The “Hempire” State
New Law Calls for Comprehensive Regulation of the State’s Industrial Hemp Industry
On December 9, 2019, Governor Cuomo signed Senate Bill No. 6184, creating a comprehensive framework for New York’s regulation and monitoring of its industrial hemp industry. The new law grants the New York State Department of Agriculture and Markets (the “Department”) broad authority to regulate industrial hemp activities within the State. The new law modifies Article 29 of the New York State Agriculture and Markets law, which was previously New York’s industrial hemp pilot program, and becomes effective on March 8, 2020. This law is another step in New York’s proliferation of cannabis-related business in the State.
Industrial hemp’s recent growth can be traced to the federal government’s 2014 Farm Bill. The 2014 Farm Bill permitted the States to authorize and oversee industrial hemp growth and cultivation pursuant to agricultural “pilot programs” to be established by the respective States. Accordingly, New York created its industrial hemp pilot program which, beginning in 2015, initially allowed only 10 universities to grow hemp under the program for research purposes. Those wishing to enter the industrial hemp business needed to obtain a license as a Research Partner in order to begin growing industrial hemp.
The federal government’s more-recent 2018 Farm Bill did a number of things to boost the growth of the industrial hemp industry, the most-notable of which included removing hemp from the list of Schedule 1 Controlled Substances. The 2018 Farm Bill further prohibited the States and Native American tribes from prohibiting the interstate transportation and shipment of lawfully-produced hemp, as well as authorized the States to maintain primary regulatory authority over hemp production in conjunction with a phase-out of the various pilot programs.
New State Legislation
Following the authorization provided by the 2018 Farm Bill, New York has taken steps toward primary regulation of industrial hemp and a phase-out of the State’s pilot program. The new law signed on December 9th creates a State-implemented regulatory framework for hemp growth, cultivation and processing.
The major changes to Article 29, pertaining to both industrial hemp and CBD extraction, include: the addition of stand-alone regulations granting the Department discretion to issue licenses to grow industrial hemp and extract CBD, search warrant and quarantine procedures for license violations, growth site registration and monitoring, access to an applicant’s criminal history, character and fitness determinations to receive (and maintain) a license, as well as requirements for reporting, transportation, security and the testing of samples of industrial hemp and CBD. Those wishing to operate in the State’s industrial hemp industry need to be aware of the guidelines that the new law imposes, or else risk sustaining losses and losing investment income as a result of license violations.
How We Can Help
At Coughlin & Gerhart, we understand that navigating these complex and demanding regulations can be challenging for those interested in operating in the industrial hemp industry. These new laws are, as of yet, untested in the courts. Businesses operating in this industry must have a working knowledge of the law, and stay up to date as amendments to the law are adopted and court decisions are issued.
Our attorneys are experienced in forming hemp companies and representing clients working in the hemp industry from a variety of angles, including contract review, leasing, real property transactions, business disputes and litigation. Our knowledge and experience in this new and growing industry allows us to provide your business with quick and efficient legal solutions, affording you a “first-mover” advantage. Please contact us to see if we can offer you the support you need to help you succeed in this exciting and monumental new industry.
Brady L. Begeal, Esq.
COUGHLIN & GERHART, LLP
99 Corporate Drive
P.O. Box 2039
Binghamton, NY 13904
Disclaimer: Possessing, using, distributing, and/or selling cannabis or cannabis-based products may not be legal in all states, and may constitute a federal crime. No legal advice we give is intended to provide any guidance or assistance in violating federal or state law, nor will any such advice provide any guidance or assistance in complying with federal law or the law of any state where such activity is illegal. Please also note that we are not advising you regarding the federal, state, or local tax consequences of engaging in any business in this industry.
*ATTORNEY ADVERTISING – This information should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general information purposes only. Prior results do not guarantee a similar outcome.