New York State’s Hemp Extract Law will disrupt the industry, providing for regulation, and increased scrutinity over hemp companies. Ever since the passage of the Farm Bill of 2014, hemp companies have been testing the waters both from a growing and processing perspective, and from a retail perspective. The 2014 law allowed states to set up pilot programs for growing hemp in their states without facing federal intervention (even though hemp was still a Schedule 1 substance at the time).
With the passage of the Farm Bill of 2018, hemp was totally descheduled federally which left the door open for the hemp industry to explode. The rapid growth resulting from legalization, coupled with the fact that states have been slow to keep up with the industry’s evolution has left the door open to unregulated, unsafe hemp extract products hitting the market. In response to this issue, NYS has taken steps to create a regulatory framework surrounding the hemp extracts within NYS.
In December of 2019, Governor Cuomo signed the new Hemp Extract Law. This law is primarily a licensing law in that is provides for various levels of licenses to grow, process, and distribute hemp extracts in NYS. It further requires retail facilities where hemp extracts are being sold to obtain a permit to do so.
This change is monumental in that in the past, hemp extracts have been regulated the same way as industrial hemp has been regulated. To be clear, under NY law, industrial hemp and hemp grown for hemp extract production are actually different! Industrial hemp under NY law is used for food and fiber production, whereas hemp grown for hemp extract production is used solely for its chemical contents in a concentrated form.
In the past, if a business owner in NYS wished to sell hemp extracts in their store, they only needed to open a store. That’s it. They could potentially face some questions and raised eyebrows from the community, or experience resistance from zoning officials. This lack of regulation left consumers vulnerable to bad actors, or to those selling products labeled as “CBD” or “Full Spectrum Hemp Extract” without any comfort that the contents agreed to the label.
Under the new regulatory framework, such a facility would be required to hold a permit to sell hemp extract products, and the hemp extracts they sold would need to be produced by licensed manufacturers. In the eyes of NY legislators, this is the first layer of protection for consumers.
We believe that this law is simply a precursor for more regulation within the hemp industry in NYS, and it will also be echoed in a recreational marijuana program should the state move in that direction in the future.