NJ Establishes Permanent Hemp Program, Friendlier Environment for CBD Than NY and PA

On August 9, 2019, New Jersey Governor Phil Murphy signed A5322 into law, making the Garden State the latest to establish a permanent program for the cultivation, handling, processing, transport, and sale of hemp and hemp-derived products. A5322 is immediately effective and it repeals New Jersey’s prior Industrial Hemp Pilot Program, which went into effect in 2018.

Consistent with the Agriculture Improvement Act of 2018 (the 2018 Farm Bill, which we discussed previously), A5322 specifies that hemp, hemp-derived cannabinoids, and hemp products, including hemp-derived cannabidiol (CBD), are not controlled substances and are lawful to possess, transport, sell, and purchase within the State. Per A5322, New Jersey hemp producers are required to have testing performed by a registered third-party laboratory to ensure compliance with the federally-defined delta-9 tetrahydrocannabinol (THC) level for hemp (i.e., THC concentration of not more than 0.3 percent).

Notably, A5322 permits hemp, hemp products, and hemp derivatives (including hemp-derived CBD), to be added as ingredients in cosmetics, personal care products, and products intended for human consumption in New Jersey. Permitting hemp-derived CBD to be added to such products is a stark departure from neighboring states’ policies, and is partially in conflict with federal requirements. Just last month, New York Department of Agriculture and Markets (the Department) Deputy Commissioner Jennifer Trodden issued a letter to food license and dairy permit holders restating the Department’s policy that “no food or beverage product may be made or sold in New York State if it contains CBD as a food, a food additive or an ingredient.” Pennsylvania, too, has taken a similar position, stating on its Department of Agriculture website earlier this year that it subscribes to the U.S. Food and Drug Administration’s (FDA or the Agency) prohibition on the sale of food and dietary supplements containing CBD.

As discussed previously, in response to the 2018 Farm Bill being signed into law, FDA was quick to remind the public about what the legislation did not change: the Agency’s authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act or the Act) and section 351 of the Public Health Service Act. In short, FDA has taken the position that it is unlawful under the FD&C Act to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived. The Agency’s justification for its position is that, in its view, CBD and THC are active ingredients in FDA-approved drug products and were the subject of substantial clinical investigations before they were marketed as food. However, as we also noted, both prior to and after the 2018 Farm Bill was signed into law, the Agency has taken a largely hands-off approach to enforcement in this area, absent aggressive disease claims (e.g., cancer, AIDS, diabetes, etc.). The FD&C Act does not prohibit CBD as an ingredient in topical products, so long as such products do not bear therapeutic claims.

Despite FDA’s well-known approach to CBD products, manufacturers, distributors, and retailers have had to adopt a jurisdiction-by-jurisdiction approach given the differences in state and local regulation of the same. Accordingly, it is important for stakeholders in New Jersey, New York, and Pennsylvania to be aware of these distinctions across state and local lines as FDA continues to explore how, if at all, it will change its approach to CBD products.  

If you have questions regarding compliance with New Jersey’s new hemp requirements or about maintaining broader state or federal compliance, please contact the authors or the attorney at the firm with whom you are regularly in contact.