By: Joshua Safran, Esq.
In recent years, the popularity of cannabidiol (CBD) products has skyrocketed, with retailers and manufacturers rushing to meet growing consumer demand for CBD-infused oils, beverages, cosmetics, and dietary supplements. However, navigating the legal complexities surrounding the sale of CBD products in California requires a deep understanding of both state and federal laws. As business law attorneys with expertise in Business & Entity Formation, we at Strategy Law LLP provide you with critical insights on how to ensure your business complies with California’s regulatory framework, including the mandates of Assembly Bill No. 45 (AB45).
In this blog, we will cover the evolution of laws related to CBD products, the impact of AB45 on CBD sales in California, and the steps business owners must take to ensure compliance with state regulations.
I. Evolution of CBD Laws: A Quick Background
1970 – 2020: The Long Struggle with CBD Prohibition
The legal status of CBD has undergone significant changes over the past few decades. Initially, under the Controlled Substances Act (CSA) of 1970, cannabis, including all its derivatives like CBD, was classified as a Schedule I controlled substance. This meant it was illegal to possess, manufacture, or distribute CBD at the federal level.
In California, significant milestones occurred in 1996 and 2016. The passage of Proposition 215 legalized medical marijuana, including CBD, for medicinal use at licensed dispensaries. Later, in 2016, Proposition 64 legalized recreational marijuana, but still, CBD was not approved for use as an additive in foods, beverages, or other products.
2018 – 2020: The Farm Bill Sparks Confusion
The passage of the Agriculture Improvement Act of 2018 (known as the Farm Bill) legalized hemp-derived CBD products, provided they contain no more than 0.3% THC. However, despite the Farm Bill’s provisions, CBD products were still subject to FDA oversight, and the FDA did not approve CBD for use in food and beverages, leaving many businesses confused about its legal status.
This led to a flood of CBD products entering the market, many with unverified claims about their health benefits, and some even falsely advertising CBD content. Despite the boom, the sale of CBD products remained a gray area under federal law.
2021 – Present: AB45 Legalizes CBD Products in California
In 2021, California passed Assembly Bill No. 45 (AB45), which legalized the sale of most CBD products, including dietary supplements, oils, beverages, cosmetics, and pet foods. While this was a significant step for businesses in California, it’s important to remember that CBD-infused food and beverages still remain illegal under federal law unless approved by the FDA. As such, business owners must navigate this legal landscape carefully to avoid any pitfalls.
II. AB45 and Its Impact on Retail Sales of CBD Products
A. Legal vs. Illegal CBD Products under AB45
AB45 allows for the sale of a wide variety of CBD products in California, including dietary supplements, oils, beverages, cosmetics, and pet foods. However, certain restrictions remain in place. For example, CBD cannot be used in medical devices, prescription drugs, tobacco products, or alcoholic beverages in California. In addition, inhalable hemp products cannot be sold until the California Department of Public Health (CDPH) establishes specific regulations and tax formats for these items.
B. Licensing Requirements for Manufacturers and Retailers
While retailers of CBD products do not need a special license to sell these products under AB45, manufacturers must register with the CDPH. Manufacturers are required to comply with strict regulations covering:
- Ingredient sourcing
- Content standards
- Quality testing
- Labeling and packaging
Ensuring compliance with these requirements is crucial for any business looking to manufacture or distribute CBD products in California.
C. Restrictions on Retail Vendors
AB45 imposes a number of key requirements and restrictions on retail vendors of CBD products. These include:
- Prepackaged and Shelf-Stable Products
All CBD-infused food and beverages must be prepackaged and shelf-stable in compliance with California’s Health and Safety Code (HSC) Section 111922(b). - Labeling and Advertising Compliance
CBD products must comply with strict labeling and advertising standards. Labels must clearly list ingredients, net quantity, and content, and must not make misleading health claims about the effects of CBD. Importantly, products cannot make unsubstantiated therapeutic claims about CBD, though structure-function claims for dietary supplements are exempt under certain conditions (HSC § 110407). - Required Product Information
Labels must include:- A QR code or barcode linked to an independent laboratory’s certificate of analysis for the product.
- The product’s batch number, THC content, and contaminant levels.
- A statement that CBD products have not been evaluated by the FDA for safety or efficacy (HSC § 111926.2).
- Advertising Restrictions
CBD products can only be advertised in a way that ensures at least 70% of the audience is 18 years or older (HSC § 111926(c)). - Age Restrictions
CBD products cannot be sold to individuals under the age of 21, in compliance with California’s Title 17 CCR § 23005.
III. How Strategy Law Can Assist Your Business
As a Business & Entity Formation law firm, Strategy Law specializes in helping businesses navigate the complex regulatory environment surrounding CBD product sales. Whether you are looking to launch a new CBD product line or ensure that your business complies with California’s AB45 and federal laws, we offer expert legal guidance tailored to your needs.
Our team of business law attorneys can help you with:
- Entity formation for CBD product businesses, ensuring that your company is structured to protect your interests and comply with applicable laws.
- Licensing and regulatory compliance to ensure that your products meet the necessary health, safety, and legal standards.
- Risk management to help you navigate the evolving landscape of CBD product sales and protect your business from potential legal challenges.
If you’re looking for expert legal guidance on the sale of CBD products, Strategy Law is here to support your business every step of the way. Contact us today to schedule a consultation with one of our LLC attorneys to discuss how we can help your business thrive in the rapidly growing CBD market.
This blog is written as of July, 2025. Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.
All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations. No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation
