New Jersey's Hemp Program Opens the Door to Applicants

By Jennifer Cabrera, Counsel; Michelle Bodian, Senior Associate

Feb 6, 2020

On August 9, 2019, Governor Phil Murphy created a legal pathway for farmers and businesses in New Jersey to grow hemp when he signed bill A5322, which became the New Jersey Hemp Farming Act (NJ Hemp Law).

The NJ Hemp Law established a commercial hemp program and directed the state Department of Agriculture (NJDA) to issue regulations establishing a commercial hemp program in the Garden State by licensing the cultivation, processing, and handling of hemp and hemp products.

While the NJ Hemp Law does not direct any regulatory agency to establish rules governing the retail sale of products containing hemp-derived cannabinoids (like cannabidiol, a.k.a. CBD), the Law does state that hemp-derived CBD may be added to cosmetics, personal care products, and products intended for human or animal consumption.

On December 27, 2019, New Jersey became one of the first three states to have its state hemp plan approved by the United States Department of Agriculture (USDA). This approval grants NJDA primary regulatory authority over hemp production in New Jersey. The NJDA has since published rules governing the state hemp program (NJDA Hemp Regulations) and posted license applications, program instructions and testing guidelines on its website.

Below is a summary of the provisions of the NJDA Hemp Regulations and the license applications:

Application Requirements

• License applications must include a description of the property where hemp is to be grown, processed or handled, including block and lot number(s) and geospatial coordinates, as well as a map showing boundaries and dimensions of the growing area. (NJAC 2:25-2.1)(d))

• Applicants must also provide proof of authorization to engage in hemp production, e.g., deed or written agreement by a landowner. (NJAC 2:25-2.1)(k))

• Applicants and “Key Participants” of an applicant must establish that they have not been convicted of a felony relating to a controlled substance within the 10 years preceding the date of their application. (NJAC 2:25-2.2(e)) There are several narrow exceptions.

  • Key Participants include sole proprietors, partners in a partnership, and persons with executive managerial control in a corporation, including CEO, COO and CFO. This definition does not include non-executive managers like farm, field or shift managers. (NJAC 2:25-1.2)

• Applicants and key participants must submit to criminal background checks by the New Jersey State Police and submit the background check results to the NJDA with their application. (NJAC 2:25-2.2(e))

• Licenses are valid for one year from the date of issuance. (NJAC 2:25-2.2(a))

Regulation of Cultivation

• The annual licensing fee for growers is $300, plus $15 per each acre. (NJAC 2:25-2.1(f)

• Growers must apply to the NJDA at least 30 days before the anticipated date of planting hemp. (NJAC 2:25-2.1(c))

• Cultivators must submit a Letter of Intent from one or more processors (if not self-processing) with their application, along with a marketing plan. (Grower License Application pp. 3, 11)

• Before obtaining any hemp seeds, propagules, or plantlets for cultivation, growers must submit a hemp acquisition plan for written approval by the NJDA. (NJAC 2:25-3.1)

• Licensed growers must comply with ongoing reporting requirements to the NJDA, including e.g., pre-planting, transfer, harvest, and disposal reports. (NJAC 2:25-4.1 to 4.5; Grower License Application p. 9)

• It is critical to submit a site modification plan before planting in an area not covered by a license; hemp growing in an unlicensed location will be confiscated and destroyed and growers may not seek compensation. (NJAC 2:25-2.2(n)&(r); Grower License Application p. 10)

Regulation of Processors and Handlers

• The annual licensing fee for processors of grain and fiber is $450, while processors of floral, hemp oil, and CBD extracts will pay $1,000 annually. (NJAC 2:25-2.1(f)

• The annual licensing fee for handlers (a category including third-party testing laboratories) is $450. (NJAC 2:25-2.1(f)

• Growers who process or handle their own hemp are not required to pay additional processor or handler fees, but will pay a separate licensing fee if they process or handle hemp purchased from a separate grower. ((NJAC 2:25-2.1(g))

• Processors and handlers must apply to the NJDA at least 30 days before the anticipated date of processing or handling hemp. (NJAC 2:25-2.1)(b))

• Product Labeling:  Processors must label hemp products to distinguish between hemp extract, CBD, and hemp oil. Labels must include:
  • Amount of oil or extract
  • Percentage of THC
  • Percentage of CBD extract contained (NJAC 2:25-5.3)

Transport

• Transporters of hemp and hemp materials, including seeds, must carry (i) proof of authorization to engage in the commercial sale of hemp under a state plan or USDA rules, and (ii) a travel manifest listing origin, destination, product description, and date of transport. (NJAC 2:25-2.2(v) & 3.1(g))  No sample travel manifest has been provided.

• Third-party carriers do not need to be licensed to transport hemp. (NJAC 2:25-2.2(v) & 3.1(l))

Inspection and Testing

• Within 15 days of anticipated harvest, hemp samples must be taken for compliance testing by either the NJDA or a third-party DEA-registered lab. (NJAC 2:25-5.2(a)(10); 5.4(a))

• Licensed growers are also subject to annual inspection and sampling by the NJDA. (NJAC 2:25-5.2(a)(1))  The NJDA may also conduct additional inspections, for which advance notice is not required. Furthermore, licensees consent to the NJDA, other regulators, and state and local law enforcement entering licensed premises. (NJAC 2:25-5.1 and 5.2(4))

• Producers may operate an in-house testing lab for purposes other than compliance testing, provided it complies with the regulations applicable to third party labs. (NJAC 2:25-5.4(d))

Violations

• A licensee who grows hemp with a THC concentration exceeding 0.3% but equal or less than 0.5% on a dry weight basis must destroy the crop in compliance with 21 CFR 1317.15 regarding the destruction of controlled substances. But growing such non-compliant hemp will not necessarily be considered a negligent violation. (NJAC 2:25-6.1(c))

• Negligent violations of the Hemp Program, including failure to comply with reporting requirements, are not subject to criminal enforcement but do require the submission of a Corrective Action Plan. Producers with 3 negligent violations in a 5 year period will be considered ineligible to participate in the Program for a 5 year period. (NJAC 2:25-6.1)

Miscellaneous

• Information provided by licensees to the NJDA may be shared with law enforcement agencies without further notice. (NJAC 2:25-2.2(g))

• Members of the public cannot have direct unsupervised access to hemp. (NJAC 2:25-2.2(u))

• Live hemp plants and hemp materials (a term which is undefined) cannot be transported to unlicensed areas, like trade shows or county fairs. (NJAC 2:25-2.2(t))

• Changes to licensee’s contact information must be reported to the NJDA within 10 days. (NJAC 2:25-2.2(c))

• Licenses cannot be transferred or assigned “under any circumstances.” (NJAC 2:25-2.2(l))