[Part 1: Retail License] New York DOH will Impose New Regulations on Hemp Companies

Hemp and CBS retailers across NYS have been operating in grey area since the consumer hemp products market exploded at the end of the 2010s. This grey area existed because the products sold, and the sale of those products by retailers were both un-, or under-regulated within NYS law. The passage of the Farm Bill of 2018 amplified this problem when it legalized industrial hemp across the United States.  However, New York State’s Hemp Regulations are about to become more stringent.

In the aftermath of its passage, hemp and CBD brands felt a loosening of their existing restrictions, and we saw many retailers opening up their doors to the products to capitalize on their popularity. False medical claims, nebulously labeled products, and unverified ingredients caught the attention of NYS legislators, and they sought to wrap a more restrictive, protective regulatory framework around the industry.

The first attempt to materially regulate hemp industries:

At the tail end of 2019, Cuomo signed S.6184/A.7680 into law[1]. This bill marked NYS’ first attempt to materially regulate the hemp industries. The bill is primarily a licensing law; it establishes the ability for companies operating in hemp to do so with a license in hand. The pilot program that the 2014 federal farm bill established did create licenses for growing and processing, but this is the first time that licenses have been developed to cover retailers, and the first time that the items produced and sold have specific requirements.

NYS Department of Health has since released proposed regulations[2] pursuant to this bill that provide more clarity than the bill itself into how these new provisions will function. In this post, I will focus on the impact on retailers of hemp extracts.

If you want to be a “cannabinoid hemp retailer” in NYS after January 1, 2021, you need a license:

According to these regulations, you must hold a license under the act in order to sell or offer cannabinoid hemp products to consumers in New York State. What does that mean? If you carry CBD on your shelf today, you would need to obtain one of these licenses in order to continue to do so.

New York State's Hemp Regulations

Application content:

These regulations set forth the requirements for the application for licensure. It must include the following items. The method for this application has not been released on DOH’s website as of yet[3]. With that said, I assume that this will be either a pre-defined form or an online portal similar to other programs administered by the DOH.

The proposed regulations list the following required application information be submitted along with the licensing fee of $300. I think it is safe to assume that additional required information will come to light as these regulations make their way through the approval process. The following is taken directly from the regulation:

  1. the name, address, telephone number and email address of the applicant;
  2. the physical address of any real property where the applicant intends to operate, the days and hours of operation of such retail facility, and for any online retailer, the internet address of the applicant;
  3. the name of the manufacturer or cannabinoid hemp processor, and state or country of manufacture, for all cannabinoid hemp products the applicant intends to offer for sale;
  4. a summary and description of the types and forms of cannabinoid hemp products the applicant intends to offer for sale;
  5. a statement that the applicant will not sell inhalable cannabinoid hemp products to consumers under 21 years of age;
  6. a statement that the applicant and those in control of the entity, meaning a person or persons that have the ability to direct the activity of the applicant or licensee, including principals, officers or others with such control, are of good moral character;
  7. a statement that the applicant will comply with all applicable state and local laws and regulations relating to the activities in which it intends to engage under the license;
  8. a statement that the applicant will not distribute or sell any cannabinoid hemp product in the form of an injectable, transdermal patch, inhaler, suppository, flower product including cigarette, cigar, pre-roll or any other disallowed form as determined by the department;
  9. proof of a certificate of authority from the New York State Department of Taxation and Finance, as applicable; and
  10. any other information as may be required by the department.

If you already sell hemp products, do not panic! As long as you otherwise comply with the regulations and submit your application by April 1, 2021, you can continue to operate normally and will considered to comply with the law.

Other notes on the license:

  • It is valid for 1 year
  • There is a $300 fee per retail location
  • Renewals cost the same
  • Licenses are only transferrable with DOH approval

What can a licensed retailer sell, to whom, etc?

The nitty gritty details of what kind of hemp products are permissible is a long list, which we will cover in a later post. However, it is quite clear that a licensed retailer in NYS may only sell products that meet the requirements under Secs. 1005.8, 1005.9, 1005.10, of these regulations. Sale of anything outside of those parameters would be a violation of the license, and could subject the licensee to fines, revocation of the license or non-renewal in later years.

There are age restrictions on certain products, prohibitions on specific kinds of products, required signage, advertisement restrictions, etc. Although the regulations provide some clarity to these areas, I would expect to see them become more robust in future drafts of these regulations.

For further questions on regulations being imposed by New York State Department of Health please contact me at mhopkins@teamdkb.com.

 

Sources:

[1] https://www.governor.ny.gov/news/governor-cuomo-signs-legislation-establishing-regulatory-framework-producing-and-selling-hemp#:~:text=Cuomo%20today%20signed%20legislation%20(S,protecting%20consumers%20from%20potential%20harm.

[2] https://regs.health.ny.gov/sites/default/files/proposed-regulations/20-21hemp.pdf 

[3] https://www.health.ny.gov/regulations/hemp/retailers.htm