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Now accepting applications: State's CBD licensing program draws mixed reactions

This week, New York State began accepting license

This week, New York State began accepting license applications as part of a new program to regulate businesses that sell, process or distribute CBD products. Matt Flax, owner of Vaporville, says he's not opposed to the regulation but businesses shouldn't have to pay a $300 fee. Credit: Barry Sloan

New York State this week began accepting license applications as part of a new program to regulate businesses that sell, process or distribute CBD products.

While some Long Island business owners welcome the regulations, which they said signal the end of the CBD industry’s "wild, wild West period," one retailer complained that a $300 license fee is too high for businesses already hurting from the pandemic.

CBD or cannabidiol — a cannabis-derived compound that isn’t psychoactive — is a key ingredient in a range of products including topical oils and creams, capsules, and foods and beverages.

Proponents of CBD say the products help them sleep, make them feel calmer and relieve joint pain, although scientific research supporting these claims is scarce.

The CBD market is expected to grow from $967 million in 2020 to $5.3 billion by 2025, according to a recent study by Dublin-based market research firm Research and Markets.

In October, the Department of Health released the state’s proposed CBD guidelines, which greenlight the use of hemp-derived CBD in certain foods, drinks, topicals and dietary supplements.

The new Cannabinoid Hemp Program sets requirements for laboratory testing as well as guidelines for manufacturing, packaging and labeling.

To be sold in New York State, CBD products must be tested by an approved third-party laboratory, and properly labeled to inform consumers of the amount of cannabinoids per serving and warn of any risk associated with the use of the product.

The licensing program "is the first step to ensuring a safe and regulated supply chain for cannabinoid hemp products in New York State, Health Commissioner Howard Zucker said in a statement. "Licensing will hold processors, distributors and retailers accountable, helping to remove sub-standard and potentially dangerous products from the marketplace."

The Department of Health "encourages all businesses selling cannabinoid hemp products to sign up for a license as soon as possible," spokeswoman Jill Montag said Thursday. "As with any new program, the Department is leading with education and expects enforcement activities to increase during the program’s implementation," she said.

David Falkowski, a Bridgehampton hemp grower who owns CBD business Open Minded Organics, called the licensing program a possible "game changer" for those who grow, sell and manufacture hemp-derived CBD products.

The new oversight, Falkowski said, could potentially weed out players "who up until now, have been getting by cutting corners and operating in this legal gray area," and in turn make the market a safer one for consumers.

But Hicksville vape shop owner Matt Flax sees things differently and is not too thrilled about needing a license to sell products already on his shelves.

His main gripe: the $300 permit fee for a hemp retailer license. Flax, whose business Vaporville — like all nonessential businesses — was closed for several weeks during the COVID-19 shutdown in March, said for the past year small business owners have been through the ringer.

"I’m going to pay the fee because I sell a lot of CBD products here and I know I won’t be able to continue doing so" without a license, he said.

"But am I a fan? No, of course not. Regulations, licenses, fees ... these all put a strain on small businesses like mine."

Flax added that while he’s not entirely opposed to regulations "as long as they’re not overreaching," he was hoping for a less pricey licensing fee.

Even so, for many CBD industry insiders the licensing requirement was expected, and is welcome, Falkowski said. "The majority of us are so glad this day is finally here ... it’s been a long time coming."

License applications are available on the Cannabinoid Hemp Program’s website.

New requirements for CBD businesses

Who must be licensed: retailers, distributors, processors and manufacturers

License fees: retailer, distributor -- $300; up to $4,500 for manufacturers

What’s required: independent, third-party testing of products, labeling that includes amount of CBD per serving

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