New York’s New Hemp Extract Law and the CBD Marketplace

By: Richard M. Blau, chair of GrayRobinson's alcohol beverage, food law, and cannabis industry departments

On December 19, 2019, Governor Andrew Cuomo signed into law legislation introduced by state Senator Jen Metzger and Assembly member Donna Lupardo, regulating the production and marketing of hemp extract in New York State. Senate Bill 6184 and Assembly Bill 7680 together establish a state permitting process for growers, processors and sellers of hemp extract, while also requiring laboratory testing of hemp extract products, including cannabidiol (CBD), as well as specific product labeling. The legislation was signed pursuant to a chapter agreement, which provided for a more streamlined regulatory pathway for hemp products. The new law also grants the NY Department of Agriculture and Markets supervision over hemp growers, and delegates to the NY Department of Health supervision over hemp extracts.  

As part of the new regulatory environment for CBD in New York, a registration requirement now exists for sellers of hemp extract products. Noteworthy, however, is the fact that the new law defers the decision on whether to legalize the addition of hemp extracts, including CBD, to foods or beverages. Still, the new law moves New York state ahead of the federal government, which is still working to determine how best to regulate the CBD industry.

The Federal Farm Bill of 2018 and New York’s New Hemp Extracts Law

The 2018 Federal Farm Bill (Agriculture Improvement Act of 2018, P.L. 115-334) removed hemp from Schedule 1 of the Controlled Substances Act. 21 U.S.C. §§801 et seq.; Title 21 C.F.R. Part 1308.11. Botanically, hemp and marijuana are from the same species of plant, Cannabis sativa, but from different varieties or cultivars. However, hemp and marijuana are genetically distinct forms of cannabis that are distinguished by their use and chemical composition as well as by differing cultivation practices in their production. While marijuana generally refers to the cultivated plant used as a psychotropic drug (whether used for medicinal or recreational purposes), hemp is cultivated for use in the production of a wide range of products, including foods and beverages, personal care products, nutritional supplements, fabrics and textiles, paper, construction materials, and other manufactured and industrial goods. Hemp is defined under the 2018 Farm bill as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis..”

By legalizing hemp at the federal level, the 2018 Farm Bill also legalized CBD that is derived from hemp, creating new opportunities for New York farmers and businesses. Hemp extracts currently are being used to produce a broad range of CBD consumer products, including edibles, ointments, topical creams and unguents, etc. 

Despite being delisted from the Controlled Substances Act, however, these products have not received federal regulatory review or approval – in large part because the US Food and Drug Administration, which has jurisdiction to regulate such products, still is working to develop appropriate production standards, labeling requirements and marketing guidelines for CBD products.

To address the gap in federal oversight of CBD products, New York’s new law establishes a regulatory framework for regulating hemp extract production, processing, and commerce within the state, updating the hemp permitting process and regulating the extract industry through production standards, testing, and labeling, creating needed industry certainty while also protecting consumers. The new hemp bill will give New York farmers a competitive edge in the hemp industry by allowing for regulated and quality products to be produced, focusing on New York-grown hemp.

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