Late last month, the state’s fledgling hemp industry finally received long-awaited regulations from the state Department of Health to regulate cannabinoid hemp products in New York State. Industry officials praised the new regulations that they believe will foster significant growth in the industry.
However, the Election Day vote in neighboring New Jersey to legalize recreational marijuana just may put the needed legislative pressure on state lawmakers to do the same in the Empire State.
The successful ballot measure in New Jersey adds an amendment to the state constitution allowing people aged 21 and older to use recreational marijuana. The amendment also allows the state to set up a regulated market to grow, distribute and sell the drug, according to the Wall Street Journal.
The use of recreational marijuana is currently permitted in 11 states and Washington, D.C., according to the National Conference of State Legislatures. Also, on Election Day, voters in Arizona, South Dakota and Montana approved measures to legalize recreational marijuana.
In the coming days and weeks, New York State lawmakers will begin reacting to the passage of the recreational marijuana legislation in New Jersey. It should be noted that Gov. Andrew Cuomo in January 2020 pledged for the second year in a row to legalize recreational marijuana. However, in the midst of the COVID pandemic, that effort failed. Now, facing a significant revenue shortfall due to the pandemic and a questionable path to further coronavirus relief funding from Congress, could a third campaign to legalize recreational marijuana in New York State be far behind?
Back in January 2020, Gov. Cuomo in his State of the State address once again pushed for passage of a regulated “adult-use cannabis program” for individuals 21 years of age and older. He noted that the State Police and the Department of Health issued a report that said the benefits of the legalization of recreational marijuana outweighed the risks.
“Now we just have to put it in place, and we have to do it in a way that creates an economic opportunity for poor communities and people who paid the price, and not for rich corporations that are going to come in to make a buck. It reduces the impact of criminalization on communities of colors. It will automatically seal certain cannabis-related criminal records. It implements quality control,” the governor said. He added that his proposal would allow counties and large cities to opt out of the program. If legalized, the regulated industry could generate approximately $300 million in tax revenue, the governor noted.
At the time, the governor said, according to a Reuters report, “This year let’s work with our neighbors New Jersey, Connecticut and Pennsylvania, to coordinate a safe and fair system and let’s legalize adult use of marijuana,” Cuomo said.
The governor’s efforts to legalize recreational marijuana in 2019 and 2020 failed due to disagreements over ensuring fairness for minority communities affected by enforcement of drug laws, how to spend the tax revenues, and whether to allow local communities to opt out. Multiple published reports state that aides to the governor have predicted that Cuomo will once again look to pass recreational marijuana legalization legislation as part of his 2021-2022 state budget.
New Proposed Regulations for Cannabinoid Hemp Products Seen as Boom for Industry in Hudson Valley, NY State
In late October, the New York State Department of Health filed proposed regulations to regulate cannabinoid hemp products in New York State. In accordance with legislation signed earlier this year by Gov. Cuomo, the department is creating a Cannabinoid Hemp Program. The program will license both cannabinoid hemp processors and retailers and set quality control standards that all cannabinoid hemp products must meet.
"These regulations are the next step toward regulating the growing hemp industry in New York in a way that protects consumers and helps ensure the industry's long-term viability," said Governor Cuomo. "Establishing the state's Cannabinoid Hemp Program to regulate production and sale of hemp and hemp extract will help protect both consumers and farmers."
The Cannabinoid Hemp Program will organize and legitimize the cannabinoid market in New York State by creating a licensing framework for cannabinoid hemp processors and retailers, and by establishing basic manufacturing, packaging and labeling and laboratory testing standards. Currently, applications for cannabinoid hemp processing and retailing licenses are under development, and NYSDOH intends to make them available in early 2021.
The new regulations were praised by state lawmakers and hemp industry executives. New York State Senator Jen Metzger joined Town of Warwick Supervisor Mike Sweeton, farmer Mark Rogowski, Orange County IDA CEO Laurie Villasuso, and hemp industry leaders at a press conference outside of Kaycha Labs in Warwick in late October to announce major new initiatives to advance Orange County’s hemp industry.
Metzger, who chairs the Senate Agriculture Committee, said the draft regulations allow for CBD-infused beverages and food, and if finalized, would greatly expand opportunities for developing a wider range of CBD products in New York State. At the press conference, Senator Metzger also announced $250,000 in state funding to the Town of Warwick to purchase equipment for rent by local farmers diversifying into hemp production. The equipment will be housed at the Orange County Industrial Development Agency Accelerator in one of the historic buildings at the Warwick Tech Park where manufacturing and office space for CBD-related small businesses will be available for firms that participate in the IDA’s Accelerator program.
At the press conference, Urban Extracts, Rogowski Farms, and Hillview Med announced a new partnership in which locally grown and processed hemp extract will be sourced for a CBD-infused seltzer, Kaló, distributed by Pepsi. “Now we have the rules of the game, and now we know what we’re shooting for,” said Urban Extracts CEO Eran Sherin, while discussing the opportunities associated with the local manufacturing of hemp, allowing for scale and creating Orange County jobs.
Warwick Town Supervisor Michael Sweeton said, “Our hemp initiative had stalled since the regulations were under review which forced companies to put their plans for investment on hold. I reached out to Senator Metzger for help and she delivered by working to get New York State to issue these regulations. This will now jump start our effort to redevelop the former prison and create jobs here in Warwick.”
Mark Rogowski of Rogowski Farm said, “This latest legislation that Senator Metzger put a lot of time into is very encouraging. To be able to expand it into food and beverage gives us another avenue where we can move this product. A lot of us farmers in the Black Dirt region have a lot of faith that we’ll be able to pull this off. Hopefully it sparks things on a national level where you’ll see CBD demand explode like we thought it would back in 2018. Hopefully 2021 will be great and we can start growing a good quantity in New York.”
Eran Sherin, CEO of Urban Extracts added, “Everything that we need to be successful is right here in our community, and it really starts with our farmers… What we’ve learned over the last three years is we know how to produce [hemp], we know how to extract it, we know how to productize it, but a business is only successful if you have customers and you can distribute, and this set of regulations is so important because it really now gives us the ability to scale and to distribute product.”
In 2015, the governor launched the Industrial Hemp Agricultural Research Pilot Program, supporting farmers and further boosting economic development in upstate New York. Since then, New York's hemp program has expanded significantly, making New York one of the leading hemp producing states in the country, with more than 700 farmers and 100 manufacturers of hemp products. Hemp is a sustainable, carbon-sequestering crop that is capable of being transformed into hundreds of products including textiles, furniture, fuel, food, construction materials and personal care items.
Some hemp products that have been growing in popularity include cannabinoid hemp products such as Cannabidiol, or CBD, which can be found online or in retail stores throughout the state. While regulations exist at the federal level for the growth of hemp, there are currently no federal regulations for the processing and manufacturing of cannabinoid hemp products, resulting in the cannabinoid hemp marketplace lacking basic consumer protections that are common in similar industries. There are published reports of cannabinoid hemp products that do not contain any cannabinoids but contain unspecified or inconsistent levels of THC - the psychoactive component of the cannabis plant - or are contaminated with harmful toxins.
The proposed regulations fill that regulatory void and create a system allowing for the use of hemp-derived cannabinoids in certain foods, beverages, topical sand dietary supplement products, provided regulatory requirements are satisfied. All cannabinoid hemp products must be manufactured using good manufacturing practices based on the end product's intended use. The label must contain the total amount of cannabinoids in the product, number of cannabinoids per serving, a nutritional or supplement fact panel, information about whether the product contains THC and appropriate warnings stating the product is not intended for children, its use may cause the failure of a drug test, the product has not been evaluated by the FDA and if pregnant or nursing, to consult a healthcare provider before use.
Additionally, cannabinoid hemp products are required to be laboratory-tested before entering the market, with testing for their cannabinoid profile, heavy metals, microbial impurities, mycotoxins, pesticides and residual solvents. This information is required to be retrievable by the consumer in the form of a QR code or corresponding link on the product label. Retailers are prohibited from selling inhalable cannabinoid hemp products, such as vape products, to consumers under 21 years of age.
