Published December 10th, 2018
This past week, The NYS Department of Agriculture and Markets opened up applications for both growers and processors of CBD and other cannabinoids derived from industrial hemp. They also published an updated “Research Partner Agreement” for processors which outlines the rules and regulations needed to conduct research on industrial hemp. This included clear guidelines for sourcing, processing, and selling products with CBD or cannabinoids. Below you will find our analysis and opinion on these new regulations and how we see this shaping the New York hemp industry. All analysis and opinions are our own and do not necessarily reflect the views of our partner farmers or clients. Further, this is an informational document with a broad overview, detailed analysis is provided to our farmers and clients.
What are some of the changes?
The new research agreement included many new changes to the NYS pilot program and vary in importance depending on your research or business within the program. Below are some of the changes that stood out to us and we feel will have the greatest and most far reaching impacts. We implore you to read the new agreement yourself, located on the NYS Department of Agriculture and Markets website.
All CBD products produced or market in NYS must adhere to FDA Dietary Supplement regulations which includes cGMP facility certification. Pre-approved products are pills, capsules, tablets, tinctures, droplets or elixir, chewables, or isolate powders.
All processing of CBD must be sourced from New York hemp producers.
Children are prohibited from being sold or marketed CBD products.
Food, vape, or smoke-able products containing CBD are prohibited.
All hemp and derived products will be compliant with less than 0.3% delta-9 THC content.
Any individual with a felony or misdemeanor drug related conviction may not be allowed to participate in the program.
What do these changes mean?
While the updated regulations are specifically tied to the research pilot program, it’s hard to imagine these rules not being in effect for 2019. Even though the 2018 Farm Bill would eliminate the need for pilot state research programs, states would be required to submit a plan for regulation of an industrial hemp market and it would make sense for some, if not all, of these changes to be included. Specifically, the treatment of CBD products as a dietary supplement seems to make clear the intent of NYS to go along with any future federal regulations on CBD. However, currently the Food and Drug Administration (FDA) does not recognize CBD as a dietary supplement but have recognized a single drug, Epidiolex, as being an approved drug.
The requirements for CBD products to be processed and manufactured according the FDA standards on dietary supplements we believe is a way for NYS to ensure safe CBD products. The implementation of such standards is costly, onerous, and will exclude the majority of small product manufactures from producing CBD products. In our analysis, the best positioned companies would be those with a cGMP facility that can process, manufacture, and package CBD products to be sold under other brands. This raises our concern of a tightly controlled marketplace where a handful of businesses would be able to set the prices paid to farmers and to consumers. Without the ability of small-scale producers or farmers to sell their own products, the market may experience lower diversity, higher prices, and lower accessibility. While we advocate for safety standards for any hemp derived products, we fail to see the logic in regulating specific products (those high in cannabinoids) so tightly. With no known toxicity, dependence, or psychoactive properties, CBD should be treated like any other ingredient that promotes general wellness. A small bakery adding protein powder or vitamin C to their muffins would not need to do so in a cGMP facility. In our opinion, these regulations will make it too expensive for any small businesses to produce their own products with CBD or other cannabinoids in them.
As the hemp industry in New York State begins to take off, we would caution against regulations that go further than just providing for a safe market but prohibit certain products and throw up significant barriers to entry for small businesses. The exclusion of vaping or smokeable products comes when both are extremely popular and will allow for out-of-state products to take their place on the shelves. Some consumers want to vape or smoke hemp to receive the full cannabinoid and terpene profiles and the state should not prohibit them while allowing for similar nicotine-based products with known toxicity and addictive properties. Further, individuals who have been convicted of marijuana possession should not be excluded from participating in the industrial hemp market, especially as the adult use of marijuana is being proposed by the state legislature.
We are hopeful that as the NYS Legislature crafts legislation for both industrial hemp and marijuana they do not include regulations that may serve to handicap small businesses and farmers from selling their products. New York has an excellent opportunity to support small businesses, farmers, and economically disadvantaged communities through the new cannabis industries, hemp and adult use marijuana. To do so will require regulations that take care to include small producers while ensuring consumer safety, and we are confident our elected representatives will do just that.