GOV. GAVIN Newsom has signed Assembly Bill 8, a sweeping overhaul that brings intoxicating hemp products under California’s regulated cannabis framework and bans their sale outside licensed dispensaries.
The new law aims to end the free-for-all market for intoxicating hemp derivatives such as delta-8 THC, delta-10 THC, HHC, THCP and other synthesized or converted cannabinoids that have been widely sold in smoke shops, convenience stores and gas stations.
These products carved out an unregulated market by exploiting federal loopholes created by the 2018 Farm Bill (see story page 1).
While legal cannabis operators have paid steep taxes, testing costs. and compliance fees, hemp-derived intoxicants entered California with none of those burdens — and undercut licensed operators in nearly every product category from vapes to drinks to gummies.
As the market grew, state regulators repeatedly warned that intoxicating hemp products were being marketed to youth, sold with no potency caps and often contained chemically synthesized cannabinoids or THC levels far above legal limits.
AB 8 is the culmination of multiple emergency actions, attempted legislative fixes and a growing push from the cannabis industry to rein in unregulated competition.
A unified regulatory structure
Beginning Jan. 1, 2028, consumable hemp-derived products containing cannabinoids other than CBD isolate must comply with all rules governing cannabis products. The law bans:
- Intoxicating hemp products sold outside the cannabis retail system.
- Hemp-derived vapes.
- Hemp flower and prerolls intended for consumption.
- Synthetic cannabinoids.
- Inhalable products not produced in the licensed system.
Impacts
For legal cannabis businesses, AB 8 addresses one of the most damaging competitive pressures of the last five years. Intoxicating hemp operators have been able to sell THC-like products with no potency limits, little testing and far lower operating costs, and without the 15% cannabis excise tax.
Industry groups backing the bill argued that intoxicating hemp products were eroding legal cannabis sales, weakening the regulated market and pushing some operators toward insolvency.
The bill explicitly exempts products containing only CBD isolate, defined as cannabidiol with 99%-plus purity and no THC or synthetic cannabinoids from the new cannabis regulatory structure.
These products remain regulated under the state’s food and supplement rules and do not have to enter the cannabis supply chain.
However, anything containing cannabinoids beyond CBD isolate (even minor cannabinoids) will be treated as cannabis once the law is fully implemented.
Takeaway for cannabis executives
The law will fully take effect in 2028 and represents a turning point for California’s regulated market.
For cannabis operators, this means:
- A more level competitive field
- Stronger enforcement against unlicensed intoxicants
- Clearer product categories and reduced consumer confusion
- New opportunities to expand product lines with compliant hemp-derived cannabinoids starting in 2028
For hemp manufacturers, the law forces a strategic decision: become a fully licensed cannabis operator or leave the intoxicating cannabinoid space in California.