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.
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.