The Sherman Food, Drug, and Cosmetic Law, among other things, regulates the labeling of food, beverages, and cosmetics and makes it a crime to distribute in commerce any food, drug, device, or cosmetic if its packaging or labeling does not conform to these provisions. Existing law establishes a process for the embargo, condemnation, and destruction of a food, drug, device, or cosmetic that is adulterated, misbranded, or falsely advertised, gives the authority to place items under embargo to authorized agents of the State Department of Public Health, and requires the department to take specified actions. Violation of the Sherman Food, Drug, and Cosmetic Law is a misdemeanor. Existing law also requires hemp manufacturers who produce specified products that include industrial hemp or who produce raw hemp extract, as defined, to complete a registration process, under the State Department of Public Health, and to meet various requirements for testing and labeling on products. Existing law, as part of the registration process, requires the department to assess specified fees, including an oversight and authorization enrollment fee, to cover the actual reasonable costs of implementing the regulatory program.

This bill would authorize a hemp manufacturer to produce and sell low-dose hemp drinks, as defined, if specified requirements are met, including that the low-dose hemp drink contains no greater than 5 milligrams of total THC per container and does not contain cannabis, as defined. The bill would require the low-dose hemp drink to be tested by an independent testing laboratory, and would prohibit a low-dose hemp drink from being sold to or consumed by an individual under 21 years of age.

This bill would impose a low-dose hemp drink excise tax upon purchasers of low-dose hemp drinks sold in the state at 10% of the gross receipts of any retail sale of low-dose hemp drinks, as specified. The bill would require the California Department of Tax and Fee Administration to administer the tax pursuant to the Fee Collection Procedures Law, the violation of which is a crime. The bill would require a retailer to collect the tax from the purchaser and remit it to the California Department of Tax and Fee Administration. The bill would require the tax, and interest, penalties, and other amounts collected and paid to the department pursuant to the tax, to be deposited into the Low-Dose Hemp Drink Excise Tax Fund, which the bill would establish, and would continuously appropriate the moneys in the fund to the department and to the State Department of Public Health for regulatory purposes related to low-dose hemp drinks, as specified.

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2 3 of the membership of each house of the Legislature.