New York State Expands Opportunities for Industrial Hemp Production and Processing

On July 12, 2017, New York Governor Andrew Cuomo signed into law a bill (the "Industrial Hemp Law") that makes industrial hemp an agricultural commodity under the New York State Agricultural and Markets Law. The driver behind this new law is New York's goal to be the state that takes the lead in the production and processing of industrial hemp, making New York State a hub for the industry.

Industrial hemp is not marijuana. It contains only trace amounts of tetrahydrocannibol ("THC"), the psychoactive component of marijuana. Industrial hemp is used to make over 25,000 products, including food, paper, rope, clothing, and soaps. Although industrial hemp has been grown for thousands of years, in the 1930s it was classified as marijuana and heavily taxed, and the Controlled Substances Act of 1970 brought an end to the industrial hemp industry in the United States. Currently, thirty other countries grow and process industrial hemp, and according to Congressional Research Service statistics, the industrial hemp industry in the United States has the potential to significantly increase in the coming years. New York State wants to be the leader in the thriving industrial hemp market.

In 2014, the United States signed into law the Farm Bill of 2013, which defined industrial hemp as distinct from marijuana and authorized institutions of higher education or state departments of agriculture to regulate and conduct research and pilot programs on industrial hemp. In 2015, New York State launched its Industrial Hemp Agricultural Research Pilot Program, permitting a limited number of educational institutions to grow and research industrial hemp. In 2017, the state lifted the cap on the number of sites that were authorized to grow and research the plant and expanded the program to include farmers and businesses.

The Industrial Hemp Law takes this one step further by classifying industrial hemp as an agricultural commodity in New York State, which provides it the same protections as other crops. Under the new law, industrial hemp and products derived from it are agricultural products that may be grown, produced and possessed in the state, and sold, distributed, transported or processed either inside or outside of the state. The Department of Agriculture and Markets, in cooperation with the New York State Department of Health and the New York State Criminal Justice Services, is charged with promulgating regulations implementing the Industrial Hemp Law. The Department of Agriculture and Markets is also charged with establishing an industrial hemp seed certification program and a "one-stop shop" hotline and webpage to provide information and technical assistance to producers and manufacturers.

To produce industrial hemp, a grower must first apply for a permit from the New York State Department of Agriculture. Because the regulations and guidance for an industrial hemp growing permit are currently being updated by the Department of Agriculture, new permit applications are not currently being accepted. At this time, there are no specific permits or other approvals required or proposed to process industrial hemp in New York, although the new regulations could change this.

To advance industrial hemp research and economic development opportunities for current and new industrial hemp businesses, the state is making $10 million in grant funding available through two Empire State Development ("ESD") initiatives: $5 million for research into the production of industrial hemp in New York, and $5 million in capital grants for businesses related to the processing of industrial hemp, including new construction and equipment purchases. Grant applications for these two programs became available on July 20, 2017.

If you would like advice and assistance on how to be involved in the development of the new industrial hemp regulations, applying for a growing permit or navigating the laws and regulations applicable to industrial hemp in New York, please contact us.