Freshly Baked: Insight into NY’s New Hemp Laws
Hemp may be a budding topic of interest in New York State, but the legal and regulatory landscape drastically changed as of December 9, 2019. On that date, Governor Cuomo signed legislation establishing a more streamlined regulatory framework for the growing, processing, and sale of hemp and hemp extract in the state. While not operational yet, this new legislation will become effective on March 9, 2020.
Marissa Weiss, Esq., an associate attorney at the Walden-based firm Jacobowitz & Gubits, offers some insights and legal information regarding the pending updates for those entrepreneurs both seasoned and new to the hemp marketplace.
- What does the new law say?
Prior to the new law, more than 80 farms and businesses had been granted permits to participate in the state’s Industrial Hemp Agricultural Research Pilot Program, which began in 2015. Although officials were ecstatic at the possibility of gaining a new cash crop in the state, it was not long before the state Department of Agriculture and Market’s Division of Plant Industry was overrun with applications from those farmers and processors seeking to delve into the industry. The world of hemp regulation became hazy at best, with all hemp licenses labeled as either “hemp grower” or “hemp processor,” without clear rules for those entrepreneurs seeking to enter both markets. Even hazier was the world of cannabinoid (CBD) products, including oils, as virtually no state—nor federal—regulations existed.
Essentially, the new hemp bill attempts to clarify this arena by categorizing hemp into two classes: “industrial hemp,” used for fiber or grain purposes (known as “industrial purposes”), and “hemp extract,” defined as any product made or derived from industrial hemp, which is used or intended for human or animal consumption or use for its CBD content. Hemp extract is further split into three types of licenses:
- CBD grower;
- CBD manufacturer (e.g. manufacturing and selling CBD products other than oils); and
- CBD extractor (e.g. extracting and manufacturing CBD oil).
As before, Agriculture and Markets aims to weed out the bad applicants by requiring that all license applicants provide sufficient evidence that they are willing and able to comply with all state regulations, that they are effectively able to control THC levels in their plants or products, and that they possess (or have the legal right to use) sufficient land, buildings, and equipment to successfully carry out the licensed activity.
- What does this mean for NY hemp growers?
For hemp growers, the impact of this regulation depends greatly on what kind of hemp is grown and whether or not you have a current, valid license. If you are a current farmer growing industrial or hemp extract, not much will change—although there may be changes that result from the new federal hemp research program once it takes effect on November 1, 2020. Farmers with current, valid authorizations to grow hemp do not need take any additional action until October 31, 2020.
However, if you are a current CBD grower who wants to continue growing past this timeframe, or if you are a farmer looking to get into the CBD grower’s market in the 2020 growing season and beyond, you must adhere to these new regulations. Agriculture and Markets will start accepting applications to grow both industrial hemp and hemp extract in early 2020.
Our office can help with these applications and will be further investigating the impacts of this new federal program throughout 2020 in order to provide updated legal guidance to current and new growers alike.
- What does this mean for NY hemp processors?
To be blunt, the new law will most affect NY hemp processors. Since processing is now more categorized, it is possible that what was considered under the umbrella of a single processing license prior to December 9 may now require three different hemp extract licenses. In addition, a separate license will now be required for each facility at which a licensed activity takes place. One exception: CBD extractor license holders are allowed to obtain a license allowing for the growing of hemp at the same property. Since licenses must be renewed every two years and be subject to a fee based upon the amount of hemp extract grown or produced (or by gross annual receipts, in the case of CBD sales for CBD manufacturer licenses), the impact to hemp entrepreneurs’ bottom lines could become substantial.
One final note: all hemp processors must now only use hemp raw product grown within the state. Time will tell whether this mandate allows for anticipated higher profits to stay within the state’s borders.
- What does this mean for retail sales of CBD?
CBD retail sales, previously unregulated entirely, are now covered by CBD grower, manufacturer, and extractor licenses. This means that CBD growers, processors, and extractors are now not permitted to sell hemp extract products without an additional license. Agriculture and Markets will establish the full licensing program in early 2020. Once established, licensed CBD product producers are allowed to grow, manufacture, and/or sell CBD products as a dietary supplement. Hemp extract producers should also take note that their products must now include labels that warn customers of the potential impact of consumption and no label can state that hemp extract can cure or prevent any disease without the necessary additional Food and Drug Administration (FDA) approvals.
It remains illegal to sell foods and beverages with CBD added. Some have pointed to a provision in the new law which allows the addition of less than twenty milligrams of CBD per 12 ounce beverage. However, Governor Cuomo and the state legislature have agreed that this provision will be removed prior to the law’s effective date—March 9, 2020. Therefore, it remains and will remain illegal to sell foods and beverages with CBD added. Time will tell whether the state decides to change this policy in the future.
One buzz kill: the changes are not solidified yet—Governor Cuomo and the state legislature have agreed that additional legislative changes, which include revising provisions regarding CBD-infused food and beverages, must be enacted before March 9, 2020. As such, it remains highly important to consult an attorney well versed in the ever-changing world of hemp prior to spending time, money, and effort in applying for the new licenses.
Jacobowitz & Gubits law firm remains committed to striving to provide sound legal navigation to those looking to wade through the ever-changing world of hemp as regulations multiply and intensify. You can learn more by visiting www.jacobowitz.com.
This is not intended to be legal advice. You should contact an attorney for advice regarding your specific situation.
A portion of this article appeared in the 2.15.2020 edition of Chronogram.com, “Understanding New York’s New Hemp Laws: A Q&A with Attorney Marissa Weiss, Esq. You can read that article here.