New Law Regulates Hemp and Hemp Extracts in New York

By Jennifer Cabrera, Counsel; David Kramer, Senior Associate; Michelle Bodian, Senior Associate

Dec 19, 2019

[Updated May 5, 2020]

On December 9, 2019, Governor Cuomo signed a new hemp bill into law. This law is one of the country's most comprehensive laws regulating the cultivation, manufacture and sale of hemp extracts, including CBD.

The New York legislature approved a bill (S6184-A) in summer 2019 which was sent to the Governor but never signed. The Governor’s announcement was accompanied by a memorandum explaining that the “Executive had secured an agreement with the Legislature to make certain amendments” to S6184-A, in particular:

• To empower the New York Department of Health (“NYDH”) to oversee the regulation of hemp processors (as opposed to the New York Department of Agriculture and Markets (“NYDAM”), which currently exercises jurisdiction); and

• To remove certain “burdensome administrative requirements” that would have constrained the industry.

An updated version of the NY Hemp Law, dated January 7, 2020, is now available bearing the bill numbers A08977and S6968.

In general, the NY Hemp Law is an improvement over S6184-A, in particular by removing the restriction on retail sales of out-of-state hemp products and eliminating the confusing distinction between cannabinoid extractors and manufacturers (now grouping both classes together as “cannabinoid processors”). The NY Hemp Law gives the NYDH regulatory oversight over hemp products for human consumption, allowing for greater consistency in the regulation of medical cannabis and hemp products (a sensible development in light of the recent joint proposal by NYDH and NYDAM to allow sales of hemp-derived CBD by New York-licensed medical marijuana dispensaries). Finally, as with the earlier draft, NY contemplates licensing for retailers of hemp products, like CBD, with that licensing regime coming into effect January 2021.   

Below is a summary of the provisions of the NY Hemp Law.   

Regulation of Cultivation:

• Unlike S6184-A, which added new provisions to the end of Article 29 of the Agriculture and Markets Law, the NY Hemp Law repeals and replaces all of Article 29 (formerly “Growth of Industrial Hemp”) and renames that Article “Growth of Hemp.”

• The NYDAM retains regulatory oversight over the cultivation of hemp (§508).

  • These regulations will include provisions on testing procedures using Total THC, following the United States Department of Agriculture (USDA) interim final rule (§508(4)).

• Successful applicants for a cultivation license will be provided with a Research Partner Agreement by NYDAM (§509; see also NYDAM website).

• While transportation does not require a license (§509), the law does contemplate the NYDAM issuing regulation regarding transport (§508).

• The cultivation provisions come into effect within 90 days of signature, i.e., by March 9, 2020 (§4 of the NY Hemp Law).

• While the NYDAM may extend the duration, the NY Hemp Law establishes a minimum duration of three years for cultivation licenses (§508(2)).  

• Out-of-state hemp must meet “all standards established for hemp under state law rules and regulations” (§507).  Presumably, “state law” refers to New York state law, not the law of the state in which the hemp is actually produced.  

Regulation of Cannabinoid Hemp and Hemp Extract:

• Unlike S6184-A, the provisions dealing with cannabinoid hemp and hemp extract will go into a new Article 33-B of the NY Public Health Law. 

  • These provisions only apply to phytocannabinoids, not synthetic cannabinoids (§3398(1)). 

• The NYDH is given regulatory oversight over cannabinoid hemp and hemp extract processing and retail sales (§33980a).

• A “cannabinoid hemp processor license” is required to “process, extract, pack or manufacture cannabinoid hemp or hemp extract into products, whether in intermediate or final form, used for human consumption” (§3398(7) and §3398-b). 

  • Processing includes “extracting, preparing, treating, modifying, compounding, manufacturing or otherwise manipulating cannabinoid hemp to concentrate or extract its cannabinoids, or creating product, whether in intermediate or final form, used for human consumption” (§3398(8)). 

  • This license is not required for hemp products that are not used for human consumption (§3398-b).

  • “Human consumption” includes use in, on, or by the human body, which would appear to include cosmetics and topicals (§3398(3)).   

    The law is silent on animal products and expressly states that cannabinoid hemp processor licenses are not required for processing products “not to be used for human consumption” (§3398-b(2)).

  • License holders may distribute and sell the products they have processed.  It is unclear whether this is limited to wholesale sale or whether it contemplates retail sales as well.  (§3398-b(2)).

• A “cannabinoid hemp retailer license” will be required for all direct to consumer sales in New York (§3398-c). 

• The NYDH shall issue regulations regarding packaging and labeling requirements for hemp products processed and sold in New York (§3398-m). 

• Hemp products must be extracted and processed in accordance with Good Manufacturing Processes pursuant to 21 CFR 111, 117 (§3398-n(3)).  

• Transportation does not require a license (§3398-8(b)), the law contemplates the NYDH will issue regulation regarding transport (§3398-a). 

  Testing – processors must contract with independent commercial labs for testing; the NYDH will issue regulations establishing testing protocols and will establish the necessary certifications required for labs (§3398-o).

  • Note that the New York law does NOT require DEA certification for labs, though that presumably would be included in the NYDH regulations (assuming the USDA does not amend the interim final rule to eliminate that requirement).

• Unlike S6184-A, the final New York law does allow the retail sale of out-of-state hemp products, provided they meet the standards established under New York law and regulation (§3398-s).  

  • Similarly, §3398-a(8) allows the commissioner to develop procedures for determining whether “cannabinoid hemp, hemp extract or ingredients, additives, or products derived therefrom” (whether produced in- or out-of-state) can be sold within New York.  

  • This is an improvement over the former draft of S6184-A, which restricted the distribution or sale of hemp extract for human or animal consumption to products manufactured pursuant to a valid New York license. See §546 of the earlier draft: “Except as authorized in this article, the manufacturing of hemp extract for human or animal consumption and the distribution and/or sale thereof is prohibited in this state unless the manufacturer is licensed under this article.”

• The timing of when these provisions on cannabinoid hemp and hemp extract come into effect is confusing. The new sections on licensing (for hemp processors and retailers) being added to Article 33-B of the Public Health Law will come into effect on January 1, 2021. All other provisions of Article 33-B will come into effect on May 1, 2020 (§4 of NY Hemp Law).   

  It is not clear yet whether the NYDH regulations will be issued by May 1, 2020 or a later date.

  • It is also unclear whether applications for cannabinoid processors or retailers will be available before January 1, 2021.

  • We will continue to monitor the NYDH website for further guidance.

• While the NYDH may extend the duration, the NY Hemp Law establishes a minimum duration of two years for processor licenses (§3398-b(5)) and one year for retailer licenses (§3398-c(2)).