Make Room for Hemp: NJ and NY Industrial Hemp Regulations

We have all been following the transforming laws governing the sale and purchase of marijuana which have remained centralized in headlines for quite some time now. Amidst all the excitement, we don’t want to overlook the changes being made state by state in hemp distribution and sale.

New Jersey
Under the relevant regulations, “hemp” means the plant Cannabis sativa L. and any part of that plant,  including the seeds of the plant 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 of a dry-weight basis. Hemp and hemp-derived cannabinoids, including cannabidiol, shall be considered an agricultural commodity and not a controlled substance due to the presence of help or hemp-derived cannabinoids. See N.J. Stat. § 4:28-8.

While smokable hemp flower is not mentioned specifically within the regulations, according to the state’s definition of hemp and associated regulations, hemp flower is treated like other hemp products, and, therefore, legal in the State of New Jersey.  2018 N.J. A.N. 5322 § C.24:5-23(c) provides that “[n]otwithstanding any other law, a person or business entity may possess, transport, sell, and purchase legally produced hemp products in this state.”

The cultivation, handling, and processing of hemp or hemp products is governed mainly by 2018 N.J. A.N. 5322. This provision generally states that it is lawful for a hemp producer or its agent to cultivate, handle, or process hemp or hemp products in the State.  Section C.25:5-23(9)(e) later clarifies that “[r]etail sales of hemp products processed outside the state may be conducted in the state when the products and the hemp used in the products were processed and cultivated legally in another state or jurisdiction that has the same or substantially similar requirements for processing hemp products or cultivation hemp as provided in P.L. C. 238.”

A large portion of the regulations relate to producing the hemp and the site at which hemp is produced.  The applicant will need to be able to provide some of this information, which is quite detailed, especially as related to the product site itself.  Every individual that intends to plant, grow, harvest, possess, process, distribute, buy, or sell industrial hemp for commercial purposes in New Jersey needs to apply for a license with the Secretary of Agriculture.

The New Jersey Hemp Processor/Handler License Application can be found here.

Upon applying for a license, the State of New Jersey will conduct a background check. Along with the application, there is a $50 application fee, along with additional documentation and payments, which can be found on page 11 of the processing application.  Of course, the application can be denied for a variety of reasons ranging from insufficient funding to a criminal background.

New York
2019 N.Y. AB 8977 governs hemp growth, sale, distribution transportation and processing in New York.  New York provides the same definition for hemp as described above under New Jersey law. Section 3398 sets forth that you must obtain a cannabinoid hemp retailer license from the Department of Agriculture in order to legally sell hemp product. Under § 3398-d, you can apply for a license with the Department and it can be filled out by either yourself as an applicant or by a representative.  This license is available at the New York State Business Express website with a log-in requirement. There are separate applications depending on whether the intended purpose for the license is to distribute, or to process and grow. Section 3398-d explains that a separate license is needed for each facility at which retail sales are conducted or you can otherwise submit one application for separate licensure at multiple locations.

Section 3398-g lists the selection criteria for licensure including: good moral character, experience and competency, adequate facilities, equipment, process controls, and security to undertake activities, ability to comply with all applicable state and local laws, rules, and regulations. Of course, the commissioner can deny an application and, if that happens, will provide reasons to justify the denial.

Notably, a new Part 1005 of Title 10 (Health) of the Official Compilation of Codes, Rules, and Regulations of the State of New York has been amended, thus altering the regulations of processing and retail sale of cannabinoid hemp in New York State. According to Section 1005.1(m), “flower product” means “any form of cannabinoid hemp product consisting of the flower, buds, leave, or stems of the hemp plant, including trimmings thereof, intended for retail sale to consumers without further processing”.

Section 1005.8 outlines the cannabinoid hemp product requirements to be sold at retail. One of the requirements specifies that the product cannot be in the form of flower product including cigarette, cigar, or pre-roll, or any other disallowed form determined by the department. That is likely for good reason – smoking hemp cigarettes has increasingly been mistaken by law enforcement to be illegal marijuana.  A number of reports state that if a person gets arrested for smoking, what seems to be, marijuana without a license, he can be held in custody until law enforcement is able to make a determination (i.e. send it out for testing) that it was, in fact, hemp.

The application for a New York Cannabinoid Hemp Distributor Permit can be found here.

If the application is granted, the license is good for one year and has an annual license fee of $300 for each retail location.

Hemp product has been steadily gaining popularity.  Both New York and New Jersey have provided easy-to-follow guidelines to spell out how one can go about gaining a license to either grow or distribute.  For assistance filling out an application or for any additional questions related to industrial hemp or marijuana, visit our Cannabis Group.