New York State recently passed a law to legalize and regulate both medical and recreational consumption of marijuana for adults in the state. In the Bill that Governor Cuomo signed into law two weeks ago, cannabis businesses were also permitted to set up in New York once a regulatory framework has been introduced. While many advocates celebrated this move instantly, it took a while for analysts to read the fine print and reveal that the hemp industry will be affected as well. But how is the hemp industry impacted by New York’s recent legalization?
While hemp cultivation has been legal in New York since 2015, the industry has lacked a centralized agency that provides regulation and monitors compliance. The task of creating guidelines and a regulatory framework for industrial hemp was previously left to New York State’s agriculture authorities. The New York cannabis law provides a new designation for hemp cannabinoids and products, which is the first time a state has offered regulatory guidelines for hemp while passing cannabis articles.
What are the New Regulatory Guidelines for Hemp?
According to the law, hemp will be designated a new category known as “cannabinoid hemp,” which is overseen by the Office of Cannabis Management. This agency will be responsible for setting the cannabis and cannabinoid hemp industries’ rules and regulations.
This recognition of the similarities between hemp and cannabis has been celebrated by many in the hemp industry as it clears up the regulatory environment for hemp. According to Geoff Whaling of the National Hemp Association, this law streamlines the compliance and regulatory process for hemp growers. They now have a single point of contact with the government.
“We all have to currently deal with departments of health and departments of AG and departments of justice and attorneys general, on and on and on,” he said.
Furthermore, this law makes it easier for hemp farmers to integrate THC-rich flowers into their farms.
Will Hemp Farmers Start Transitioning to THC Flower?
Critics of the new law have argued that creating a “one-stop-shop” for both cannabinoid hemp and marijuana regulation will create a scramble among hemp farmers to switch to marijuana flowers that have more THC than hemp, which is grown for the CBD instead.
That’s because when both hemp and cannabis are regulated and taxed similarly and overseen by the same agency, it makes no sense for hemp farmers to focus only on the low-THC flower. This is the argument made by said Kaelan Castetter, vice president of the New York Cannabis Growers and Processors Association.
“I think most of them are looking to enter the high-THC space,” offered Mr. Castetter, who said he’s personally considering THC production at his company, CSG Hemp, which grows and sells hemp in southern New York. “It’s all cannabis, right?” he said. “There’s so much similarity between growing hemp for its cannabinoid content that is not THC and growing for THC content. So, why not?”
How Does this Impact the Hemp Industry?
While this law offers CBD hemp farmers the opportunity to pivot into the lucrative THC industry that is now also legal, it is worrying for industries like CBD oils that rely on hemp as a raw material. Fears of cannabinoid hemp shortages are rampant all over the industry as farmers repurpose farmland for THC flowers. Just like Mr. Castetter above, many hemp growing companies believe they already have the necessary infrastructure, skills and resources to transition to marijuana rich in THC efficiently.
While fears of a mass exit are high among some speculators, it is still too early to call for most industry investors. Many hemp producers have supply contracts that they can’t just exit from without facing penalties. Furthermore, the streamlining of hemp regulations is expected to attract more investors to the industry, just like the cannabis industry. All in all, this is worth watching for those looking to invest in New York’s hemp industry soon.
How is the Hemp Industry Impacted by New York’s Recent Legalization?
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