This week’s Tap Root is the third in our latest series examining the NYS Department of Health’s (DOH) updated cannabinoid hemp regulations, wherein we look at issues of key concern in this novel regulatory framework governing the Empire State’s hemp industry.
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New York’s Proposed Hemp Flower Ban
The sale of hemp flower has possibly been one of the most contentious issues connected to DOH’s proposed cannabinoid hemp regulatory framework. While the product is currently being sold across the state due to lack of permanent and comprehensive regulations for New York’s hemp industry, the department’s original proposed regulations, released in late October 2020, banned hemp flower products in their entirety.
To the relief of many in the industry, the department’s latest revision of the regulations removes such blanket prohibitions on hemp flower, due to a deluge of public comment and industry pushback against the ban. While DOH made concessions to the industry in this latest iteration of draft cannabinoid hemp rules, the newly updated regulations only lift the ban on hemp flower that is not explicitly advertised for smoking. In this way, the ban has only been partially lifted, as the regulations continue to prohibit “flower product labeled or advertised for the purpose of smoking, or in the form of a cigarette, cigar or pre-roll, or packaged combined with other items designed to facilitate smoking…”
The updated regulations, released on May 19, 2021, allow for the sale of hemp flower at licensed cannabinoid hemp retailers, however such flower cannot be labeled or clearly advertised for smoking as described above. In that sense, the ban has only been partially lifted—largely to conform with the provisions of the newly enacted Marijuana Regulation and Taxation Act (MRTA) of 2021—and the sale of smokable hemp flower will be restricted to licensed adult-use cannabis dispensaries once they come online in 2022, as currently expected. Per the regulatory impact statement attached to the proposed regulations, the revisions seek “…to address changes in the recently enacted Marihuana Regulation & Taxation Act, the regulations were modified to permit the sale of cannabinoid hemp flower products provided such products are not marketed or advertised for smoking.”
“decided to establish additional restrictions on inhalable products to deter smoking and youth-use.”
According to DOH, the ban on smokable hemp flower remains in the draft regulations because it supports DOH’s larger agency’s mission of promoting the health of New Yorkers. Such reasoning is alluded to in the regulatory impact statement as well, which states that the department “decided to establish additional restrictions on inhalable products to deter smoking and youth-use.”
How Do Other States Handle Hemp Flower?
There is currently some variation among states with regard to the regulatory and legal treatment of hemp flower.
California’s state legislation is currently considering legislation that would effectively ban smokable hemp flower. Such legislation would prohibit the inclusion of industrial hemp in:
processed smokable products regulated by California law, including, but not limited to, electronic cigarettes with nicotine
smokable flower, including, but not limited to, hookah and shisha with nicotine
a product containing nicotine or tobacco
Regarding this bill, CannaLawBlog argues that “If the state does manage to pass a ban on smokable hemp products, it is likely to be subject to immediate litigation like in Indiana and Texas,” and points to a historical example of AB-2028 which saw considerable backlash and was not passed. It is possible that it will not pass, but that still means that the state will not have CBD regulations in place.
The Illinois Department of Agriculture regulates hemp for the state. Currently, the industry exists in what could be deemed a regulatory gray area, as the industry (similar to NY’s cannabinoid hemp space) is currently operating under temporary rules. Such rules do not clearly define “marketable hemp products. Per an analysis by CannaLawBlog: “because there is no permissive language that allows for Hemp-CBD products and because of Section 25, the sale of these products is illegal at worst, and unregulated at best.” In addition, only registered processors can process Hemp-CBD grown under the program. However, nothing in SB 2298 nor the IDA rules expressly prohibit the introduction of hemp products lawfully processed under another state plan.
VT has some of the loosest hemp laws in the country. The state’s regulations went into effect in 2018, allowing those registered with the Agency of Agriculture to buy and sell hemp, as well as growing hemp with a concentration of Delta-9 THC below 1 percent. As with many states, Vermont differentiates cannabis and hemp purely based on Delta-9 THC content. According to Botany Farms, sales of hemp flower are permitted at “specialist grocery shops, the veterinarian (for pet CBD products), pharmacies, markets for farmers, supplement stores, tobacco stores, and CBD specialty stores.”
The future of hemp flower in the Empire State
Excluding smokable hemp flower from DOH’s final regulations governing cannabinoid hemp will, without a doubt, have an effect on the market, as demand for smokable hemp flower has been surging. According to Adam Koh, editorial director for industry data and intelligence firm Hemp Benchmarks, in an interview with Hemp Grower, smokable hemp is incredibly attractive to farmers as in 2020 it had seen the “most significant price increase of any of the hemp product categories.” Wholesale bulk flower prices plunged 50% from December 2019 to May 2020 but made its way back up to previous December 2019 levels by November 2020 and was the only product type to demonstrate such growth. In December 2020, it was selling for around $250 a pound, according to Hemp Grower (citing Hemp Benchmarks). Nationally, in 2019, there was an estimated $70.6 million of hemp CBD pre-roll and raw flower, according to Pew, demonstrating overall market power.”
For now, it is important to note that DOH’s proposed regulations are not yet effective and thus smokable hemp flower can continue to be sold while the market operates in this regulatory gray area. With the comment period on the revised regulations running through July 19, 2021, it is possible that we will see final regulations released in late summer or early fall 2021. However, the date that regulated entities will need to be in compliance is yet unknown.