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By Kristin McCall, Arin Aragona, and Hannah King, Attorneys at Dentons
While hemp has been legal in Kentucky since 2013, until this year the existing regulations were minimal. Hemp industry participants, such as processors, manufacturers, distributors, retailers, and testing labs should be aware that there is a new regulatory scheme aimed at both “Adult Use” products (e.g., hemp-derived delta-8 tetrahydrocannabinol (“THC”) and hemp-derived delta-9 THC products) and non-intoxicating hemp-derived products. These requirements, which include entity and product registration requirements, are now necessary for the legal sale of such products in the Commonwealth.
On March 23, 2023, Governor Andy Beshear signed HB 544 an act relating to the regulation of hemp-derived products directing the Cabinet for Health and Family Services to regulate delta-8 THC and other hemp-derived cannabinoids. On August 1, 2023, the Cabinet initiated that process by promulgating emergency administrative regulations governing the manufacturing, processing, distribution, and sale of hemp-derived cannabinoid products (902 KAR 45:190E). These regulations were subsequently amended on October 13, 2023. The amended emergency regulations are now effective and will remain in effect while the Cabinet prepares replacement emergency regulations and proposed final regulations. It is anticipated that the Cabinet will issue the emergency regulations and proposed final regulations before Saturday, April 27, 2024, which is when the current emergency regulations expire. After the new emergency regulations and proposed final regulations are published, there will be a public comment period for each before the final regulations go into effect.
For industry participants, the emergency regulations contain a number of comprehensive requirements, detailed below, which must be complied with to continue operating legally in the state. These rules align with several other state efforts to regulate hemp-derived products, including Louisiana, Iowa, and West Virginia. When viewed in the context of recent trends by state governments toward either banning or regulating hemp-derived products, Kentucky’s approach—allowing for the continued production and sale of products containing hemp-derived cannabinoids subject to licensing, product registration, testing and packaging requirements, and age gates—is better for the industry. The new regulations are, for the most part, targeted at addressing public health concerns raised by Governor Beshear’s 2022 Executive Order and the U.S. Food and Drug Administration. Kentucky’s new laws governing the production and sale of hemp-derived products will, however, require existing companies to make changes—in some instances, significant changes—to operations to comply.
To date, it does not appear that the Cabinet has begun enforcing the emergency regulations. However, the emergency regulations require the Cabinet or its agents to conduct an on-site inspection of all hemp-derived processing and manufacturing establishments, storage warehouses, distribution centers, and retail establishments. The Cabinet and its agents may also seize and destroy any products not in compliance with the emergency regulation. Given that enforcement could begin at any time, it is prudent for all operators in the hemp space to come into compliance with the regulations as soon as possible.
Below is a brief summary of the more significant provisions:
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- Permitting: The emergency regulations require any person in Kentucky seeking to process, manufacture, store, or distribute hemp-derived cannabinoids to be permitted by the Cabinet. Although the permitting system has not been established yet, the permits will have to be renewed annually. Processors and Manufacturers are also subject to certain regulations related to food and cosmetic processing (902 KAR 45:160).
- Out-of-State Processors and Manufacturers: Under the emergency regulations, out-of-state processors and manufacturers that want to distribute or sell their hemp-derived cannabinoid products in the Commonwealth must have a permit from a state that has been approved by the Kentucky Department of Public Health as having equivalent state standards for processing, laboratory testing, and labeling requirements. All out-of-state processors and manufacturers of hemp-derived cannabinoid products available for distribution in Kentucky will have to register with the Department effective January 1, 2024. The Department has not yet issued a list of approved states, but Dentons can advise clients on which states are currently regulating hemp-derived cannabinoids, and which states have regulatory frameworks similar to Kentucky’s emergency regulations.
- Product Registration: All in-state and out-of-state processors and manufacturers are required to register with the Cabinet each of their finished products that is available for distribution in Kentucky. Such registration requires a $200 annual fee per SKU and certain information related to the product, such as a certificate of analysis, a copy of the label, and the origin of cannabinoids contained therein.
- Processing: The emergency regulations restrict the solvents that may be used for extraction, conversion, catalyzation, or distillation and impose other requirements for facilities where these activities will occur. Processors also may not adulterate products with caffeine, alcohol, or any additive that increases toxicity, addictiveness, carcinogenicity, or cardiac effects.
- Testing: The emergency regulations require health and safety testing of hemp-derived products at ISO 17025 accredited laboratories. All concentrate, extract, and edible products must be tested for cannabinoids, microbial impurities, mycotoxins, pesticides, heavy metals and residual chemicals, and vaping devices must be tested for Vitamin E acetate.
- Packaging and Labeling: The emergency regulations require for certain hemp-derived cannabinoid products, among other things: child-resistant packaging; labels listing the total amount of cannabinoids per serving; identification of certain types of hemp-derived cannabinoids that the product contains; and certain warning statements for adult-use hemp-derived ingestible products.
- Non-Intoxicating versus Adult Use Hemp Products. The emergency regulations divide hemp products into two types: (1) non-intoxicating and cosmetic cannabinoid products, and (2) adult use hemp-derived cannabinoid products. The rules establish maximum amounts of certain cannabinoids or specific ratios of certain cannabinoids for each type of product. Many, although not all, of the regulations are different depending on the product type.
- Retail Sales: The emergency regulations require any retail establishments offering hemp-derived cannabinoid products to register with the Cabinet within 90 days of the effective date of the emergency regulations, which means the deadline was Monday, October 30, 2023. All hemp-derived cannabinoid products sold in a retail establishment in Kentucky must be from an approved source, be packaged and labeled in accordance with the emergency regulations, and have a valid certificate of analysis available upon request. Only non-intoxicating and cosmetic hemp products may be sold to persons under the age of 21, and all other hemp-derived cannabinoid products may be sold only to persons age 21 and older and must be stored in a manner to prevent theft and access by individuals under the age of 21.
Should you have any questions about legislative, regulatory, licensing, and enforcement developments relevant to the production and sale of hemp and other cannabis products in Kentucky or about hemp or cannabis products generally, please contact the authors.
About The Authors
Arin Aragona is a partner in Dentons’ Corporate, Private Equity and Cannabis practice groups. Prior to joining Dentons, Arin was general counsel and chief operating officer of a boutique private equity firm primarily focused on the US cannabis industry. He may be reached at [email protected]
Kristin McCall is a partner in Dentons’ Commercial Litigation practice, where she represents clients in state and federal courts in a variety of litigation matters. She also helps businesses navigate the often complex and constantly evolving cannabis laws at the local and state levels regarding licensing and permitting, regulatory compliance and related litigation. She may be reached at [email protected]
Headshots by Gary Barragan
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