Introduction
Although marijuana legalization continues to be a hot topic in the new year, it is noteworthy that the federally legal hemp industry continues to develop across the country. New York, one of the nation’s major markets, now counts itself among the states with a fully regulated hemp cultivation, processing, and retail program. The New York Cannabis Control Board (CCB) approved supplementary rules for the state’s Cannabinoid Hemp Program (CHP) at its December 16, 2021 meeting. These additional regulations expand the regulations finalized at the CCB’s November 3, 2021 meeting, which officially launched the CHP and expanded the Medical Cannabis Program. As stated by Board Member Jen Metzger, “The proposed regulations we are releasing for public comment today will enable our hemp farmers to grow their businesses by processing their own flower, and will also establish a clear definition of ‘craft’ for labeling and marketing purposes, which will empower consumers to make informed choices while supporting sustainable small businesses.” Additionally, the regulations continue the trend of states stepping in to regulate hemp and CBD products in light of the FDA’s failure to do so.
Hemp Under the Farm Bill
Under the Agriculture Improvement Act of 2018 (2018 Farm Bill), cannabis with a THC concentration of 0.3% or less, commonly known as “hemp,” was removed from the Controlled Substances Act (CSA). “The 2018 Farm Bill allows states and tribes to submit a plan and apply for primary regulatory authority over the production of hemp in their state or in their tribal territory,” thus placing the regulation of this emerging market within state discretion. Currently, over 40 states have enacted legislation to establish hemp production programs or allow for hemp cultivation research. USDA’s own overarching regulations for this federal Domestic Hemp Production Program were finalized in 2021. Originally, states’ hemp programs dealt largely with hemp cultivation. More and more, however, state regulations are dealing with content, packaging, and labeling requirements for the hemp and CBD products themselves. This has created a patchwork of rules governing retail-products and, since hemp and CBD products are federally legal and may be sold across state lines, requires manufacturers to stay abreast of regulatory requirements in each market.
New York’s Hemp Regulatory Changes
In March 2021, New York passed the Marihuana Regulation and Taxation Act (MRTA). The MRTA created and tasked the Office of Cannabis Management (OCM) and the CCB with “regulat[ing] medical cannabis, adult-use cannabis, cannabinoid hemp and hemp extracts.” The OCM Cannabinoid Hemp Program seeks to educate the public on cannabinoid products, conduct enforcement actions against substandard or prohibited cannabinoid hemp products, and create consumer protection and quality control standards for manufacturing, packaging, labeling, and laboratory testing of cannabinoid products.
The OCM licenses hemp retailers, which are businesses selling cannabinoid hemp products online or in person, and distributors, who sell or distribute CBD products to retailers. CBD products manufactured outside of New York may not be distributed to retailers within New York unless transported by a distributor licensed by the OCM. In addition, the OCM oversees two types of hemp processor licenses: “extract and manufacturing” licenses, which permit the licensee to extract or isolate cannabinoids from hemp, as well as manufacture final CBD products, and “manufacturing only” licenses, which require the licensee to purchase crude oil, distillate, isolate, or other intermediary form of hemp to be manufactured into a final product. Hemp cultivators are separately licensed by the New York Department of Agriculture and Markets.
“Hemp” is the cannabis plant and any parts of the plant with a delta-9 THC concentration of .3% or less, and “cannabinoid hemp products” are “hemp or any product manufactured or derived from hemp, including hemp derived terpenes, in its final form, used for human consumption.” Cannabinoid hemp products do not include cosmetics as defined in the Federal Food, Drug & Cosmetic Act. In New York, no one may sell cannabinoid hemp products (either in person or online) without a Cannabinoid Hemp Retailer license issued by the OCM. Hemp extracts may not be sold directly to consumers — they must be manufactured into a cannabinoid hemp product before being offered for retail sale. The existing regulations ban the sale of smokable hemp flower (but not disposable cartridges pre-filled with hemp extract) and the addition of delta-8 THC and delta-10 THC to cannabinoid hemp products.
The December 2021 regulation amendments include the addition of a “Cannabinoid Hemp Farm Processor” license, which is reserved for cannabinoid hemp processors who are licensed to cultivate hemp and manufacture cannabinoid hemp flower products. Such licensees may not produce more than 1,000 pounds of dried hemp per year, and they may not purchase or sell hemp or hemp extract other than those produced from hemp grown on their own farm. Cannabinoid hemp farm processors may not perform extraction of hemp, and they are exempted from the requirement to submit a third-party Good Manufacturing Practices facility audit with their license application.
In addition, the amendments to the hemp regulations:
- Require labels to include the state or country of origin from which the hemp used in the product was sourced;
- Add a definition for “craft” cannabinoid hemp products, which are those products manufactured from hemp grown by a licensed hemp grower who grows less than 1,000 pounds of dried hemp annually and hand trims, hang dries, and, if a flower product, hand packages the product;
- Remove the previous requirement that information in the supplement or nutritional fact panel be a larger font size than other information on the product label;
- Remove the requirement that cannabinoid hemp products be shelf stable, allowing for certain types of foods and beverages infused with cannabinoids;
- Change the per serving milligram (mg) cap for dietary supplement cannabinoid hemp products from 75 mg to 100 mg of total cannabinoids per serving; and
- Increase the acceptable THC concentration of intermediary hemp extract from 3% THC to 5% THC, conforming with practices in other states.[1]
The CCB is accepting comments to the proposed amendments until March 7, 2022. Comments can be emailed to regulations@oc.ny.gov. Applications for cannabinoid hemp processors, retailers, and distributors are currently being accepted, and more information about applications can be found at https://cannabis.ny.gov/cannabinoid-hemp. More information about obtaining a hemp grower license is available at https://agriculture.ny.gov/hemp.
[1] https://www.law360.com/articles/1449525/attachments/0
Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.