Biden Administration Attempts to Press Pause on Recently Released USDA Hemp Regulations
Shortly after taking office, President Biden issued a memorandum to all federal agencies recommending they authorize an additional thirty-day comment period for newly issued final rules that have not yet taken effect. The recently released USDA Hemp Regulations fall within this category, as they do not take effect until March of this year. While the memo only recommends an extended comment period, industry professionals believe the USDA will follow suit as its newly nominated Administrator, former Agriculture Secretary Tom Vilsack, has yet to be confirmed by the Senate.
Extending the comment period may just be a formality, and it does not necessarily mean there will be negative consequences for the hemp industry. But for an industry that has been waiting over two years for new regulations, there is growing frustration and concern that farmers and processors will be forced to endure another growing season controlled by the regulations that came from the 2014 Farm Bill. The main concern here is that the new regulations provide some relief for agricultural products that exceed the 0.3% threshold. So, the wait for a comprehensive regulatory framework that reflects the 2018 Farm Bill continues.
Taking a Page Out of Its Neighbor’s Playbook, New York Pushes for Legalization
It should come as no surprise that just two months after New Jersey citizens voted to legalize recreational marijuana, New York appears to be following suit. Last week, Gov. Andrew Cuomo released the annual Executive Budget Proposal for fiscal year 2021. If passed, New York’s legalization will continue the furious efforts we are seeing in most northeastern states to open new cannabis markets. However, unlike recent states that approved the legalization of adult-use cannabis, New York would be leaps and bounds ahead of the crowd because its legalization would come by way of the legislature, and not simple ballot measures that could take years to become fully formed law. The Governor’s regulatory proposal is incredibly comprehensive and provides a clear pathway that should expedite the process of actually allowing cannabis retail stores to open in the state. Here are a few of the main takeaways from the proposal:
- The proposal would enact the previously introduced Cannabis Regulation & Taxation Act (CRTA). If passed, the CRTA would require the creation of an Office of Cannabis Management (OCM). The OCM would be controlled by a Cannabis Control Board tasked with administering the state’s regulation of adult-use, medical, and cannabinoid industries.
- The CRTA requires the OCM to create a Social and Economic Equity Plan (the Equity Plan) that “actively promotes racial, ethnic, and gender diversity in the adult-use cannabis industry and prioritizes applicants who qualify as a minority and women-owned business, social equity applicant, or disadvantaged farmer and which positively impacts areas that have been harmed through disproportionate enforcement of the war on drugs.”
- The CRTA would also mandate a tax structure based on product and THC potency. Specifically, wholesale products would be taxed as follows: (1) A rate of 0.7 cents per milligram of THC content for cannabis flower/pre-roll/shake products; (2) A rate of 1 cent per milligram of THC content for cannabis concentrates and oil products; and (3) A rate of 4 cents per milligram of THC content for cannabis-infused/edible products.
In terms of the next steps, we will know more on February 23, 2021, after the legislature conducts a joint budget hearing where the new proposal will be discussed. Following that hearing, both chambers will announce their independent budget plans. Gov. Cuomo has been clear in the past with his intention to open up a legal recreational market, so the fact that such a comprehensive regulatory plan has been introduced is excellent news for those eager to enter what will assuredly be one of the largest cannabis markets in the world. Keep an eye out for future weekly updates, as CBDA is closely following the progress in New York.