan Associates and an experienced corporate finance professional in the cannabis space, discussed the potential impact of the proposed regulations during an interview before his appearance at the Benzinga Cannabis Capital Conference.

See Also: Hemp Under Siege: State Bans And Farm Bill To Be Discussed On Sept. 30

Hemp Restrictions And Market Shifts

Yakatan, like many others in the industry, found the proposed restrictions puzzling, especially regarding specific product categories. "The recent announcement by Governor Newsome is perplexing. Why this action has been enacted and why it eliminates things like low-dose beverages makes no sense," he said.

The ban could drastically impact hemp businesses in California, particularly those selling hemp-based beverages and other products that have found a growing market in the state. According to Yakatan, companies that focus on alternative cannabinoids could face severe challenges in the coming months. "This does not bode well for those in the ALT-Niod beverage business with products in CA," he explained.

Impact On The Regulated Cannabis Market

While the restrictions may hurt the hemp industry, Yakatan suggested that they could provide an advantage to the regulated cannabis market in California as consumers shift toward dispensaries for similar products. "I can only see this helping the regulated cannabis market, as consumers will now (for six months at least) have to go to a regulated (or trap) dispensary to procure product," he said.

The temporary ban raises broader concerns about how state-by-state hemp regulations could affect the national cannabis market. Yakatan anticipates that each state will legislate its hemp rules, leading to a fragmented regulatory landscape. "It appears that each state is going to legislate this issue on its own and as it sees fit. Get ready for a nationwide game of Whack-A-Mole as this continues," he added.

A Changing Landscape for Hemp and Cannabis

As California's emergency rules go into effect, many in the cannabis industry will be watching closely to see how the state navigates these changes and what kind of precedent it sets for other states. The upcoming Benzinga Cannabis Capital Conference will likely feature further discussion on how hemp restrictions and other regulatory developments are shaping the future of the cannabis industry.

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