NJ Governor Signs Bill Tightening Rules On Hemp: Industry Stakeholders Protest, Big Alcohol Celebrates

New Jersey Governor Phil Murphy signed Senate Bill No. 3235 into law, introducing strict regulations for intoxicating hemp products, including Delta-8 THC and THC-infused beverages.

The bill, which places these products under the purview of the New Jersey Cannabis Regulatory Commission (CRC), marks a significant shift in the regulation of hemp-derived THC products.

The bill itself sparked debate among hemp industry stakeholders, who are being partially outlawed. Late amendments to the legislation have raised concerns that the alcohol industry is benefiting from regulatory advantages that cannabis businesses do not receive.

Outcry Among Hemp Industry

For hemp industry stakeholders who have been following state guidelines and voluntarily implementing safety measures, the new law comes as a blow. Many complain that they have been unfairly impacted by legislation that was meant to crack down on unregulated products, not those adhering to responsible practices.

"We are good actors. We followed the process the state put forward to enter this business… and here we are," said Philip Petracca, owner of Bella Ray Beverage, a THC drink startup.

Petracca, like many others, has invested heavily in the industry, but now faces being outlawed by new regulation, reported Asbury Park Press.

New Amendments Favor Alcohol Industry

Murphy acknowledged that late-stage changes to the bill granted alcohol licensees—such as liquor stores and distributors—allowing them to sell intoxicating hemp beverages without being subject to the same stringent regulations as cannabis businesses.

These amendments have sparked controversy among cannabis industry stakeholders, who argue that the bill creates an uneven playing field.

In his official statement, Murphy expressed concern over the added advantage given to alcohol licensees. "Late amendments to this bill in the Legislature opened the door to the sale and distribution of intoxicating hemp beverages by holders of plenary wholesale licenses and plenary retail distribution licenses for alcoholic beverages, in addition to licensed cannabis businesses."

Read Also: Gov. Murphy ‘Honored’ As NJ Black-Owned Cannabis Cultivator Names Strain After Him

Cannabis Companies Are Not Receiving Fair Treatment

Murphy said these licensees may not be held to the same regulatory standards as cannabis businesses, creating a loophole. Murphy himself seems to be aware of the situation, judging from comments he made.

“The bill also does not explicitly require alcohol licensees that sell or distribute intoxicating hemp products to comply with the many regulatory requirements that apply to cannabis businesses,” the governor said.

Cannabis in New Jersey is purported to be $1.1 billion-dollar highly regulated market in which business are obliged to meet requirements that include rigorous testing, labeling and sales restrictions – all key components of the CRC's regulatory framework. Whereas, alcohol businesses could be exempt from them under this new law.

Murphy expressed concerns about the CRC’s ability to oversee this new market segment, especially without additional resources.

"I am concerned that the bill requires the New Jersey Cannabis Regulatory Commission…to establish a new regulatory program for alcohol licensees selling intoxicating hemp beverages but does not provide the Commission with the resources necessary," the governor said.

Despite these concerns, amendments to New Jersey’s hemp regulation bill remained in the signed version of the bill.

• Get Benzinga’s exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you’re serious about the business, you can’t afford to miss out.

Why Murphy Signed The Bill Despite Concerns

Despite the bill’s potential impact on fairness in the industry, Murphy ultimately decided that the public health risks posed by unregulated intoxicating hemp products were too great to ignore.

"The status quo is untenable, and this bill will put an end to it," he said.

Murphy addes that the bill's immediate impact on public safety outweighed its imperfections. "Because the bill would address this present danger, I have concluded that the wiser course is to sign the bill now and commit to working with the Legislature to address the technical issues and other challenges in separate legislation."

As a result, intoxicating hemp products like Delta-8 and THC seltzers will be pulled from shelves within 30 days, awaiting new CRC regulations.

Once these guidelines are in place, hemp products that do comply will return to the market but will be restricted to licensed cannabis businesses or alcohol licensees.

• Read Next: Expert Calls For A United Hemp And Cannabis Front, ‘Industries Should Collaborate’ And Push For Federal Rules

Cover: Gov Murphy and Prolific Growhouse's CEO David Nicolas by Edwin Torres/ Courtesy of N.J. Governor’s Office