NYS issued the nation's most comprehensive set of regulations on hemp extract products. These proposed rules cover the entire marketplace from licensing retailers to what products can be sold.
Who's affected by these regulations?
In short, everyone. These regulations are a result of the Hemp Extract Law (a8977/s6968), passed during the 2019 legislative session by Assemblywoman Donna Lupardo and Senator Jen Metzger in response to the need to protect New York consumers from mislabeled or dangerous product and regulate a fast-growing marketplace of CBD products. The bill itself laid out a framework for the regulations and was changed significantly by the Governor's Office during a chapter amendment process. Importantly, the Hemp Extract Law takes steps to broadly define hemp extract products to include all cannabinoids from hemp while transferring regulatory authority from the Department of Agriculture & Markets (DAM) under the Hemp Pilot Program to the Department of Health (DOH).
Once these regulations take effect after a public comment period ending January 11th, all companies who extract, manufacture, distribute, or sell for retail hemp extract products will need to be licensed. This extends to any out of state companies selling to consumers in New York and would most likely apply to online sales. The fees proposed for such licenses are:
Hemp Extractor - $1,000 application fee + $4,500 license fee.
Hemp Manufacturer - $500 application fee + $2,000 license fee.
Hemp Retailer - $300 license fee per location.
What's allowed to be sold?
These proposed rules laid out what exactly can and cannot be sold in New York, delivering some big news on both sides. The State went far to buck the federal government on their inaction in regulating hemp extracts while potentially providing a "safe harbor" for a range of products in one of the Country's largest consumer markets.
- Food & Beverage products up to 25mg per unit
- Dietary supplements with a cap of 3000mg per product
- Vaping products
- Cosmetics as defined by federal statute
What's not allowed:
- Injectable (we aren't sure what this means)
While the allowance of food & beverage products will be celebrated as a huge win for the industry, the prohibition on flower products will certainly cause a backlash as market indicators show hemp flower to be one of the most stable and quickly growing segments. The legitimization of dietary supplements is also a huge step as the FDA currently practices "discretionary enforcement" while officially not allowing any cannabinoids as supplements.
Another interesting surprise is that vapes are allowed, under strict quality standards, considering that Governor Cuomo took swift action last year during a sweep of respiratory illnesses linked to vaping. It appears the DOH took the position that safely regulated products are better than the inevitable sale on the illicit market.
A Focus on Quality
One of the main reasons cited for why the Hemp Extract Law and subsequent regulations were needed was to protect public health. The FDA has recently reported that many extract products they have tested are either contaminated or don't have the advertised amount of cannabinoids in them. Because the FDA doesn't regulate any extract products, there's a large gap in enforcement leading to many CBD companies rushing out bad products. This had resulted in lower consumer confidence around hemp extract products and a reluctance for many large distributors and retailers to carry them.
Good Manufacturing Practices
The FDA has set strict regulations for the manufacturing of food, beverages, supplements, and pharmaceuticals called GMPs. These standards are not currently enforced for hemp extracts due to the lack of FDA regulation but are widely seen as necessary to ensure consistent and quality products. In the DOH regulations, the need to conform to GMPs is a common theme throughout. Not only do manufacturers need to demonstrate their compliance through a 3rd party audit, but all products sold also need to conform to these standards.
In addition to standards on the production side, products sold in-state will need to conform to a set of labeling guidelines. These requirements include a batch number, manufacturer name, link to test results, and the origin of where the hemp was grown. Retailers will need to ensure that the products they sell meet these guidelines.
The public comment period extends to January 11th, 2021 and we expect there to be some minor changes to these rules based on submitted comments. This will coincide with the Governor's proposed budget that will most likely include the legalization of adult-use cannabis and include hemp regulatory authority into a newly created Office of Cannabis Management.
Read the full regulations here: https://regs.health.ny.gov/sites/default/files/proposed-regulations/20-21hemp.pdf
Businesses should begin the process of conforming their operations and products to these regulations. For a more in-depth analysis and help understanding how these new rules affect your business, fill out the contact form below.