New Jersey Looking to Increase Regulation of Hemp and Cannabis Products

The New Jersey Legislature is currently debating cannabis legislation that would increase oversight over “intoxicating” hemp products like gummies, beverages, and lotions. Under Senate Bill 3235, so-called “intoxicating hemp products,” defined as those with a concentration of total THC greater than 0.5 milligrams per serving or 2.5 milligrams per package, would be regulated by the Cannabis Regulatory Commission (CRC), while lower total concentration hemp products would remain under the regulation of the Department of Agriculture.

Federal Hemp Regulations

While marijuana remains a Schedule I substance under the Controlled Substances Act (CSA), hemp is also now legal under federal law. Pursuant to the 2018 Farm Bill, cannabis plants and derivatives that contain no more than 0.3% THC on a dry-weight basis are no longer controlled substances under the CSA. The 2018 Farm Bill also does place any limitations on the sale, transport, or possession of hemp-derived products, provided that such products are produced in accordance with the law.

In the wake of the Farm Bill, intoxicating hemp-derived cannabinoids (IHDCs), a new type of psychoactive cannabis product, have flooded the market. IHDCs, including hexahydrocannabinol (HHC) and delta-8 THC, are psychoactive compounds. However, because they are extracted from hemp rather than cannabis, they legal under federal law.

New Jersey Hemp Regulations

Under the 2018 Farm Bill, states that want to have primary regulatory authority over the production of hemp within their borders must submit a plan to the USDA that details how they plan to regulate hemp production. The USDA must approve the plan prior to implementation. In August 2019, New Jersey enacted the Hemp Farming Act (Act), which complies with the 2018 Farm Bill. The Act, along with the implementing rules established by the New Jersey Department of Agriculture, establish the New Jersey Hemp Program (Program).

New Jersey’s Proposed “Intoxicating” Hemp Legislation

New Jersey’s latest cannabis reform, Senate Bill 3235, makes several significant changes to New Jersey’s regulatory scheme for hemp products, including the roles of several state agencies. Under the bill, the Cannabis Regulatory Commission (CRC) would be responsible for regulating the sale of all legally produced intoxicating cannabis items, whether hemp or cannabis, while the Department of Agriculture would continue to regulate the cultivation and processing of hemp as an agricultural commodity. The Office of the Attorney General would maintain the jurisdiction over illegally produced marijuana and THC, including any businesses or individuals who fail to sell cannabis items through a licensed retailer.

Under the proposed legislation, a person would be prohibited from selling or distributing an intoxicating hemp product unless the person is licensed by the commission and the product complies with the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA). The CRC is tasked with enacting regulations related to the sale and purchase of such intoxicating products. Under such regulations, entities would be required to be licensed as a Class 5 Cannabis Retailer in order to operate a business in which any intoxicating products are sold. Retailers would also be limited to selling products to persons 21 years of age or older.  

The bill amends the New Jersey Hemp Farming Act to set limits on the amount of THC that can be sold in hemp or (non-intoxicating) hemp products.  This limit is set at a total THC concentration of not more than 0.3 percent on a dry weight basis and additionally, for a hemp product, not more than 0.5 milligrams of total THC per serving, and 2.5 milligrams of total THC per package.

Debate Over Changes to New Jersey Hemp Oversight

While there is a general consensus on the need for further regulation of hemp products, the devil is in the details. During recent testimony before the Senate Judiciary Committee, critics of the bill argue that the limits on how much THC can be sold in hemp products is too law, subjecting too many products to more onerous CRC oversight. Manufacturers of hemp products, such as low-dose cannabis-infused beverages, have also questioned whether cannabis retailers are equipped to sell their products, noting that it may make more sense for them to be sold in liquor stores under the oversight of the Division of Alcoholic Beverage Control.

The Senate Judiciary Committee ultimately advanced Senate Bill 3235 by a 6–2 vote. The legislation is now pending before the Senate Budget and Appropriations Committee. We will continue to track its status and provide updates.

Navigating the Hemp Industry Requires an Experienced Cannabis Attorney

The hemp industry currently involves numerous legal grey areas, which makes it challenging to for businesses to pursue new opportunities. Scarinci Hollenbeck’s Cannabis Law Group has been at the forefront of the industry since its inception and remains dedicated to helping our clients navigate the ever-evolving regulatory landscape, with an eye towards growing their businesses while also minimizing the legal risks.