New York Cannabis: Social and Economic Equity Applicants

As we previously broadly summarized on December 27, 2022 (here), in late December 2022, the Office of Cannabis Management (“OCM”) released its first proposed adult-use cannabis rules and regulation for New York (the “Proposed Regulations”). The official document is 282 pages, so we won’t cover every detail. But we will highlight the big-ticket items, significant issues that all applicants should be aware of, and the license application process as a whole.  This post will go into detail the Social and Economic Equity sections and commentary provided for in the Proposed Regulations.  Keep in mind, the Proposed Regulations are still pending as OCM receives the final public comments to the Proposed Regulations.

For anyone considering applying for an adult-use license, we reiterate our recommendation of hiring an experienced, local cannabis attorney. At a minimum, understanding the overall framework of the licenses and the licensing process is a precursor to an in-depth consultation on a license application.

One of the more notable topics covered in depth by the Proposed Regulations is the establishment of a social and economic equity applicant, and licensee. If you remember, the Marijuana Regulation and Tax Act (“MRTA”) established a goal to award 50% of all adult-use cannabis licenses to social and economic equity applicants.

During the evaluation of an application, the OCM may prioritize application submission, review, selection and issuance by social and economic equity status. Those applications that demonstrate that the applicant is seeking to qualify as a social and economic equity licensee are eligible for extra priority.

In short, to qualify as a social economic equity applicant, an applicant must demonstrate, through documentation provided to the OCM, that that sole control of the applicant is held by either:

1. an individual from a community disproportionately impacted by the enforcement of cannabis prohibition;
2. a minority-owned business;
3. a women-owned business;
4. a distressed farmer; or
5. a service-disabled veteran owned business.

The Proposed Regulations provide for specific documents required to establish the status of the social economic applicant, with respect to any of the above.

Note that “sole control” in this context may be a misnomer. It does not mean that the applicant is the sole owner of the license, but that the social and economic equity applicant exercises the authority to, among other things: exercise authority over the business, and materially influence the day-to-day business decisions. Further, no other person or persons may exercise or have the ability to control the majority of voting rights, or remove the applicant.

If, at any time after a social and economic equity applicant has been granted a license, the Office determines that the sole control requirement is violated, the Office may institute an action to suspend or revoke such license, provided the Office provides an opportunity to cure.

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Tennessee Bill Would Regulate the Sale of Delta-8 THC

Tennessee leaders are again putting forth a bill that would regulate hemp-derived cannabinoids like delta-8 and delta-10 THC, after a previous attempt failed last year. Some hemp advocates applauded the bill, while others would rather simply legalize cannabis, naturally rich in delta-9 THC.

State House Majority Leader William Lamberth (R-Portland) and Sen. Richard Briggs, (R-Knoxville) introduced a bill on Tuesday to regulate products containing hemp-derived cannabinoids, such as delta-8 and delta-10 THC—his second attempt to do so.

House Bill 403 would tax and regulate cannabinoids derived from hemp via what some describe as synthetic processes. Typically products with delta-8 THC are marketed as being somewhat psychoactive, with effects weaker but similar to delta-9 THC.

“Delta-8 is a legal substance that can be sold and packaged in the form of candy or gummies; it often has a very high concentration of THC,” Rep. Lamberth stated. “There are no regulations and no legitimate way for anyone to know exactly what they are buying. Nothing in our current law prohibits a child from purchasing delta-8.”

The bill would ban the sale of hemp-derived cannabinoid products to people under the age of 21; adds a 5% additional sales tax to any product sold at a store; and create a licensing, quality testing, regulatory and enforcement process through the Tennessee Department of Agriculture.

“We need to regulate this because the horse is out of the barn,” Sen. Briggs said. “This stuff is everywhere, and we can’t put that genie back in the bottle.”

What is Delta-8 THC?

The idea is that hemp-derived CBD can be converted to other compounds, frequently being marketed as psychoactive. This doesn’t mesh with the general U.S. definition of hemp, bred specifically to not be psychoactive.

Delta-8 THC occurs naturally, but only in trace amounts: According to Chemical & Engineering News, cannabis plants naturally contain just 0.1% delta-8 THC or less—though some plants contain as much as 1%. Jeffrey Raber, cofounder and CEO of the Werc Shop told C&E News that there isn’t enough delta-8 THC found naturally in hemp to be economical for extraction.

But hemp growers in the state are supportive of the bill despite some suspicion about emerging hemp-derived cannabinoids. “We support anything that doesn’t put burdensome regulations on the industry,” Kelley Hess, executive director of the Tennessee Growers Coalition, said.

While hemp growers may support delta-8 products, others do not.

Artists such as Margo Price support legalization, but don’t support hemp-derived cannabinoid products in Tennessee. Opponents don’t like the way certain cannabinoids are extracted from hemp, which usually means altering the CBD molecule, which is found in hemp in larger amounts, using natural solvents and acids.

Tennessee! Legalize cannabis, grow it, eat it, smoke it and TAX IT! People are just gonna cross state lines and do it anyway. This Delta 8 shit had got to go! https://t.co/8CJKwDRk5x

— Margo Price (@MissMargoPrice) December 17, 2022

Attempt to Regulate Delta-8 Last Year

While some states moved to restrict hemp-derived cannabinoids, such as Utah, Tennessee would be taking a much different approach by regulating it instead.

Rep. Lamberth sponsored an earlier attempt to regulate delta-8 THC and similar compounds. Some Tennessee lawmakers and the Tennessee Bureau of Investigation said that by regulating delta-8, the state would be legitimizing the industry. 

House Bill 1927, which was introduced previously, would regulate delta-8 by making it illegal in most cases outside trace-level concentrations. The bill was amended in April 2022 to be more specific to include other hemp-derived THCs such as delta-9 and 10 and the derivative hexahydrocannabinol (HHC), but exclude non-THC hemp cannabinoids such as CBD.

Tennessee is one of 11 non-green states that hasn’t legalized, regulated, or decriminalized cannabis in some form. 

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High Design by LMC: Discover YouTube’s best cannabis documentaries

In the ever-growing weed media landscape, it can be hard to find people who get the culture and community right. Documentary journalist Luc Carlin is one of them.

The post High Design by LMC: Discover YouTube’s best cannabis documentaries appeared first on Leafly.

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Breaking: FDA Says “No” to CBD Foods and Dietary Supplements

Since the passage of the 2018 Farm Bill, the hemp CBD industry has been eagerly awaiting FDA CBD regulations. In that time, FDA convened a working group to study how the agency would regulate CBD foods and dietary supplements. As of January 26, 2023, the FDA concluded that it will NOT regulate CBD foods or dietary supplements.

FDA and the States on CBD since the Farm Bill

Before jumping into the post, it bears noting that the FDA has taken the position, literally since the day the 2018 Farm Bill was passed, that CBD foods and dietary supplements violate the Food, Drug & Cosmetic Act. Nevertheless, it has issued only periodic warning letters and taken minimal actions against the CBD industry beyond these letters. The agency has also tended to focus more on egregious misconduct.

In the face of the FDA’s limited responses, states have filled the void with their own regulations, though we always knew the FDA was considering CBD food and dietary supplement regulations.

Now, the FDA is declining to move forward with regulations but has indicated that it would work with Congress if it passes separate CBD legislation. This is because the FDA concluded that its existing regulatory framework was insufficient for CBD and that it would need a new legislative framework through which to introduce regulations.

What FDA said today

Something that should give hope to the industry is that the FDA seems to have put a lot of thought into what CBD legislation should look like:

A new regulatory pathway would benefit consumers by providing safeguards and oversight to manage and minimize risks related to CBD products. Some risk management tools could include clear labels, prevention of contaminants, CBD content limits, and measures, such as minimum purchase age, to mitigate the risk of ingestion by children. In addition, a new pathway could provide access and oversight for certain CBD-containing products for animals.

The FDA used the word “regulatory framework,” but again, this would need to come through congressional legislation in light of the FDA’s refusal to move forward.

So why did the FDA conclude that it couldn’t regulate CBD foods or dietary supplements? Here’s what it said:

The FDA’s existing foods and dietary supplement authorities provide only limited tools for managing many of the risks associated with CBD products. Under the law, any substance, including CBD, must meet specific safety standards to be lawfully marketed as a dietary supplement or food additive.

The working group, which I chair, has closely examined studies related to the CBD-based drug Epidiolex, published scientific literature, information submitted to a public docket, as well as studies both conducted and commissioned by the agency. Given the available evidence, it is not apparent how CBD products could meet safety standards for dietary supplements or food additives. For example, we have not found adequate evidence to determine how much CBD can be consumed, and for how long, before causing harm. Therefore, we do not intend to pursue rulemaking allowing the use of CBD in dietary supplements or conventional foods.

CBD also poses risks to animals, and people could be unknowingly exposed to CBD through meat, milk and eggs from animals fed CBD. Because it is not apparent how CBD products could meet the safety standard for substances in animal food, we also do not intend to pursue rulemaking allowing the use of CBD in animal food. A new regulatory pathway could provide access and oversight for certain CBD-containing products for animals.

The status of CBD regulation won’t change anytime soon

It’s frustrating that after more than four years of waiting, the FDA is still in the same spot of claiming more information is needed. But this shouldn’t be shocking to anyone familiar with the FDA in general. It can take years – even decades – to get approval of new drugs. And in the FDA’s view, CBD doesn’t fit neatly into any of the categories of things it regulates.

For this reason, the FDA isn’t moving forward with CBD regulations and denied “three citizen petitions that had asked the agency to conduct rulemaking to allow the marketing of CBD products as dietary supplements.”

One final thing that the FDA said that’s worth noting is:

The FDA will continue to take action against CBD and other cannabis-derived products to protect the public, in coordination with state regulatory partners, when appropriate. We will remain diligent in monitoring the marketplace, identifying products that pose risks and acting within our authorities. The FDA looks forward to working with Congress to develop a cross-agency strategy for the regulation of these products to protect the public’s health and safety.

I’m not sure if there’s any “there” there. As mentioned, the FDA’s enforcement priorities to date have been relatively minor compared to what they could be if the FDA really wanted to swing the hammer. It may pick up the pace, but then again, it may not.

While Congress is unlikely to do anything anytime soon (because, well, it’s Congress in 2023), there are definitely some CBD champions in Congress on both sides of the aisle. Hopefully the FDA’s new position spurs them to reach across the aisle and figure this mess out.

In the meantime, and as always, stay tuned to the Canna Law Blog for more FDA updates.

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Huge decision: FDA won’t restrict CBD sales, calls for ‘new regulatory pathway’ to assure safety

FDA officials found that CBD doesn't fit existing regulations. They want Congress to create new rules, and will allow the exiting market to continue.

The post Huge decision: FDA won’t restrict CBD sales, calls for ‘new regulatory pathway’ to assure safety appeared first on Leafly.

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Upstate New York Officials Clash Over New Cannabis Regulations

City and county officials in upstate New York are at odds over the implementation of rules governing the sale and cultivation of marijuana in the community. 

The dispute is between the Niagara Falls City Council and members of the Niagara County Planning Board, and it centers around how the community will enforce the sale of recreational marijuana, which was legalized by the state of New York in 2021. 

The Niagara Gazette reports: “The Niagara County Planning Board unanimously decided to disapprove a zoning text amendment the Niagara Falls City Council approved a month ago, which allows for the cultivation, production and sale of recreational cannabis within the city. Despite this decision, the members knew their actions would have little effect on the city’s implementation. The county board members’ objections ranged from not being specific on locations to the city seeing little financial benefit from having these businesses operate in the Falls.”

Under the ordinance that was approved by the Niagara Falls City Council last month, “cannabis dispensaries engaging in sales only can operate between 8 a.m. and 2 a.m., those that allow on-site consumption may operate from 8 a.m. to 4 a.m., and may not operate more than 70 hours a week,” and retail “dispensaries may not be located within 500 feet of a community facility while consumption dispensaries may not be within 200 feet of a house of worship, 500 feet of a school or ‘community facility,’ and 1,000 feet of similar operations,” according to the Niagara Gazette.

New York’s Office of Cannabis Management issued 36 recreational marijuana dispensary licenses to various businesses and nonprofits in the state in November, but so far, only two retailers––both located in Manhattan––have opened to customers.

The Office of Cannabis Management says that cities, towns, and villages could have opted out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses from operating within their jurisdictions, but those municipalities needed to “pass a local law by December 31, 2021 or nine months after the effective date of the legislation.”

The agency explains: “If a municipality does not opt-out by December 31, 2021, the municipality will be unable to opt-out at a future date. However, a municipality may opt back in, to allow either, or both, adult-use retail dispensary or on-site consumption license types by repealing the local law which established the prohibition. All local laws passed by municipalities opting out of allowing adult-use retail dispensaries or on-site consumption licenses are subject to a permissive referendum as outlined in section twenty-four of the Municipal Home Rule Law. This creates a process allowing voters of the municipality to petition the outcome of a local law, which if successful, will trigger the question of whether or not to approve the local law, to be placed on the ballot at the next general election of state or local government officials for the municipality.” 

No municipality can “opt-out of adult-use legalization,” according to the Office of Cannabis Management.

According to the Niagara Gazette, Kevin Forma, the city planning director of Niagara Falls, “said the directions that all municipalities received from the state are similar to liquor ordinances and the requirements for having a bar,” and that the “state was also restrictive in what the city can do for allowing and disallowing uses.”

“The state is telling us that we cannot restrict this,” Forma said during the planner’s meeting on Monday, as quoted by the Gazette. “We’re developing this to the best of our ability, managing this in conjunction with the state rules and regulations.”

The post Upstate New York Officials Clash Over New Cannabis Regulations appeared first on High Times.

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FREE Webinar, February 1: New York Cannabis Q&A

On Wednesday, February 1, 2023 at 2pm EST, Simon Malinowski will host a free, hour-long webinar to answer any questions about New York’s adult-use cannabis rules and regulations.

Simon is our lead New York cannabis attorney, based in Manhattan. He will cover a variety of topics including the application process, anticipated timelines and license types.

Please feel free to submit your questions in advance. Questions will also be taken throughout the presentation!

Register Here

In the meantime, check out our extensive blog coverage on these topics, including yesterday’s post by Simon: New York Cannabis: State of the State 2023. It’s finally time!

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