On November 1st, over 700 New York hemp growers will have their licenses expire and replace by a new federal regulatory structure administered by the USDA.
Background
On August 14th, Commissioner Richard A. Ball sent out two letters on behalf of the Department of Agriculture & Markets (DAM) to the USDA. These letters detailed the relationship between NYS and the USDA as the Interim Final Rule (IFR), the USDA’s legislation to oversee hemp cultivation federally, comes into effect on October 31st of this year. These letters state that New York State has decided not to submit a state plan to the USDA. This decision will ultimately transfer authority over licensing and compliance from the NYS DAM to the USDA. Four years ago, the NYS DAM embarked on its industrial hemp pilot research program in accordance with the 2014 Farm Bill. According to the regulations of the Farm Bill, the USDA released its Interim Final Rule regarding the federal cultivation of industrial hemp late last year, set to replace the Farm Bill this year. Under the IFR, states can submit individual hemp cultivation plans which would operate independently from the USDA. This would allow states to maintain control over their hemp industry, including setting appropriate testing requirements, licensing, and enforcement of regulations. Many states have chosen to submit their own plans as the IFR has been sharply criticized for its out-of-touch and overburdensome regulations. Regulations regarding the timing of sampling and testing, disposal of non-compliant plants, and reporting requirements were specifically listed as problematic in New York’s letters to the USDA. Other lawmakers, such as NY Senator Chuck Schumer and Oregon Senator Ron Wyden have also released statements criticizing the IFR and its potential negative effects on the nation’s growing hemp industry.
What This Means
In light of these circumstances, New York State has chosen not to submit a state plan to the USDA for the 2021 growing season. Instead, the state has formally requested that the USDA extend the 2014 Farm Bill until the 2021 growing season, giving states more time to prepare and submit comprehensive plans in line with USDA regulations. Lawmakers also hope that this extension will allow the USDA to review and revise some of its more burdensome regulations, which they have failed yet to do.
Unless the 2014 Farm Bill is extended or the USDA otherwise agrees to change its requirements for the 2021 grow season, it appears that growers interested in cultivating an industrial hemp crop in 2021 will need to apply to USDA for a producer license. NYS DAM has stated that they will do whatever they can to assist growers in this process should this be the case.
Given the USDA’s track record and responsiveness to criticisms of its final rule, it is not certain how they will respond to New York’s requests. Licensed hemp growers in New York State should prepare themselves for this transfer of authority and educate themselves on the tenets of the IFR should this be the case, as it differs greatly from established New York regulations.
Issues with the Interim Final Rule
The IFR sets unrealistic standards for hemp cultivation. For example, while NYS tests for delta-9 THC alone, the USDA calls for the total THC content of the hemp plant, which also includes THCA. Further, it would require tests to come from the top flowers of the plant, which are naturally higher in THC. Based on anecdotal knowledge and experience, most New York hemp producers would have failed in 2019 under the proposed USDA testing regulations.
The IFR also sets strict regulations regarding disposal of non-compliant products. The USDA requires that, if one plant is found to not be in compliance with regulation, the entire crop must be destroyed. Given the nature of its testing requirements, this can be extremely harmful to growers who are otherwise cultivating compliant crops.
Under the IFR, inspections are conducted on an annual basis and with random samples. These inspections must be carried out within 15 days of the anticipated harvest date by a licensed official. This short timeline is unrealistic for many hemp growers and overestimates the capacity of state authorities to conduct accurate and thorough tests within such a short time period.
Another area of criticism concerns background checks; the IFR licensing process would require criminal background checks to ensure employees and “key figures” in business entities are free of drug convictions for a period of ten years. The USDA hemp producer application (which will replace NYS’s industrial hemp grower application), can be found here.
What’s Next for NY Hemp Growers
The letters sent by the Department represent the first clear steps New York has taken to adjust to this interim final rule. The USDA’s response remains to seen. Although the IFR is certainly less than ideal, NYS growers should prepare for a transfer of authority to the USDA this October. This would require applying for the USDA hemp producer application, which will replace NYS’s industrial hemp grower application. This application can be found here.
If, however, the USDA does in fact extend the 2014 Farm Bill, hemp growers in NYS can expect business-as-usual for the 2021 growing season. During this time, the state would likely continue to work with the USDA to revise some of the IFR’s regulations.
The exact nature of this process can not yet be determined. Certain issues, such as what might happen to indoor growing operations during this limbo period, remain unclear. If the USDA does not extend the 2014 Farm Bill, hemp growers should expect further guidelines from the USDA as October 31 approaches. NYS DAM is also likely to release guidelines and assistance for New York growers.
As NYS continues to feel the economic, social, and political ramifications of the Covid-19 pandemic, legislative developments for cannabis within the state have been mostly placed on the sideline. Unless the USDA extends the 2014 Farm Bill allowing NYS more time to draft a comprehensive state plan, growers should not expect much to change regarding the regulations found in the interim final rule.
Joe Vitale, Lead Policy Analyst
Joe Vitale earned his bachelor’s degree in History and German Studies from Binghamton University, where his academic work has led to various awards, research positions, and publications in scholarly journals. Combining his vast research experience with a fine eye for details, Joe delivers in-depth regulatory analysis and compliance research at CCG.