California's New Climate Disclosure Regime for Cannabis: Why 2026 Will Change Everything
California continues to set the bar for environmental regulation, and its 2026 climate reporting mandates under SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act) are now poised to impact the state’s largest cannabis and hemp beverage operators. These requirements are ushering in a new era of cannabis compliance—one where climate risk and greenhouse gas (GHG) emissions reporting are as critical as METRC traceability.
This guide unpacks the compliance landscape, who’s in scope, and a cannabis-specific readiness strategy tailored to the unique realities of multi-state operators (MSOs), beverage makers, and supply-chain partners doing business in California.
Who Must Comply: Applicability & Thresholds
- SB 253 applies to entities with over $1 billion in annual global revenue that do business in California—including many MSOs, private equity portfolios, and beverage/CPG brands.
- SB 261 has a threshold of $500 million in annual revenue and targets publicly disclosed, TCFD-aligned climate risk assessments.
- Implementation timelines are largely holding as of late 2025, even as CARB (California Air Resources Board) has delayed final rulemaking to early 2026 (V&E Law). CARB has released preliminary covered-entity lists and reporting templates (White & Case), and litigation has so far not derailed deadlines.
Key Dates:
- SB 261: Climate risk reports due January 1, 2026
- SB 253: Scope 1 and 2 emissions disclosures due July 30, 2026; Scope 3 for supply chain to follow in 2027
What Must be Reported: Emissions, Risk, and More
SB 253: GHG Emissions Disclosures
- Scope 1 (direct emissions from owned/controlled assets) and Scope 2 (indirect, such as purchased electricity) reporting required for 2026.
- Scope 3 (value chain) emissions will be mandatory in 2027, implicating packaging, logistics, and contract manufacturing partners.
- Public disclosure in a standardized, digitally accessible format.
- Biennial, TCFD-aligned disclosures (Task Force on Climate-Related Financial Disclosures).
- Must address governance, strategy, risk management, and metrics related to climate risk—both physical (e.g., wildfire, water use, agricultural risk) and transitional (e.g., regulatory, market, reputational) impacts.
- Companies not disclosing must explain why and describe plans for future compliance.
Assurance & Governance
- Third-party attestation will become mandatory, ramping up for Scope 1/2 by 2027 (+Scope 3 soon after).
- Governance procedures, board oversight, and explicit documentation are increasingly expected, mirroring SEC proposals (BDO Update).
Sector-Specific Readiness: Cannabis & Hemp Beverage Operators
1. Mapping Facilities, Ops, and Contract Manufacturing (Scope 1/2)
- Create a full inventory of all owned and leased facilities, including grows, manufacturing, distribution, and retail locations in- and out-of-state.
- Engage contract manufacturers and co-packers—obtain GHG data on their energy and utility sources. Educate them about upcoming obligations, especially for beverage canners and formulators.
2. Supplier Engagement for Scope 3
- Launch dialogue with packaging and logistics partners in 2025 to collect emissions data, ahead of 2027 requirements.
- Start inserting GHG data-sharing clauses into supplier contracts.
- Use supplier data platforms or portals to streamline information-gathering (mirroring CPG industry best practices).
3. Climate Risk Integration and Board Oversight
- Assign climate compliance to a board committee or C-suite executive.
- Map out climate-related operational risks using both internal data and input from major suppliers (think water stress for cultivators, supply interruptions due to wildfires, shifts in consumer demand for sustainably packaged products).
- Update governance docs to reflect climate oversight, risk tolerances, and disclosure processes.
4. Building a Data Foundation
- Identify current gaps in emissions tracking (many operators may not have facility-level utility data or robust tracking for contract partners).
- Begin with high-quality estimates—CARB allows qualitative and modeled data in initial reporting.
- Leverage tools used by mainstream beverage/CPG brands (e.g., Watershed, Optera) to harmonize cannabis disclosures with broader regulatory trends.
5. Planning for Assurance & Public Communication
- Source or engage third-party assurance partners with sector-specific knowledge.
- Develop reporting templates and policies for public website posting, as mandated.
- Practice scenario analysis for climate risk: consider local physical risks, regulatory transitions, and shifts in ESG market expectations.
Compliance Challenges: What Makes Cannabis Unique?
- Multiple geographies and product types, often with overlapping entities for regulatory and tax reasons.
- Heavy reliance on contract manufacturing and distribution, necessitating strong supplier relationships and education.
- Legacy systems may lack emissions-tracking or climate risk functionality; retrofitting can be resource-intensive.
- Supplier data quality and reliability is a pain point—incentivizing engagement and digital tools is key.
- Overlap with federal SEC climate disclosure proposals (for listed MSOs) and voluntary frameworks already in use by beverage/CPG peers means harmonization is critical.
Practical Steps & Key Takeaways for 2025–2026
Start Now With a Climate Disclosure Readiness Plan
- Identify all facilities, major suppliers, and contract partners. Map them to Scope 1, 2, and 3 for emissions reporting.
- Get executive/board buy-in and assign clear accountability for climate compliance.
- Begin gathering energy and operational data: Utilities, manufacturing inputs, shipment miles.
- Establish supplier engagement protocols and upgrade contracts to require GHG data and climate risk co-assessments.
- Choose platforms and partners for data collection, modeling, and external assurance.
- Monitor CARB rulemaking and resources to adapt procedures as final regulations emerge in early 2026.
For Businesses:
- Early action will reduce compliance costs, protect reputational value, and ensure access to capital as ESG scrutiny increases.
- Leverage resources from CPG peers, cannabis associations, and CannabisRegulations.ai for ongoing updates.
For Consumers:
- Expect to see product labels, websites, and store signage reflecting climate commitments and emissions data in the near future.
- Sustainability information will become a differentiator among brands marketing in California.
Resources & Further Reading
As regulatory timelines hold steady, the best defense is early, proactive compliance. For personalized support and evolving cannabis compliance strategies, visit CannabisRegulations.ai.
