Adjustments are in retailer for CBD gross sales in New York

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The new regulations proposed in New York will reassure consumers that CBD products made and sold in the state meet minimum efficacy and safety requirements while paving the way for hemp-infused beverages and foods.

The long-awaited rules were largely welcomed by industry, but they contained a glaring loophole that raises objections from producers and processors trying to revive a company that, after what were once big growth projections, is in neutrality.

One of the bans on the 63 pages of the recently published rules is a ban on selling flowers made from the non-psychoactive form of the cannabis plant. The smokable form is one of the most popular items in the fledgling CBD market, and the ban locks down a potentially lucrative route for growers.

“If you ban it, you’re really kidding the farmers,” said Kaelen Castetter of CSG Hemp, a Binghamton maker of CBD products.

Cannabinoids, the by-product of the low-THC derivative of the cannabis plant, have been touted for their potential for relieving several diseases, including anxiety and chronic pain, although the science to support the claims remains elusive.

Based on anecdotal evidence, some CBD-laced products have found a loyal following among consumers.

“These (regulations) are fantastic safety and quality barriers as they mandate good manufacturing practices,” said Joy Beckerman, owner and founder of Hemp Ace International, an expert and legal adviser.

Consumer protection

New York regulations seek to restore order to a market that lacks product standards, and consumers have few assurances that the product on the shelf will match the information on the label.

The rules ultimately offer the industry a more definitive route to commercializing industrial hemp.

“A lot of consumers didn’t know what they weren’t told,” said Rep. Donna Lupardo, D-Endwell, who chairs the congregation’s agriculture committee and has led the efforts to develop the hemp industry in New York for six years.

Under the rules currently under consideration, all aspects of the hemp supply chain would be licensed and regulated under the auspices of the State Department of Health and the Department of Agriculture and Markets.

Goods on the shelf would be covered by strict identification codes that make it possible to trace the origin of the product from the field to the warehouse.

CBD producers are optimistic but cautious in their assessments.

The new regulations are “a good start” for the local hemp industry, said Ed McCauley. He and former flower grower Adam Kurtz run the Fusion Holding Group in Oregon and New York’s Orange Counties.

It opened in 2016 and is the already popular Fusion CBD brand.

“Better quality products will definitely be on the shelves in New York,” said Michael Geraci, co-owner of Orange County-based Hemp Farms in New York, another early local hemp grower and CBD maker.

New regulations aim for quality control

State regulations state that the use of cannabinoid hemp products has “increased rapidly” and state that the federal government has not put its own regulatory system in place.

“In that absence, unscrupulous players have come into the market selling cannabinoid hemp products that do not meet the quality control standards that are common in the mainstream supplement, food and cannabis industries,” the regulations read. “Reports of cannabinoid hemp products that contain no cannabinoids at all or are contaminated with harmful toxins and pesticides are rife.”

The proposed New York regulations would allow spot checks at all stages of production by health department inspectors.

Permission to manufacture foods and beverages infused with CBD within certain limits has been wholeheartedly welcomed by the industry.

The move enables the production of water, seltzer, gummies, pralines, teas, juices and even items enriched with hemp extract such as muesli and bread.

“This is huge for the industry,” said Castetter.

Alcohol products or transdermal patches are not allowed.

New York sets standards

New York hopes to set the standard for the future by introducing tough regulations, Lupardo said, establishing the state as a leader in the hemp industry so goods from local producers can be among the best on the market.

Lupardo said extensive rules issued by the health department should give the industry the much-needed boost and encourage a multitude of startups to prepare and create a new source of jobs in New York state.

“You will see the market stabilize and then you will see growth,” Lupardo predicted.

The meeting leader also said the rules could speed up Canopy Growth’s $ 9 million investment in an industrial hemp center outside of Binghamton. Although announced more than a year ago, progress has been slow.

After last year’s burn from overproduction of hemp, it will likely take at least two years for the new state regulations to pay off for many farmers, said Maire Ullrich, director of the Cornell Cooperative Extension’s agriculture program for Orange County.

Ullrich estimated that farmers in the Hudson Valley planted more than 1,500 acres of hemp last year, including up to 700 acres in Orange County alone. Nearly 20,000 acres were planted nationwide last year, up from 3,500 acres in 2018, according to state estimates.

Nevertheless, the local farmers planted a small part of this hemp area this year as the coronavirus caused the prices of products to rise, said Ullrich.

Additionally, total hemp production in New York last year resulted in the price per percentage point of CBD per pound of hemp dropping to less than $ 1 in early 2020, compared to a high of $ 4 in summer 2019, Ullrich said.

Some growers are taking between $ 4 and $ 10 a pound for it to be even worth growing hemp for CBD, McCauley said.

Any retailer looking to sell CBD products must pay $ 300 for a state license.

“For some operators it will be a shock wave,” said Castetter of the extensive regulations.

The ban on flowers attracts criticism

In accordance with federal regulations, New York requires that all products contain less than 0.3% THC, the substance responsible for that feeling of euphoria after using marijuana or other cannabis-infused products.

Industry officials sought a rationale for the flower ban, saying it was counter-intuitive as New York expects to introduce adult marijuana next year.

Flower products are among the most popular products in the adult market.

“I share the frustration of our members and the hundreds of farmers across the state who have devoted significant resources to harvesting their crops this year to keep hemp flowers from being allowed for sale,” said Allan Gandelman, president of New York Cannabis Growers & Processors Association.

The federal government removed the non-psychoactive variant from the list of controlled substances at the end of 2018 as part of the updated Farm Bill. New York has allowed industrial hemp cultivation as part of a trial program since 2015.

Comments on the new regulations will be accepted by the Health Department from November 10, 2020 to January 11, 2021. This means that they can take effect as early as the beginning of next year after they have been revised and made public.

Lupardo said she expected some changes to the proposal based on the discussion and had final rules for the first quarter of next year.

Jeff Platsky covers transportation and economics for the USA TODAY Network New York. He can be reached at JPLATSKY@Gannett.com and followed on Twitter: @JeffPlatsky.

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