Joint Hearing of California's Assembly and Senate Business & Professions Committees

On March 11, 2025, California's Assembly Business & Professions and Senate Business, Professions & Economic Development Committees held a joint hearing on California's cannabis industry, specifically focused on the findings of the California Cannabis Market 2024 Report.

The report attempted to paint a picture of industry stability, citing increased biomass production and rising wholesale flower prices as signs of a healthy market. But these numbers obscure a harsher reality: the state’s legal cannabis industry is stalled, manufacturing is collapsing, and much of the market (biomass and consumers) is being siphoned off by illicit operators.

The hearing specifically addressed concerns regarding intoxicating hemp products, with the Department of Cannabis Control's Christina Dempsey noting these products represent a substantial public health risk. These highly intoxicating products, now prohibited in California but still widely available, are often created through chemical synthesis and can contain dangerous byproducts.

Perhaps the report’s most glaring error is its claim that “cannabinoids derived from hemp are generally cheaper than those derived from cannabis due to fewer (current) regulations.”

This is demonstrably false. Producing THC from hemp requires roughly 50 times the biomass needed for cannabis-derived THC extraction. The only reason these products appear cheaper is that THC-rich biomass — functionally indistinguishable from cannabis — is being mislabeled as “hemp” to evade taxes and regulations.

The state’s failure to crack down on this is directly harming licensed operators and depriving cannabis tax beneficiaries of funding. The report suggests that “hemp market integration” will be important for the cannabis industry’s future. In reality, the unchecked proliferation of illicit THC products masquerading as “hemp” is destabilizing the legal market and driving its decline.

California must take action

To stabilize the market, the state must:

1. Strengthen enforcement against illicit THC.

   • Unregulated products evade safety testing, licensing, and taxes.

   • Prioritize enforcement funding and implement effective mechanisms.

2. Prevent the excise tax increase and, at a minimum, freeze the rate at 15%.

   • Raising taxes on a declining industry will drive more consumers to the illicit market.

3. Support manufacturers by removing regulatory barriers and expanding access to legal retail.

4. Ensure affordability so consumers aren’t pushed to the illicit, unregulated market.

Without immediate intervention, California risks losing its legal cannabis industry to the unregulated market.

Sources and more information

• Testimony from Tiffany Devitt, Director of Regulatory and Government Affairs for Groundwork Holdings and Co-Author of the Great Hemp Hoax

• Testimony from Amy O'Gorman Jenkins, Executive Director of the California Cannabis Operators Association

• Greenstate.com: California’s cannabis market: growth on paper, decline in reality