Oversight Lacking in New York Hemp Industry, Audit Finds
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Oversight Lacking in New York Hemp Industry, Audit Finds

A new audit of New York’s hemp program has revealed lack of inspections and testing, incomplete data collection, unstandardized cultivation license approvals and other issues.

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January 9, 2020

With hemp production quickly ramping up across the U.S., a new audit of New York’s hemp program shows the state’s industry is lacking significant oversight. 

New York State Comptroller Thomas DiNapoli recently released a 14-page report showing lack of inspections and testing, incomplete data collection and unstandardized cultivation license approvals, among other issues, within the state’s hemp program.

The audit covered the period from April 1, 2016, through May 31, 2019, and examined oversight of the program’s 156 cultivators for that time period.

The New York Department of Agriculture and Markets processes and approves program applications. It is also responsible for conducting pre-growing inspections and for sampling plants to test tetrahydrocannabinol (THC) levels. 

According to the report, the audit found “the department does not always follow established practices when reviewing applications, conducting inspections and sampling plants.”

Problems abound

One key finding of the report was that the department inspected only 57% of growers’ research plans to ensure they were following operations indicated on their applications. 

“Without an inspection, the department ... cannot easily review other important aspects of the planting process relevant to research, such as the seed information (e.g., origin, variety), plot size, and location (i.e., indoor/outdoor),” the audit says.

Additionally, the department tested THC levels for only 58% of growers, according to the audit. 

The audit also shows the department didn’t maintain info about whether planting occurred or not, and it didn’t follow up with growers to determine this info. 

Another key finding of the report is that the department generally accepts most grower applications—even those that are incomplete or contain risk factors that officials say they screen for during review. Risk factors, according to the audit, include indication that products will be tested on humans, applications from minors or unsupervised students and growing sites located in a backyard, in a suburban area or close to a school. 

“We question whether all growers should have been authorized under program guidelines. We reviewed information for all 156 participants approved as of December 2018, finding eight applications were not dated – five of which were also missing the grower’s signatures,” the audit says. “Additionally, some applications contained other red flags. For example, on one application, the stated purpose of growing was to ‘test this in the daily lives of veterans that have the effects of war that cause them pain every day,’ which appears to be a medical use not allowed under the program.”

The audit also revealed the department only has a draft policy for handling the disposal of noncompliant plants that test above the 0.3% THC threshold, which it is not following.

“According to the draft policy, when plants test above the acceptable THC threshold, the crops should be quarantined and resampled to verify the initial results. In addition, any other locations that were planted using the same seed source should be identified and scheduled for inspection and sampling. However, the department did not follow this draft policy and did not resample the non-compliant hemp, any other plants from those sites or any other sites using the same seed source,” the audit says. 

The audit also revealed lengthy sample processing times. The average time to process a sample was nearly 50 days, with the longest sample processing period reaching up to 72 days. “Given these extended processing times, we question whether results for plants containing over 0.3 percent THC could be retested and plants could be disposed of before non-compliant hemp entered the industry supply chain,” the audit says. 

A growing industry

The department has attributed the shortcomings to staffing shortages, competing priorities and unreliable data systems, according to the audit. 

The program’s rapid growth since hemp’s federal legalization in 2018 likely compounded the problem near the end of the audit period. As of December 2018, the program included 156 growers. By July 2019, that number had grown to more than 400 growers in the state.

“The program has been evolving since its inception due to the rapidly changing regulatory environment,” the department says in its response to the audit. “The department has continuously enhanced its policies, procedures and practices as the department learns from the research of its partners and in response to changes made to state and federal law and will continue to do so in order to ensure effective oversight and monitoring.”  

The audit made three recommendations for the department to amend its processes, which include improving program data, implementing and following procedures for regular data analysis and honing procedures for processing applications, conducting inspections, sampling and disposing of non-compliant plants.

The state recently approved legislation for a “more streamlined regulatory pathway for hemp growers,” according to a press release from New York Gov. Andrew Cuomo’s office, that will work establish greater regulations in the state’s industry. The legislation also granted the Department of Agriculture and Markets supervision over hemp growers and the Department of Health supervision over hemp extract; created a registration requirement for sellers of hemp extract products; made conforming regulatory changes to the 2018 Farm Bill; and defers decision making on hemp extracts, including CBD, as additives for food and beverages, the press release says.

"The hemp industry in New York is exploding, and with that growth comes a responsibility to regulate the industry in a way that helps ensure its long-term viability and protects consumers," Cuomo said in the release. "By establishing a regulatory framework for producing and selling hemp and hemp extract we can set the industry on a path to continued growth in a smart, safe way that empowers both farmers and consumers."