Devising New York’s Blueprint for CBD Regulations

By Trevor Yahn-Grode, Data Analyst, New Frontier Data

After six years of virtually unregulated growth, more and more states are poised to pass regulations for the CBD industry. Industry stakeholders are watching keenly in New York,  regulators have proposed a new set of rules to regulate the manufacture, promotion, and sale of CBD products. Those provisions, which address key industry concerns about the implications of the DEA’s Interim Final Rules (IFR) and the role of the FDA, have garnered praise from industry stakeholders as a model for the rest of the nation.

The rules would legalize “intermediate sales” of biomass containing up to 3% THC between licensed processors, define key marketing terms (i.e., “full spectrum”, “broad spectrum”, “isolate”, etc.), and create a legal framework for the production and sale of CBD-infused foods and beverages containing less than 25 milligrams of CBD. The recognition and legalization of intermediate sales is an especially welcome development for processors, who (under the DEA’s IFR) could potentially face criminal liability for dealing with work-in-progress hemp extract.

Meanwhile, the rules would make New York the first state to try and create a legal definition for the many marketing terms used by CBD brands to differentiate and categorize their products. The FDA cited among its chief concerns about the market the lack of agreed-upon definitions for such categories, as well as the widespread mislabeling of CBD products.

Regulators thus propose the following definitions:

• Full spectrum: “a cannabinoid hemp product that is: (1) derived from a hemp extract; (2) contains cannabinoids, aromatics, essential vitamins and minerals, fatty acids, protein, chlorophyll, flavonoids, or terpenes; and (3) has not been reformulated or has not had cannabinoid isolates or distillates added to it”;
• Broad spectrum: “a concentrate extracted from hemp containing multiple cannabinoids, but where all Δ9-Tetrahydrocannabinol (THC) has been removed”;
• Distillate: “a concentrate where a segment of cannabinoids from an initial extraction are selectively concentrated through heating and cooling, with all impurities removed”; and
• Isolate: “a concentrate that is more than 95 percent comprised of a single cannabinoid compound created by a chemical extraction process.”

Nationwide, hemp operators have long blamed both inaction from federal regulatory agencies and ambiguous laws for slowing the industry’s growth and development. New York’s rules are the clearest and most comprehensive regulation governing hemp-derived cannabinoids proposed to date. However, they, too, are not without controversy.

The rules would make New York the seventh state to ban smokable hemp flower – citing that it makes it difficult for law enforcement to distinguish between hemp and marijuana – and the first state to explicitly ban mixtures of CBD with alcohol or tobacco. Detractors of the rules described them as unnecessary restrictions in the markets, which would harm the state’s nascent industry.

Despite the controversies, the proposed legislation has received overall praise from industry stakeholders, who see clearer regulations as positive developments for consumers and producers alike. The rules are set to take effect next growing season, with regulators taking public comment on the proposals between November 10 and January 11, 2021.