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New York’s Long-Awaited CBD Regulations Are Here

Already, advocates and lawmakers have raised concerns about the exclusion of “CBD flower.”

Published on Oct 28, 2020 6:55AM EDT New York

Co-founder of Cannabis Wire.

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The push to better regulate hemp and CBD products in New York began more than one year ago, and it began with Assembly member Donna Lupardo.

As hemp production boomed upstate and unregulated CBD products hit shelves across New York City, from cafes to smoke shops to standalone CBD retailers, the Broome County lawmaker told Cannabis Wire at the time that she had introduced legislation to regulate these products because “we have to do something.”

In December, Governor Andrew Cuomo signed a bill, sponsored in the Senate by Senator Jen Metzger, to establish regulations for the production and sale of hemp and hemp extracts in the state. This week, nearly one year later, the New York State Department of Health released those regulations, which were expected in mid-July, but delayed, like many things, by COVID-19. The regulations will land on the NYS Register on November 10, and the public comment window will be open until early January.

“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,” Governor Cuomo said in a statement Wednesday. “Establishing the State’s Cannabinoid Hemp Program to regulate production and sale of hemp and hemp extract will help protect both consumers and farmers.”

Lupardo told Cannabis Wire on Wednesday that, when she first saw the hemp regulations to establish the state’s Cannabinoid Hemp Program, “it was just a real feeling of relief that we finally had a document that we were going to be able to to look at, with a date, certain that we knew that it would go to the register in early November.”

Lupardo added that there wasn’t anything in the regs that she wasn’t expecting “except the ban on the sale of flower.”

“That was definitely not something I expected to see. Our businesses who have been operating in the hemp industry, they’ve already been selling this. They’ve already been manufacturing and processing this. Many, many consumers have already been using this. The goal was to bring them out of the gray area, because it was unclear from the prior rules and regulations what the official position was on flower,” Lupardo said.

Lupardo foreshadowed a potential regulatory wrinkle: Cuomo is expected to again add legalization to his budget in January, and lawmakers in New York are likely to face more pressure to get legalization over the finish line, as New Jersey voters are expected to legalize next week. After New York lawmakers legalize cannabis, the hemp, medical cannabis, and adult use cannabis programs would all be regulated under the same umbrella, the Office of Cannabis Management. While New York’s medical program bans flower, no adult use cannabis program has made such a move, so how will New York regulate flower?

“Obviously, when we put all those three together, we’re going to have to allow smokeable products in all three areas. So it’s going to become consistent at some point,” Lupardo told Cannabis Wire.

As Cannabis Wire has reported, states are divided on smokable hemp, with some lawmakers embracing the trend and others moving to ban it.

Allan Gandelman, president of the New York State Cannabis Growers and Processors Association, told Cannabis Wire that both the timing of the release of the regulations—just after harvest season—as well as the exclusion of hemp flower, have dealt a major blow to New York’s hemp farmers.

“Most small farmers are really upset because the only product they could actually sell in this market is flower. And at the last minute, they took flower out of the regulations and are not allowing it to be sold,” Gandelman said.

Specifically, the hemp flower market is important to New York’s hemp farmers because of the existing hemp surplus from last year, so it “doesn’t make sense” for small farmers to put their energy elsewhere.

“What small farmers are very good at is producing a high quality craft flower. That is, at a small scale, is what is economically feasible,” Gandelman said.

So why was hemp flower excluded? Gandelman said he’s not 100% sure, but that he was told that, because flower isn’t allowed in the state’s medical program, it could create unfairness if the hemp regulations allowed flower.

These regulations come as businesses across the country eagerly await word from the Food and Drug Administration about CBD products. The 2018 Farm Bill removed cannabis plants with .3% THC or less, also known as hemp, from the Controlled Substances Act, catalyzing the hemp industry nationwide. While the USDA has been tasked with regulating hemp production, the FDA has spent months holding public hearings and accepting public comment as it decides which non-pharmaceutical products can contain CBD, and how much.

That a state with the population and influence of New York is poised to green-light CBD in food and drink, in vapes, in cosmetics, and in supplements, could encourage other states to do the same.

Gandelman said the inclusion of CBD in food was “amazing,” adding that NYCGPA “fought for that for two years,” though it’s unclear what specific shape this section of the market will take, because it’s not been allowed before.

After a flurry of growth in 2019, the state’s hemp industry has been in a limbo in 2020, in part due to the delayed regulations. (Another factor was uncertainty over the future of the state’s hemp program, which was expected to transition from 2014 Farm Bill regulations to 2018 Farm Bill regulations this month, but states were granted a one year extension.) Gandelman told Cannabis Wire that the “uncertainty” created by the delay has prevented the hemp industry from really taking off.

“People have not made investments in any sort of real infrastructure in terms of processing and manufacturing in New York until there was a clear path to market,” Gandelman said.

Lupardo told Cannabis Wire in June that she communicated to Cuomo that the state has an entire industry of growers, processors, manufacturers, and retailers who were “anxiously waiting” for the rules to be released.

“We have a whole industry on pause. And it has been exacerbated by the surplus that was grown last year,” Lupardo said, adding that the surplus adds an “urgency” to the situation.

Over the past year, the state has made efforts to accommodate the booming hemp industry. The New York State Departments of Health and Agriculture and Markets announced last November, for example, that the state’s medical cannabis license holders will be able to use hemp and hemp extracts produced under the state’s Hemp Agricultural Research Pilot Program to “produce cannabidiol (CBD) and other cannabinoids for approved medical marijuana products.” As Cannabis Wire reported, agriculture commissioner Richard Ball said this move gives hemp farmers “another market for their products.”

“It’s kind of a perfect storm, in terms of COVID and then also the lack of regulations and oversupply of hemp on the market, both in New York state and nationally,” Gandelman told Cannabis Wire in June. “Some farmers have decided not to grow hemp this year. And some farmers have decided to scale back, which is very different from 2019, when people were scaling up their operations and growing a lot of acres across the state.”

One of those companies that scaled back is Canopy Growth, one of the world’s highest-valued cannabis companies, which had unveiled a hemp park in upstate New York last year. This April, the company announced that it would halt growing in New York, “due to an abundance of hemp produced in the 2019 growing season,” and would instead use existing supply to “produce hemp-derived CBD products for the US market.”

Lupardo told Cannabis Wire that she’s had “a number of conversations with them recently.”

“They tell me they’ve been waiting for these regs to come out so they could decide what they are going to manufacture in the plant that they’re developing in my community. The plant was put on hold because they didn’t know what they were going to be making up there. So this will prompt them to figure out what kind of product lines they’re going to put out there,” Lupardo said.

Public comment will be open until January 11.

“This is the opportunity for all interested parties to respond. And they will. And I expect the issue of the ban on flower to be loudly, loudly discussed,” Lupardo said.

Editor’s note: this story was updated on October 28 to include comments from New York Governor Andrew Cuomo, Assembly member Donna Lupardo, and Allan Gandelman with NYCGPA.

Already, advocates and lawmakers have raised concerns about the exclusion of “CBD flower.”