Jan 27, 2025
Gov. Gavin Newsom dropped a bomb on California’s hemp industry last year when he unilaterally banned selling the drug in his state, despite it being legal at the federal level. Sales have slowed following his emergency order, yet the ban has done little to dissuade California’s pot companies from jumping into the hemp industry.
America’s hemp industry has boomed since Congress legalized the category of cannabis in 2018. Hemp has historically been used to describe cannabis used for non-drug purposes, like food and clothing, but Congress wrote a broad definition of hemp that has allowed intoxicating drugs to be sold as hemp everywhere from gas stations to online retailers.
Newsom issued an emergency order banning the drug’s sale last September, calling hemp companies “drug peddlers” who “target our children with dangerous and unregulated hemp products.” Yet in just the past month, some of the state’s biggest names in legal weed have started exporting hemp products, signaling that California’s troubled legal cannabis industry is increasingly less attractive than opportunities outside of the state.
Stiiizy, the state’s largest retailer, launched an intoxicating hemp drink line in January, which it said offered customers “a perfect blend of taste and relaxation.” Celebrities like Snoop Dogg and Seth Rogen have also launched their own lines of hemp products in recent months.
Kyle Kazan, the CEO and co-founder of Glass House Brands, one of the state’s largest cannabis companies, said during a November earnings call that the hemp market “tantalized” Glass House because it would enable them to sell Glass House products in other states. The company is currently growing a pilot batch of hemp and could eventually grow as much as 60 acres of hemp at its Southern California facilities, according to Glass House President Graham Farrar.
“The upsides are enormous: It’s a bigger market, we can accept credit cards, we can ship through the USPS and run online advertising. In other words, we can be a normal business,” Farrar recently told SFGATE.
None of these products can legally be sold within California following Newsom’s September ban, though that could change in March when the six-month emergency rule expires. Newsom’s office did not return repeated SFGATE requests for comment regarding whether the governor plans to extend the ban after it expires and whether he is concerned that legal California cannabis companies are investing in hemp.
Matt Karnes, a cannabis analyst and founder of GreenWave Advisors, said investors and businesses are more attracted to hemp because it’s an interstate market that lacks the sky-high taxes and onerous regulations that limit marijuana.
“California businesses see a massive opportunity because the market size includes the entire country (and perhaps other countries),” Karnes said in an email to SFGATE.
Farrar said the same: His company has no problem with California banning hemp products from being sold within the state, because Glass House has its own chain of retail stores where it can sell legal cannabis to Californians. Instead, he sees hemp exports as “an opportunity to help everyone” in the state’s pot industry by allowing companies to sell cannabis to more customers, as long as Newsom doesn’t shut down the growing hemp industry even further.
“All California needs to do is get out of the way, and they can save the California cannabis farmer by just not being more restrictive than other states,” Farrar said.
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