Will California's Hemp Ban Cost The State Billions? 'Just The Drink Category Is Worth Over A Billion' Says Expert

California's recent emergency regulations targeting hemp-derived products are making waves across the cannabis industry. Governor Gavin Newsom's emergency order has sparked concerns, with businesses questioning the sweeping restrictions and their impact on the state and national markets.

Brandon Harshbarger, president of Cheech & Chong Global Holdings, weighed in on the implications of these changes for the industry. Speaking ahead of his appearance at the upcoming Benzinga Cannabis Capital Conference, Harshbarger detailed how the restrictions are already causing fallout across California's cannabis and hemp markets.

Restricting Hemp: Who Wins and Who Loses?

Harshbarger, whose company operates in both the recreational cannabis and hemp markets in California, emphasized the disconnect between the state's portrayal of hemp products and the reality. "We've been more vocal than some, but the reality is there are some very large rec operators that are also producing excellent hemp-derived products in California along with many other states," he explained.

The emergency order not only affects producers but also ripples through the supply chain, harming retailers and wholesalers that had previously operated within the framework of AB45, a law allowing hemp-derived THC products under specific guidelines. “What the state isn't recognizing is that AB45 was crafted with very specific requirements for hemp producers to follow,” Harshbarger pointed out, noting that many of the products targeted by the ban complied with these regulations.

A Multi-Billion Dollar Loss?

One of the most striking figures Harshbarger provided was the potential financial hit. Using Minnesota as a comparison, he highlighted that hemp-derived THC beverages alone had generated nearly $200 million in sales in just over a year. "If you extrapolate population and store counts, it becomes easy to see that just the hemp-derived THC drink category is worth more than a billion dollars in sales a year to the State of California,” he added.

This, combined with the broader restrictions on hemp-derived products, means the potential economic impact could be far-reaching, affecting not just businesses but also employment and state tax revenues.

A Call for Unified Action

Harshbarger sees a silver lining in the situation, suggesting that the restrictions could galvanize recreational cannabis and hemp operators to work together for policy reform. "My hope is that this event is going to galvanize both the rec and hemp operators in California so we can craft policy that makes sense for greater access and healthier companies to combat the illicit market," he said.

As the debate over hemp and cannabis regulations continues, it's clear that California's decisions will have national implications. The current market, as Harshbarger stated, "is untenable," and these emergency measures may push the industry to reevaluate its approach to cannabis and hemp alike.

Now Read:

• California’s Hemp Ban ‘Likely Won’t Be The Last’: Will It Push Consumers Back To Licensed Operators?

Photo: Courtesy of Kyrylo Vasyliev via Shutterstock