AB 8 and SB 378 were signed into law by Governor Newson over the past few weeks, marking the beginning of a new phase in California’s hemp and cannabis regulations. (Gov. Press Release on AB 8 can be found here; Legislative update on SB 378 found here)
Manzuri Law is committed to assisting your hemp business through this transition – helping you understand the operational and strategic implications of these changes so you can adapt and remain competitive.
Accordingly, we’ve drafted a high-level summary of the key changes introduced by AB 8 (2025) and SB 378 (2025). There are significant revisions to the current hemp laws, so please review carefully.
I. AB 8 (2025).
AB 8 will become effective January 1, 2026 and expands regulatory oversight of industrial hemp and cannabis products in California, and effectively implements the Sept. 2024 “Emergency Regulations” into law. The bill does the following:
- Tightens industrial hemp rules for products sold in the state of California.
This means only THC free hemp is allowed in food and beverages and a total prohibition on the sale of hemp flower and prerolls within the state. Moreover, hemp products sold or stored within the state must comply with a total THC (not just delta-9) concentration of no more than .3% on a dry weight basis.
Accordingly, come January 1st, many current hemp products (especially smokable flower, prerolls, and full-spectrum extracts) will be illegal in California. All operators will need to pivot to “THC-free” formulations (likely CBD isolate, CBN isolate or broad-spectrum with no detectable THC).
Specifically, this bill prohibits anyone from selling, offering, or providing within the state:
- any inhalable cannabis product that contains THC derived from industrial hemp;
- any hemp flower or preroll that contains hemp flower or hemp-derived cannabinoids (whether infused or not);
- any cannabis product made outside the licensed market; or
- any product containing synthetic cannabinoids.
- Aligns hemp and cannabis regulations across multiple laws (MAUCRSA, Sherman Law and Cannabis Tax definitions are now aligned).
This means no more loopholes — if a hemp product even slightly resembles a cannabis product under these aligned definitions, it falls under the same cannabis rules.
The bill specifies that MAUCRSA does not apply to products that contain no cannabinoids other than CBD isolate.
- Expands enforcement powers of multiple government agencies (DCC, CDPH, CDTFA and local law enforcement) to inspect, seize and destroy noncompliant hemp/cannabis products.
Noncompliance risks are now much higher — products can be confiscated, and operators may face both administrative and criminal consequences.
- Extends cannabis excise taxes to include products that meet the new definition of cannabis/hemp (increasing taxable base).
The 15% retail excise tax is applied to the retail gross receipts of cannabis and hemp products, paid by the consumer at the point of sale, and remitted to the state by the retailer.
Under this change, hemp operators have lost their historical price advantage over cannabis operators because excise taxes raise the cost structure for doing business in the state.
- Tobacco and cigarette retailers are totally barred from selling cannabis/hemp products.
This provision will dramatically remove a sales channel for hemp operators, prohibiting the sale of hemp products in all convenience stores and smoke shops.
- Creates new criminal liabilities – noncompliance is a misdemeanor.
Under AB 8, violations related to food, labeling, and tax requirements are now classified as misdemeanors. This elevates the consequences beyond monetary fines, exposing operators to potential criminal liability for noncompliance.
- Misuse of the cannabis universal symbol is also now a misdemeanor.
Again, this provision will criminalize noncompliance – Mislabeling with the universal cannabis symbol is now a criminal liability, not just a fine.
- By 2028, Online Hemp Sales Face Full AB 8 Compliance.
Finally, the bill has a phased implementation starting on January 1, 2026 and concluding January 1, 2028. By Jan. 1, 2028, the definition of “retail sales of industrial hemp” will also include online sales to in-state customers.
For operators, this means that come Jan. 1, 2028 DTC (direct-to-consumer) hemp e-commerce in California would face the very same compliance, testing, labeling, and tax obligations as brick-and-mortar stores.
II. SB 378 (2025).
SB 378 is designed to work in tandem with AB 8, so the approval of both measures are intended to play a significant role in encouraging consumers to transition into the legal, regulated cannabis market.
SB 378 (effective July 1, 2026) seeks to hold online marketplaces accountable for cannabis and hemp sales, by requiring online platforms that host cannabis or hemp sales to:
- Verify seller licenses or warn consumers of unlicensed operators,
- Create public reporting systems for unlicensed ads, and
- (potentially) Face steep civil penalties, private lawsuits, and potential shutdowns for violations.
An “online hemp marketplace” is defined as any website, app, or social media platform in California that sells or helps sell hemp products for people to use, such as cosmetics, food, or supplements. It includes any platform that sells, facilitates sales, or connects buyers and third-party sellers of intoxicating hemp products.
There are inherent new risks associated with continuing to operate an online marketplace that sells directly to consumers (DTC) in California. This means that, unless you hold a valid cannabis license, you will be prohibited from selling any products other than CBD or CBN isolates directly to consumers in California. Additionally, this bill seeks to hold these online marketplaces jointly liable for harms from unlawful cannabis or intoxicating hemp sales, with treble (3x) damages if children are harmed.
In consequence, SB 378 significantly raises the stakes for online platforms, making these platforms responsible for policing cannabis and hemp sales. For hemp operators, this means stricter oversight of how products are listed and sold online, with noncompliance carrying the risk of severe penalties and liability.
AB 8 and SB 378 are set to reshape California’s hemp and cannabis landscape, hemp operators should act now to review product lines, tighten compliance, and vet online sales practices. Those operators who proactively align with the new requirements will not only reduce liability risk but also gain a competitive edge as the state phases out unregulated sales over the incoming months.