NJ Hemp Farming Act

A5322, known as the “New Jersey Hemp Farming Act” finally became law on Friday August 9, 2019. The New Jersey Hemp Farming Act (“NJHFA”) establishes a program for the cultivation, handling, processing, transport, and sale of hemp and hemp products in the State in accordance with federal law. The bill also repeals New Jersey’s hemp pilot program, and replaces it with a permanent program, administered by the New Jersey Department of Agriculture that complies with federal law.

Just like the 2018 Farm Bill, NJHFA defines “hemp” the plant Cannabis sativa L., any part of the plant, and all derivatives thereof with a delta-9 tetrahydrocannabinol (“THC”) concentration of not more than 0.3 percent, consistent with federal law. In other words, if the hemp has more than .3 percent THC, it will no longer be legal on a state or federal level.

Because hemp is a viable agricultural crop and the state wants to promote the cultivation and processing of hemp, the New Jersey now allows famers and businesses to cultivate (plant, grow, or harvest), handle (possessing or storing – exclusive of finished hemp products), process (convert hemp into a marketable form) and sell hemp products for commercial purposes. Farmers and businesses looking to cultivate, handle, process and sell hemp products for commercial purposes must submit an application to the New Jersey Department of Agriculture (“NJDOA”). The application must contain GPS coordinates of the hemp farm, written consent from the cultivator allowing law enforcement and other officials to enter the property at will, a criminal background check of the applicant, and a non-refundable application fee. Other information may be required by the NJDOA as they implement this application process.

It should also be noted that any person who has been convicted of an offense relating to a controlled substance under the State or federal law may not participate in this program or produce hemp in the state for a period of at least ten (10) years following the date of conviction. Individuals who previously were growing hemp lawfully with a license or registration, or authorized under 7 USC § 5940 prior to August 9, 2019 are grandfathered in and not excluded from participation based on their conviction.

The NJDOA, is named as the regulator of hemp cultivation and production, and retains authority to adopt rules as needed to implement the Act. The Department will be responsible for overseeing land use for hemp production, checking THC levels of hemp, hemp plant disposal, annual inspections of hemp producers, and submitting required information to the Secretary of the United States. The Act lists more requirements for the NJDOA to fulfill. These include establishing an appeals process for farmers who fail THC testing, creating an application process for hemp producers, defining classes of hemp products that may be sold to the public, and defining shipping procedures for sending hemp out of state lines. The Act states that the only requirement for this shipping is proof that the sender has authority to engage in the sale of hemp. Any person or entity that is not a hemp producer or agent of hemp, but who cultivates, handles or processes hemp, shall be subject to the same penalties as those related to marijuana. Lindabury plans monitor the rules and regulations implemented by the NJDOA.

The NJHFA creates a separate fund known as the New Jersey Hemp Farming Fund for purposes of collecting license fees, penalties collected by the department, donations, and sums appropriated by the Legislature to implement the hemp program.

Under the NJHFA, notwithstanding any other law, rule or regulation, derivates of hemp, including hemp-derived cannabidiol (“CBD”) may be added to cosmetics, personal care products, and products intended for human or animal consumption – to the maximum extent permitted by federal law. Moreover, the NJDOA, in consultation with the Department of Health (“NJDOH”), may adopt rules and regulations to regulate the sale of hemp products that provide that hemp-derived cannabinoids, including CBD, are not considered controlled substances or adulterants. While this language appears to legalize CBD products, it specifically cites to federal law as a possible bar to doing so. This continues to create a grey area for CBD in New Jersey particularly for food products infused with CBD.

Finally, retail sales of hemp products processed outside the State may be conducted in the State when the products and the hemp used in the products were processed and cultivated legally in another state or jurisdiction that has substantially similar requirements for processing hemp products or cultivating hemp under this law.

In sum, the passing of the NJHFA creates significant opportunities for farmers and entrepreneurs in the hemp industry. It also will require farmers and entrepreneurs to continuously deal with challenging legal issues on both a state and federal level. Thus, if you have any questions or concerns, please feel free to contact an attorney in our Food, Beverage and Agribusiness practice group.