Perhaps recognizing an enforcement gap in the evolving struggle
to protect consumers from what Governor Newsom has characterized as
a grave threat to public health and safety, the California
legislature is taking steps to stem the tide of intoxicating
consumable hemp products flowing into the State. Senator Scott
Weiner (D-San Francisco) recently introduced SB 378, which would prevent online sales of
illicit, unlicensed, non-safety-tested intoxicating hemp and
cannabis products in California. In a press release accompanying
the bill's introduction, Senator Weiner invoked many of the
same concerns – such as protecting children and adults alike
from the risk associated with untested consumable hemp products,
many of which contain dangerous synthetic substances – that
sparked California's recent emergency regulations governing
intoxicating hemp products.
Last year California promulgated emergency regulations, which directly banned
all forms of intoxicating hemp food products from being
manufactured, distributed or sold within the
State. The emergency regulations, which apply to "industrial
hemp final form food products intended for human consumption,"
state that no person shall "manufacture, warehouse,
distribute, offer, advertise, market, or sell industrial hemp final
form food products intended for human consumption including food,
food additives, beverages, and dietary supplements that are above
the limit of detection for total THC per serving." The
regulations further clarify that industrial hemp final form food
products intended for human consumption in the State are prohibited
from containing any "detectable amounts" of total
THC.
However, those emergency regulations did not explicitly address
online, direct-to-consumer sales of consumable hemp products, which
have increased exponentially in the years following enactment of
the 2018 Farm Bill. Senator Weiner did not pull any punches in
identifying behemoth e-commerce platforms Amazon and Instagram
(Meta) as part of the problem, saying "[o]nline platforms like
Amazon and Instagram do not have effective systems in place to
remove these products from online marketplaces, and they face no
penalties for blindly selling products that present serious public
health risks." Indeed, rather than targeting the elusive
roster of consumable hemp manufacturers that create these dangerous
products and introduce them into interstate commerce, SB 378 takes
aim at the intermediaries – i.e., the online
platforms – that are allowing these products to be sold
freely online without so much as an age verification
requirement.
SB 378 would specifically define and separately govern "online
cannabis marketplaces" and "online hemp
marketplaces." Among other things, it would:
- Require an online cannabis marketplace to address in its terms of service whether it permits Californians to view the advertisements and business information of unlicensed sellers of cannabis or cannabis products on its marketplace and whether the marketplace verifies the licenses of sellers of cannabis or cannabis products whose advertisements and business information are viewable on its marketplace.
- Require an online cannabis marketplace to establish a prominent mechanism within its internet-based service that allows an individual to report to the online cannabis marketplace the display, storing, or hosting on the marketplace of advertisements from, or business information about, an unlicensed seller of cannabis or cannabis products.
- Require an online hemp marketplace to establish a prominent mechanism within its internet-based service that allows an individual to report to the online hemp marketplace an advertisement for an intoxicating hemp product on the marketplace.
- Impose strict liability on an online marketplace that facilitated the connection between a consumer and an unlicensed seller of cannabis or a cannabis product for damages caused to the consumer by the cannabis or cannabis product.
- Impose strict liability on an online marketplace that facilitated the connection between a consumer and a seller of an intoxicating hemp product for damages caused to the consumer by the intoxicating hemp product.
Notably, the bill would also provide a private right of action
for individuals to enforce compliance with the law against any
online cannabis marketplace that displays, stores, or hosts an
advertisement from, or business information about, an unlicensed
seller of cannabis or cannabis products in violation of the law.
Any person who prevails in such an action would be entitled to
reasonable attorneys' fees and costs and
$250,000.
SB 378 is currently sitting in the Senate Judiciary Committee. We
will continue to monitor the bill's progress and report on any
material developments.
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