An applicant for a processor license shall indicate on the application for licensure the processing activities in which the applicant intends to engage in, including:
(2) blending and infusing;
(3) packaging and labeling; or
(4) branding, including for the exclusive performance of white labeling agreements.
Processor Ownership, Interests, Business Authorizations and Prohibitions
(a) A processor may acquire, possess, process and sell cannabis from a licensed cultivator to duly licensed processors or distributors. Authorized processing activities vary by the processing license type.
(b) A processor may process cannabis grown by a cultivator without taking ownership over that cannabis.
(c) A processor may only enter into branding or white labeling agreements with its true parties of interest, or another licensee, provided that such licensee is not otherwise prohibited therefrom pursuant to this Title.
(d) A processor may hold one (1) distributor license.
(e) A processor may purchase mature cannabis from a nursery if the cannabis was grown for seed production and the seeds have been removed.
(f) A processor shall only conduct those activities specified on its application, whether on an initial or amended application, that have been approved by the Office or Board for such processor.
(g) A processor may not be a true party of interest in another processor. A true party of interest of a processor may, however, be a true party of interest in a cultivator, processor, distributor, cooperative or collective, microbusiness, ROD, or ROND license.
(h) A processor, or its true party of interest, may have a goods and services agreement with an adult-use cultivator, processor, distributor, cooperative or collective, microbusiness, ROD, or ROND license, subject to all restrictions governing such relationships, including, but not limited to, undue influence, control, and true party of interest requirements.
(i) No processor or its true party of interest is permitted to have any direct or indirect interest, including by being a true party of interest, passive investor, or having a goods and services agreement with, or by any other means, in an adult-use retail dispensary, on-site consumption, delivery, registered organization registered under article 3 of the Cannabis Law, or cannabis laboratory licensee or permittee.
Processor License Facility Operations
(a) Good manufacturing practices:
(1) All cannabis and cannabis product processing shall be in accordance with good manufacturing practice (GMP) standards, pursuant to either Part 111 or Part 117 of Title
21 of the Code of Federal Regulations, as applicable for the type of cannabis or cannabis product being processed or as otherwise determined by the Office.
(2) A licensee who is authorized to conduct certain processing activities as determined by the Office shall establish compliance with GMP standards by submitting to the Office proof of a qualified third-party GMP audit, of the licensee's extraction and/or manufacturing processes as applicable, to the satisfaction of the Office, within one (1) year of commencing licensed operations. The Office shall determine which third-party GMP auditors are authorize and qualified.
(3) A licensee who is processing in accordance with requirements by the Office, shall maintain proof of current GMP certification for the duration of the license and make such certification readily available to the Office upon request.
(b) General requirements:
A processor shall:
(1) maintain all designated processing areas in accordance with general sanitary practices as set forth in section 125.7 of this Title;
(2) assign a lot unique identifier on all cannabis and cannabis products, which allows for complete traceability of all cannabis and cannabis products processed during a specific period of time and under similar conditions;
(3) comply with all packaging and labeling standards in Part 128 of the rules;
(4) maintain, and make available to the Office upon request, processing, packaging, labeling and batch production records, including records of all ingredients and materials used in the processing of each lot of cannabis or cannabis product, and any other applicable records required by Part 125 of the rules;
(5) develop and maintain written standard operating procedures for all processing activities to ensure homogeneity and consistency of cannabis products, including, but not limited to, development of a master manufacturing record containing standards for product purity, strength, and composition for each type of cannabis product produced. Common plan types include a GMP Plan, Quality Assurance Plan, or Hazard Analysis and Critical Control Points (HACCP) Plan.
(c) Requirements for extraction:
Unless otherwise approved in writing by the Office, a processor authorized to perform extraction may only use the methods, equipment, solvents, gases, and mediums approved on the processor's application and shall be conducted only in a manner exhibiting minimal risks to worker safety and public health.
(1) All extraction processes and activities shall:
(i) be conducted by employees trained in the operation of the extraction equipment to be utilized, as well as the emergency plan for incidents and any hazards associated with chemicals, ingredients, solvents, or processes used;
(ii) demonstrate control of all sources of ignition, and occur in a spark-free environment where appropriate for the type of extraction method used;
(iii) ensure proper ventilation;
(iv) have ongoing equipment monitoring and maintain a record of regular maintenance of equipment based on equipment specifications;
(v) follow all applicable state and local fire, safety and building codes, regulations, laws and guidance related to the use and storage of solvents, including, but not limited to, maximum quantities to be held onsite; and
(vi) have evidence of the purity of any chemical solvents used and make any certificate of analysis for the solvents or other documentation evidencing such purity readily available to employees and to the Office upon request.
(2) Unless a processor obtains prior written approval from the Office, extraction shall only be conducted using the following methods:
(i) mechanical extraction methods;
(ii) a professional grade, closed-loop CO2 extraction system that is of a supply equivalent to food or beverage grade of at least 99.5% purity;
(iii) ethanol or alcohol based, provided that all ethanol or alcohol used shall be of a grade that meets or exceeds specifications of official compendiums as defined in section 321 of Title 21 of the United States Code (USC);
(iv) a volatile solvent or hydrocarbon extraction method, provided that the method:
(a) utilizes a commercial, professional grade closed-loop system designed to recover the solvent; and
(b) utilizes the following permissible volatile solvent-based or hydrocarbon extraction substances, which shall be accompanied by a certificate of analysis which establishes that said substances have a minimum purity level of 99%:
(2) propane; or
(3) any other volatile solvent or hydrocarbon with prior written approval by the Office prior to use.
(3) For all proposed volatile solvent-based or hydrocarbon extraction, a processor shall submit to the Office, prior to receiving approval to commence extraction operations at a processing facility, documentation which demonstrates, to the satisfaction of the Office, the following additional requirements for all designated extraction equipment, rooms, or other areas where volatile solvents used for extraction are handled or stored:
(i) final certification letter from a licensed professional engineer or registered architect which certifies the completed installation of a professionally designed, commercially manufactured extraction system, that is compliant with all applicable state or local fire, safety or building codes;
(ii) a letter from the municipal jurisdiction's fire marshal, or their designee, stating that a final inspection of the facility has been conducted and that the processor has demonstrated compliance with all applicable fire codes and/or regulations; and
(iii) a certificate of occupancy, or equivalent document, from the local building official that all permits for extraction related rooms or areas have been closed as applicable.
(d) Allowable cannabis and cannabis product types:
A processor may produce the following types of cannabis or cannabis products for sale:
(2) edibles, that are not in shapes considered to be attractive to individuals under twenty-one as defined in Part 128 of the rules, including, but not limited to:
(i) capsules; (ii) beverages; (iii) tablets; (iv) tinctures; (v) baked goods; (vi) gummies; or (vii) chocolates;
(3) vaporization cartridges or single-use pens;
(4) concentrates such as shatters, waxes and resin;
(5) cannabis flower products, including, but not limited to, whole flower, ground flower, shake and pre-rolls;
(6) cannabis extracts for intermediary sale; and
(7) any other cannabis product type or form, except for the prohibitions in subdivision (e) of the rules herein, with prior written approval of the Office which, following written submission by the processor and a review process by the Office of the proposal, including, but not limited to, review of proposed manufacturing processes, methods of administration and any other factors which assess risk to public health and safety, is determined in writing by the Office to be suitable as a product for retail sale.
(e) Prohibitions and prohibited product types:
A processor is prohibited from processing any cannabis products which:
(1) contain liquor, wine, beer, cider or meet the definition of an alcoholic beverage as defined in section 3 of the Alcohol Beverage Control Law;
(2) contain tobacco or nicotine;
(3) exceed the maximum total THC per serving and per package limits set forth in paragraph (1) of subdivision (f) of this section;
(4) are attractive to individuals under twenty-one pursuant to Part 128 and 129 of the rules;
(5) contain synthetic cannabinoids and/or cannabimimetic agents, as defined in subdivision (g) and subdivision (h) of schedule I of section 3306 of the Public Health Law;
(6) contain any artificially derived phytocannabinoids;
(7) require manufacture under sterile conditions;
(8) are considered a potentially hazardous food as defined by 10 NYCRR section 14-1.31;
(9) contain any non-phytocannabinoid ingredient that would increase potency, toxicity, or addictive potential, or that would create an unsafe combination, known or unknown, with other psychoactive substances. This prohibition shall not apply to products containing naturally occurring caffeine, such as coffee, tea, or chocolate;
(10) are manufactured by application of phytocannabinoid concentrate or extract to commercially available candy or snack food items without further processing of the product. Commercially available candy or snack food items may be used as ingredients in a cannabis product, provided that they are used in a way that renders them unrecognizable as the commercially available items, and the label, including the ingredient list, does not note that the final cannabis product contains the commercially available item;
(11) are in the shape of, or imprinted with the shape, either realistic or caricature, of a human being, animal, insect, or fruit, or is otherwise attractive to individuals under the age of twenty- one as defined herein; or
(12) are in the form of an injectable, inhaler, suppository, transdermal formulations, or any other disallowed form, as determined by the Office, including a form allowed solely for medical cannabis use, unless otherwise authorized by the Office.
(f) Requirements for all cannabis products:
All cannabis products processed for distribution for retail sale shall:
(1) if in the form of an orally ingested product, conform to the product potency limit of 10 milligrams (mg) total THC per serving, and 100 mg total THC per package, provided, however, that tinctures shall conform to the product potency limit of 10 mg total THC per serving, and 1,000 mg total THC per package.
(2) not contain less than 85% or more than 115% of the concentration of total THC, CBD, or any other phytocannabinoid and terpene content as listed on the cannabis product label and reflected on the cannabis product laboratory testing certificate of analysis. Any cannabis product not meeting this requirement shall be relabeled with the accurate phytocannabinoid and terpene content, provided that all other laboratory testing results comply with Part 130 of the rules, and the maximum serving requirements in paragraph (1) of this subdivision without further product remediation, unless otherwise authorized by the Office;
(3) be prepackaged, and not added to food or any other consumable products at the point of retail sale;
(4) be shelf stable, unless otherwise approved in writing by the Office, provided that nothing in this provision shall prohibit a processor from storing non-cannabis components or ingredients under refrigeration until use in product manufacturing;
(5) unless otherwise approved by the Office, except for cannabis, contain only ingredients which are appropriate for the cannabis product type and are, unless otherwise required to be pharmaceutical grade based on the product type, at a minimum, food grade, meaning the ingredient is generally recognized as safe (GRAS), pursuant to sections 201(s) and 409 of the Federal Food, Drug, and Cosmetic Act, or meets internationally recognized standards for the purity and identity of food ingredients;
(i) unless otherwise approved by the Office, except for cannabis, no ingredient or component shall be used in the manufacturing of an edible cannabis product unless that ingredient or component is permitted by the United States Food and Drug Administration (FDA) for use in food or food manufacturing, as specified in Substances Added to Food in the United States, or is GRAS;
(ii) unless otherwise approved by the Office, except for cannabis, topical cannabis products shall only contain ingredients permitted for cosmetic manufacturing in accordance with Title 21, Code of Federal Regulations, Part 700, subpart B (section 700.11 et seq.);
(iii) unless otherwise approved by the Office, cannabis products intended to be inhaled shall only contain cannabis, cannabis concentrate, terpenes, rolling paper, pre-roll filter tips, or ingredients permitted by the United States Food and Drug Administration as an “inactive ingredient” for inhalation, as specified in the United States Food and Drug Administration Inactive Ingredients Database; and
(iv) the Office may determine additional standards related to the ingredients which may be used in cannabis products, and such standards may include, but not be limited to, the identification of ingredients which may only be appropriate for certain product forms or the establishment of certain quality metrics which must be met by specific ingredients in order to be used in cannabis products;
(6) have a date of expiration for unopened product and a use by date for opened product established by available stability data from stability studies initiated by the licensee, or from a reputable outside source, for the cannabis product form.
Each processor that is labeling cannabis products in their final form to be sold to a consumer shall possess stability data for each cannabis product being labeled which supports any unopened package date of expiration or opened package use by date on the cannabis product's respective label. All stability data shall be made available to the Office upon request;
(i) The processor shall complete any stability testing of a cannabis product, requested by the Office, to demonstrate the ongoing stability of the product produced over time.
(ii) For stability testing of unopened cannabis products, each cannabis product shall retain a total THC and CBD concentration in milligrams per single serving that is consistent with paragraph (2) of this subdivision. If the product no longer retains a consistent concentration of total THC and CBD pursuant to paragraph (1) of this subdivision, the product shall be deemed no longer suitable for sale and shall be destroyed pursuant to section 125.11 of the rules.
(7) except for cannabis flower products, have the total number of servings in the cannabis product determined and displayed.
For cannabis edible products or products intended for oral ingestion, products that consist of more than a single serving shall be either:
(i) if the cannabis product is in solid form, the product shall be scored or otherwise delineated by the processor to indicate one serving;
(ii) if the cannabis product is not in solid form, the product shall be packaged in a manner such that a single serving is readily identifiable or easily measurable and the package is resealable; or
(iii) if the cannabis product is a cannabis beverage product, the product shall not have more than a single serving per package, provided, however, multiple cannabis beverage products can be sold together.
(8) if such cannabis products, other than cannabis flower products, contain multiple servings which are not individually wrapped, premeasured, separated, or delineated, such cannabis product shall include a measuring device such as a measuring cap, cup, or dropper with the product packaging, which shall be provided with the cannabis product. Hash marks on the package shall not qualify as a measuring device;
(9) if the cannabis product is vaporized or inhaled, the vaporized or inhaled cannabis product must meet the following additional requirements:
(i) if the cannabis product is vaporization oil that cannot be separated from the associated vaporization device, the vaporization device shall have internal or external temperature controls to prevent combustion and have a heating element made of inert material such as glass, ceramic or stainless steel and not plastic or rubber;
(ii) except for botanically derived terpenes, ingredients used in vaporized or inhaled cannabis products shall be pharmaceutical grade unless otherwise approved by the Office;
(iii) ingredients used in vaporized or inhaled cannabis products shall not include:
(a) synthetic terpenes;
(b) polyethylene glycol (PEG);
(c) vitamin E acetate;
(d) medium chain triglycerides (MCT oil);
(e) medicinal compounds;
(f) illegal or controlled substances;
(g) artificial food coloring;
(h) benzoic acid;
(i) diketones; or
(j) any other compound or ingredient as determined by the Office;
(iv) vaporized or inhaled cannabis products cannot exceed more than 10% total terpenes; and (v) licensees shall maintain records with full information on the source of all botanically derived terpenes, which shall include any cannabis derived terpenes, used in vaporized or inhaled cannabis products and provide this information to the Office upon request; and
(vi) vaporized or inhaled cannabis products shall not be flavored if such flavor is:
(a) menthol or any type of mint;
(b) cotton candy;
(c) bubble gum;
(h) ice cream or gelato;
(l) a concept flavor; or
(m) another flavor that is attractive to individuals under twenty-one, as determined by the Office.
(10) except for cannabis flower products, be homogenous, with phytocannabinoid content evenly distributed throughout the cannabis product. Unless otherwise approved by the Office, a cannabis product shall not be considered homogenous if the concentration of total THC and CBD in milligrams per single serving for representative sampling submitted for testing, pursuant to Part 130 of this Title, is not within 25% of the mean concentration of total THC and CBD in milligrams per single serving for that submitted lot with the exception that, for products with a specified total THC and CBD concentration less than two (2) milligrams per single serving, the concentration of each sample for that low concentration phytocannabinoid shall be within 0.5 milligrams per serving of the mean concentration; and
(11) be identified and categorized in a processor's inventory tracking system and include information detailing the milligrams of total THC in the cannabis product, to ensure compliance with article 20-C of the Tax Law.
(g) Cannabis product quality plans, master manufacturing records and batch product records:
(1) Product Quality Plan
A processor shall implement and maintain a written product quality plan for each type of cannabis product it manufactures. The product quality plan shall address the risks and hazards associated with the premises and the manufacturing process that, if not properly mitigated, may cause the cannabis product to be adulterated or misbranded, may cause harm to individuals involved in the process, or may cause the cannabis product to fail laboratory testing or quality assurance review.
(2) Master Manufacturing Protocol
A processor shall develop, maintain and follow a written master manufacturing protocol for each unique formulation of cannabis product manufactured, and for each batch size, to ensure uniformity in finished batches and across all batches produced.
(3) Batch Production Record
A processors shall develop, maintain and follow, a written batch production record for every batch of a cannabis product manufactured, which shall include any batch specific remediation or relabeling.
(4) Product quality plans, master manufacturing protocols and batch production records shall be readily available for employee reference and made readily available to the Office upon request.
(h) Cannabis product testing:
(1) Prior to a cannabis product being distributed, a licensee authorized to process shall test a representative sample of cannabis products and maintain a certificate of analysis for all lots of cannabis product tested for a period of five (5) years from the date of expiration.
(2) All cannabis product testing shall be consistent with acceptable limits as determined by the Office.
(3) The licensee shall retain a subset of each lot of cannabis product to allow for testing in the future if requested by the Office.
(i) Cannabis product quarantine and remediation:
(1) any cannabis product lot not meeting the minimum testing standards for contaminants, shall be rejected and destroyed by the licensed processor, except that a cannabis product lot that has not met the minimum testing standards for contaminant testing may be remediated and repurposed provided that:
(i) the licensee must notify the Office of their intention to remediate or repurpose a cannabis product prior thereto;
(ii) the cannabis products shall be resubmitted for laboratory testing; and
(iii) after completing the required analyses of a representative sample obtained from a remediated or repurposed cannabis lot, the laboratory shall report the results to the Office.
(2) a cannabis product lot may only be remediated or repurposed for extraction once. If the lot again fails to meet minimum testing standards for contaminants, the entire lot shall be destroyed by the licensed processor.
(3) when a failed cannabis product lot is not remediated or reprocessed in any way it cannot be retested.
(j) A processor shall not package any other good in the same package as a cannabis product, unless such good complies with all requirements of section 129.3 of the rules and is:
(1) a rechargeable vaporization device that is closed system, has internal or external temperature controls to prevent combustion, and has a heating element made of an inert material such as glass, ceramic or stainless steel and not plastic or rubber;
(2) a measuring device such as a measuring cup, cap, or dropper;
(3) matches; or
(4) otherwise approved by the Office.
WHAT SHOULD APPLICANTS DO NEXT TO PREPARE TO APPLY?
The first step in preparing for your cannabis license application is to retain a cannabis business attorney.
The attorneys at Leaf Legal, P.C. are able to diligently guide clients towards establishing state-compliant cannabis businesses. Leaf Legal, P.C. is fully equipped to assist your legal needs in New York's rapidly expanding licensing and regulatory scheme. Contact the attorneys at Leaf Legal, P.C. to request a consultation.