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California’s cannabis and hemp industries are entering a new era of enforcement—and this time, lawmakers are focusing on what happens online. In October 2025, Governor Gavin Newsom signed Senate Bill 378 (SB 378), authored by Senator Scott Wiener (D–San Francisco). The law is designed to curb the growing number of unlicensed, untested, and potentially dangerous hemp and cannabis products sold through online platforms.
For consumers, this marks a significant step toward safer access to cannabis products. For online marketplaces, it introduces strict new obligations—and serious liability risks. And for cannabis business owners, SB 378 works hand in hand with Assembly Bill 8 (AB 8) to close loopholes that have allowed unregulated intoxicating hemp products to compete with the licensed cannabis market. A California cannabis business lawyer can help you navigate these new regulations and obligations, or defend your business if you are accused of wrongdoing.
Senate Bill 378 creates a new legal framework for how cannabis and hemp products are sold online. The law targets not only the sellers but also the platforms that enable illegal sales.
Online marketplaces such as Amazon, Instagram, and other e-commerce sites that allow Californians to view or buy cannabis or hemp products must now verify that those sellers are properly licensed. If they fail to verify, they must display a clear warning to consumers stating that the seller may not be licensed under California law.
SB 378 also requires online platforms to provide a public reporting system, allowing users to flag unlicensed ads or illegal sellers. This mechanism gives consumers and competitors alike a way to report violations directly through the platform, creating a new layer of public accountability.
Perhaps the most significant change is the law’s strict liability clause. Under SB 378, an online marketplace that facilitates the sale of an unlicensed or illegal cannabis or intoxicating hemp product can be held automatically liable for any damages caused to the consumer. That means even if the platform didn’t know the product was unlawful, it may still be responsible for injuries or harm.
Finally, SB 378 introduces a private right of action, allowing consumers to file civil lawsuits against platforms that display or host advertisements from unlicensed sellers. Successful plaintiffs can recover up to $250,000 in statutory damages plus attorneys’ fees—a major incentive for compliance.
SB 378 doesn’t exist in a vacuum. It’s part of California’s broader campaign to unify hemp and cannabis regulation under one system—a process that began with Assembly Bill 8, signed earlier this month.
AB 8, effective January 1, 2026, brings all intoxicating hemp products under the same regulatory structure as cannabis. It bans intoxicating hemp items from being sold outside of licensed dispensaries and subjects them to the same testing, labeling, and safety standards.
SB 378, effective July 1, 2026, extends these protections to the digital marketplace. While AB 8 governs how products are made and sold, SB 378 governs how they’re advertised and distributed online. Together, they close both the manufacturing loophole and the e-commerce loophole that have allowed illegal intoxicating hemp sales to thrive.
By 2028, when AB 8’s full online sales provisions take effect, every online hemp or cannabis sale to a California consumer will be subject to the same state licensing, testing, and tax requirements as traditional retail dispensaries.
Although SB 378 has been signed into law, it’s likely to face court challenges before full implementation.
One issue is strict liability. Holding an online marketplace responsible for a third-party seller’s actions—even without knowledge or intent—could be seen as an overreach. Large platforms may argue that such provisions violate due process or are preempted by federal law governing internet intermediaries, such as Section 230 of the Communications Decency Act.
Another potential challenge is interstate commerce. Because many hemp sellers ship products across state lines, opponents could claim that SB 378 unlawfully restricts interstate trade by imposing California’s standards on out-of-state businesses.
Finally, the law’s advertising restrictions—requiring warnings or removing listings—could raise First Amendment concerns about commercial speech. Even so, California’s courts have historically upheld similar restrictions when tied to consumer protection and public health.
In short, while SB 378’s goals align with the state’s interest in protecting consumers, its broad liability provisions could be tested in court before enforcement begins in 2026.
For licensed cannabis operators, SB 378 is both a protection and an opportunity. It helps level the playing field by targeting unlicensed online competitors who have undercut legal dispensaries with untested and untaxed products. Licensed businesses can also benefit from the new private right of action—giving them the ability to pursue civil penalties against platforms that knowingly host illegal sellers.
At the same time, cannabis and hemp companies that advertise or sell online must take a hard look at their digital presence. This includes reviewing online listings, affiliate marketing, and social media promotions to ensure all sales activity is conducted through compliant, licensed channels.
For online platforms, SB 378 marks a dramatic shift in liability. They must now proactively verify cannabis licenses, build age-verification systems, and create public reporting tools—or risk lawsuits and state enforcement. This could significantly change how cannabis and hemp products are marketed online, especially on social media platforms and major retail sites.
Consumers, on the other hand, gain new protections. SB 378 ensures that online cannabis and hemp sales are safer, more transparent, and more accountable. The law also empowers individuals to take action against noncompliant platforms if they are harmed by illegal or mislabeled products.
The Department of Cannabis Control (DCC) and other state agencies will enforce SB 378 in coordination with AB 8’s existing oversight. Violations can result in fines, civil liability, or even platform shutdowns. Importantly, the law does not require proof of intent—making strict compliance essential for anyone facilitating online cannabis or hemp sales.
Beyond state enforcement, private lawsuits may become a major driver of compliance. With substantial statutory damages on the table, consumers and competitors alike have a strong incentive to hold platforms accountable.
For those accused of violating AB 8 or SB 378—whether as sellers, operators, or intermediaries—the consequences can be severe. Unlicensed sales of intoxicating hemp products already carry misdemeanor criminal exposure under AB 8, and SB 378 adds the potential for civil penalties and lawsuits.
A skilled cannabis defense attorney can challenge how the law is applied, including:
As California ramps up digital enforcement, businesses and individuals operating in the cannabis or hemp space should seek counsel early to avoid costly penalties and reputational damage.
California’s cannabis laws are becoming more integrated and more aggressive. With AB 8 and SB 378 working together, the state has effectively extended its cannabis regulatory system from the dispensary counter to the digital marketplace.
For licensed operators, this provides new protections. For unlicensed sellers and online platforms, it introduces major compliance risks. And for consumers, it means greater safety and transparency in what has long been an unregulated corner of the market.
If you have questions about your business’s compliance with California’s new cannabis and hemp laws—or if you’re facing investigation or charges related to online sales—McElfresh Law can help. Our team has extensive experience defending clients in cannabis-related criminal matters and advising operators on compliance with complex state and local regulations.
Contact McElfresh Law today at 858-756-7107 or through our online contact form to schedule a consultation and protect your rights in California’s rapidly evolving cannabis marketplace.
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