CANY Public Comments – Packaging, Labeling, Marketing & Advertising 2nd Draft Regulations

CANY Official Communication

by Hal McCabe, Director of Government Relations

CANY Comments on New York State Cannabis Control Board Revised Regulations on Adult Use Cannabis (9 NYCRR Parts 128 and 129)

ORGANIZATIONAL INFORMATION

The Cannabis Association of New York (“CANY”) appreciates the work by the New York State Cannabis Control Board (“CCB”) and associated Office of Cannabis Management (“OCM”) on the Proposed Regulations concerning packaging, labeling, marketing and advertising (the “Proposed Regulations”). However, CANY notes that the Proposed Regulations create undue burdens for conditionally licensed cultivators, processors, and retailers, as well as other highly prioritized prospective licensees.

While CANY supports a safe and well-regulated adult-use cannabis industry, portions of the regulations can better balance costs and benefits while still realizing the goals of the OCM. The comments below specifically address key areas of the regulations that CANY would like revised to achieve the goals of promoting social and economic equity and making the state more resilient in the face of climate change, while protecting consumers and promoting the possibilities of the adult-use industry.

BACKGROUND

The NYS Cannabis law vests the CCB with rulemaking authority. Per Section 13: “The board shall perform such acts, prescribe such forms and propose such rules, regulations, and orders as it may deem necessary or proper to fully effectuate the provisions of this chapter…”¹ Such authority explicitly includes both the prescribing of adult-use licensing application forms and processes, as well as the qualifications and detailed eligibility criteria for such licenses.

Please find below the CANY’s comments and related recommendations based on the revised draft of the proposed regulations.

Specific Provisions of Concern:

Part 128 – Adult-Use Packaging and Labeling

1) §128.1(a) – Definitions.

CANY is concerned that some of the language contained in §128.1 is too vague and potentially overbroad.

(a) Advertising means disseminating communications in any manner or by any means, for the purpose of causing, directly or indirectly, the purchase or use of a cannabis product brand or cannabis product, including but not limited to websites, paid social media, brochures, prints ads, TV, radio, streaming, out of home, and digital advertisements.

The proposed language contained in this provision is overly restrictive by encapsulating all social media activity as advertising. Clarification is needed to make the distinction between general social media activity and paid social media advertising and marketing.

Using the overbroad term ‘social media’ results in a chilling restriction of free speech. Simply qualifying that only paid social media falls under the umbrella term ‘advertising’ in this section remedies that concern.

2) §128.1(b)(3) – Adult-Use Packaging and Labeling – Advertising: “Attractive to individuals under twenty-one”

CANY is concerned that some of the language contained in §128.1(b)(3) is subjective and should be struck from the regulations. If not stricken, the OCM should provide the Pantone color numbers for the colors considered to be neon and thus attractive to individuals under the age of 21.

  • (1) Bright colors that are “neon” in appearance;

“Neon” is a subjective term and should be stricken from the regulations. If not stricken, the OCM should provide a full list of the Pantone numbers considered to be neon.

The only way to classify color across platforms objectively is through using Pantone color numbers.

3) §128.4(b) – Retail Packaging Sustainability Program. – Retail packages can be reused after appropriate sanitation and based on visual inspection.

CANY would like to see §128.4(b) further developed with incentives for producers and retailers to offer reusable packaging.

(b) Retail packages can be reused after appropriate sanitation and based on visual inspection if the retail package is in good working order and does not appear to pose a risk of unintended exposure or ingestion of cannabis products. The visual inspection must ensure such retail packages are not brittle or have chips, cracks, or other imperfections that could compromise the child-resistant properties of the retail package or otherwise pose a threat of harm to a consumer.

CANY shares the belief that offering reusable packaging to consumers is both environmentally sound and a selling point, but is concerned that there is no incentive for consumers to return packaging or for producers to go through the process of reconditioning, which is likely to be more expensive and time-consuming than using new packaging. CANY would like to see incentivization for the reuse of packaging from the OCM in the future.

4) §128.5(a)(1) – Cannabis Product Labeling Minimum Standards – Verification of identification and proof of age for retail dispensaries.

CANY is concerned that some of the language contained in §128.5(a)(1) is impractical, if not impossible, when it comes to smokable flower.

(a) Licensees authorized to package cannabis products for retail sale shall ensure that the principal packaging display panel shall have a white background with black text containing the following information:

  • (1) milligrams per single serving of total THC (THC + THCA x 0.877), total CBD (CBD + CBDA x 0.877) content and any other marketed phytocannabinoids, or terpene profile;

The proposed language contained in this provision does not take into account the variable nature of smokable flower, and to require this would place an undue burden on the supply chain. Terpenes are volatile compounds that off-gas and at various temperatures, and measuring them requires well-calibrated gas chromatography. These results only give you a snapshot of that sample in a moment in time. This will fluctuate with a change in temperature and oxidation or even light exposure.

Further, Single serving is not and cannot be readily defined. The endocannabinoid system varies from one human to another and may vary over time in an individual.

Finally, “other . . . phytocannabinoids” is too general. The cannabis plant produces several hundred compounds and phytocannabinoids. CANY requests a list of which “other phytocannabinoids” need to be tested and what is the threshold for their presence that would require labeling. Additionally, terpenes also number in the hundreds, and most labs do not test for all of the terpenes that could be present in very small amounts.

5) §128.5(a)(1) – Cannabis Product Labeling Minimum Standards – Terpene Profile

CANY is concerned that some of the language contained in §128.5(a)(1) is not sufficiently defined as it relates to a “terpene profile,” which is not a standardized metric within the industry.

  • (1) milligrams per single serving of total THC (THC + THCA x 0.877), total CBD (CBD + CBDA x 0.877) content and any other marketed phytocannabinoids, or terpene profile;

From Guidance:

Terpene profile (if the product’s terpene content is marketed)

The proposed language asks for a “terpene profile,” for which there is no generally accepted standard metric. Further guidance is needed because this provision is already causing confusion in our industry. Maybe questions have come up on this issue, for instance:  is this strain or attribute specific?

Given that the COA (Certificate of Analysis) contains all the necessary information on the product, it is our strong belief that it is sufficiently addressed there, and this is a costly duplication of effort without a clear need. CANY recommends that the requirement for a terpene profile be eliminated from the regulations.

6) §128.5(i)(2)) – Cannabis Product Labeling Minimum Standards – Solvents

CANY is concerned that some of the language contained in §123.10(d)(1) is too vague and does not take into consideration the often complex processing formulations used in many different products.

  • (2) a list of any solvent used to produce the cannabis product, if applicable;

The proposed language does not factor in the processing of multiple extractions, which are often combined into one product, such as an edible. The reality is that multiple extraction methods are used based on the material as well as the desired end product. Additionally, these products are all laboratory tested to ensure that there are no residual extraction agents and that information can be found on the product’s COA.

CANY feels that this is unnecessarily burdensome and will be confusing for the consumer. The mandated Certificate of Analysis (COA) confirms that the product is free from any residual extraction agents, which is a sufficient demonstration of product safety.

7) §128.5(b)(8) – Cannabis Product Labeling Minimum Standards – Mandatory Information for Packaging 

CANY is looking for clarification for §128.5(b)(8), which is requiring a metric that is difficult to produce due to the natural variation in cannabis flower products.

  • (8) total THC and CBD milligrams in bold on the principal packaging display panel or marketing layer;

Dry flower products have natural variations in composition and therefore are unrealistic to require to comply with provision (8). Further clarification from the Office of Cannabis Management is needed to identify the process envisioned that can produce this data without adding unnecessary complexity and cost to the end product and potentially pricing it out of competitiveness.

CANY has identified several similar requirements which do not take into account real-world product development and production, and require similar clarification or short-term suspension until these questions can be sufficiently addressed by the OCM.

8) §128.5(b)(4) – Cannabis Product Labeling Minimum Standards – Mandatory Information for Packaging 

CANY is looking for clarification for §128.5(b)(4), which requires a metric that is difficult to produce due to the nature of cannabis flower products.

  • (4) use by date, or for dry flower products, harvest date;

Dry flower products are by their nature better when they are fresh. Use by dates are purely subjective and do not convey the most useful information to the consumer, which is the date that the dry flower was harvested. CANY would like the use-by date for dry flower products replaced with a more relevant ‘harvest date,’ which is similar to how other less shelf-stable products, like beer or coffee, are labeled.

9) §128.5(h) and §129.2(d)(1-5) – Cannabis Product Labeling Minimum Standards and Adult-Use Marketing and Advertising General Requirements. – Rotated Warnings

CANY asserts that the requirements outlined in §128.5(h) and §129.2(d)(1-5), which require rotated warnings on all packaging materials and advertising and marketing materials, are impractical and overly costly to do at the package level and should be handled by the retailer at the point of sale.

  • §128.5(h) In addition to the required warnings in section 128.5(f) of this Part, the retail packaging or marketing layer shall include any rotating health warnings as determined by the Office.

  • §129.2(d) Any marketing or advertising of cannabis or cannabis products shall include one of the following warnings in a rotating manner as directed by the Office, in their entirety in a conspicuous manner on the face of the marketing material or advertisement

While four potential warnings are listed, there is also room for the CCB (Cannabis Control Board) to introduce and mandate other warnings as they see fit. Forcing producers to develop and print so many different package variations adds enormous costs to an already prohibitively costly venture.

CANY strongly suggests that these requirements be eliminated, and a rotating warning message be displayed at the point of sale, where the consumer is most likely to read and acknowledge it.

10. §128.6(a)(2) – Cannabis Product Labeling Prohibitions – Health Claims

CANY would like clarification of some of the language contained in §128.6(a)(2) which is in conflict with other regulations on CBD labeling requirements.

  • (2) includes any false or misleading statements including, but not limited to, any health claims;

    §128.5(1) mandates that CBD levels be listed on the product label, which seems to place it in conflict with §128.6(a)(2), which prohibits any health claims, and while listing a CBD level alone is not a direct claim of health benefits there is widely accepted acknowledgment that CBD is used for the improvement of health, and any promotion of the level of CBD in the product can be assumed to be also promoting the potential health impact of a product.

    CANY is looking to the OCM to clarify their expectation for packaging, labeling, and marketing of adult-use products containing CBD. It is important that the labels contain measurable and consistent information lest consumers be confused and hesitant to purchase said and similar products.

    11. §128.6(a)(7) – Cannabis Product Labeling Prohibitions – Depiction of Cannabis

    CANY continues to seek clarification of §128.6(a)(7) which prohibits the depiction of cannabis products or paraphernalia on a package label.

    • (7) depicts cannabis, excluding the universal symbol as required by section 128.4 of this Part, cannabis products, or paraphernalia;

    CANY is again requesting additional clarification and examples of what constitutes prohibited depictions of cannabis products or paraphernalia on the label of a product. Many products, such as disposable vape pens, or vape pens packaged with a battery, display said product on the label to help inform consumers who may not understand the technical description of different styles of vape cartridges and batteries but can identify them by sight.

    CANY believes that this restriction can be detrimental to ensuring that consumers are informed and educated when making a purchase within the legal market. Restrictions such as these with little to no demonstrated positive impacts only further empower the illicit market, which does not need to follow any of the same regulations that our legal operations must, furthering the uneven playing field within the NY market.

    Part 129 – Adult-Use Marketing and Advertising General Requirements

    1. §129.2(i) – Adult-Use Marketing and Advertising General Requirements. – Age Restriction

    CANY believes the language contained in §129.2(i) is overly burdensome, unrealistic, and excessive as well as nearly impossible to verify.

    • (i) A licensee may sponsor a charitable, sports, or similar event provided however, a l licensee shall not engage in advertising at, or in connection with, such an event unless the licensee has reliable evidence that at least 90%, 70%, unless otherwise determined by the Office, of the audience at the event and/or viewing advertising in connection with the event is reasonably expected to be twenty-one years of age or older. Advertising and marketing at eligible events must comply with this Part.

    CANY believes that mandating that license holders must show, with “reliable evidence,” that any advertising, marketing, or sponsorship of or at an event only reaches individuals over the age of 21 is clearly unrealistic, overly burdensome, and places unfair limitations on legal license-holders who already have the enormously difficult task of clawing back market share from the very well established illicit market.

    CANY believes that a more realistic metric of 70% is in order to ensure as little stifling of the legal market as possible in order to give license holders as fair a chance as possible to displace the well-established illicit market. Mandating a 90% compliance rate is simply not achievable given today’s media and social media climate.

    2. §129.2(i) – Adult-Use Marketing and Advertising General Requirements. – Consent to View Advertisements

    CANY believes the language contained in §129.2(i) (Guidance) is overly burdensome, unrealistic, and curtails the ability of license holders to compete with the illicit market.

    • Guidance:  “In addition to requiring an age-restriction mechanism on the website or digital application: if the advertisement is a pop-up or banner ad, then the individual viewing the advertisement must consent to view cannabis-related material before the advertisement can be displayed to them”

    Expecting audiences to click to show consent to view an advertisement is extremely unrealistic, and CANY asserts that this provision further disadvantages legal operators in their competition against illicit operators. Part of what makes advertising work is that the information is pushed out to potential consumers. Forcing legal operators to seek consent from everyone they advertise to digitally ensures that legal advertising will be so impractical that it won’t take place.

    3. §129.3(a)(5) – Adult-Use Marketing and Advertising Prohibitions – Advertising Restrictions

    CANY believes the language contained in §129.3(a)(5) overreaches by seeking to curtail non-paid advertising activities such as social media.

    • (a) No paid marketing or advertising of cannabis products shall:

    • (5) use or display colloquial references to marijuana and cannabis or depictions or digital images or icons, whether animated or static, of cannabis, cannabis products, paraphernalia, or the imagery or action of smoking or vaping, including but not limited to “stoner”, “chronic”, “weed”, “pot”, or “sticky buds”;

    CANY strongly asserts that placing the same limitations on unpaid outreach activities, such as social media posts, as those placed on paid advertising activities is a tremendous overreach and places unfair limitations on speech and restricts license holders ability to communicate effectively with existing and potential customers.

    Instead, CANY suggests limiting the restrictions in §129.3(a) and §128(1)(a) to paid advertising and marketing activities only. Curtailing free expression through social media and other unpaid communications is counter to the spirit of the MRTA, which seeks to “reduce participation of otherwise law-abiding citizens in the illicit market. Limiting communications between citizens and license-holders is counter-productive to achieving that goal.

    4. §129.3(a)(23) – Adult-Use Marketing and Advertising Prohibitions. – Giveaways

    CANY believes the language contained in §129.3(a)(23) needs further clarification as it relates to activities such as in-store demonstrations.

    • (23) advertise through the marketing of free promotional items including, but not limited to, gifts, giveaways, discounts, points-based reward systems, customer loyalty programs, coupons, and “free” or “donated” cannabis products, except for the provision of branded exit packages by a licensee for the benefit of customers after a retail purchase is completed, or for items of nominal value (with a fair market value under $15) given away during an in-store demonstration by an employee; or

    CANY understands the intent of this provision is to constrain undue influence exercised over retailers to carry and even endorse certain products by providing low or no cost items to be given away or sold at a profit.

    With that goal in mind CANY proposes that the items mentioned in this section be allowed as giveaway items only during an in-person demonstration by an employee of the licensed producer, and that any items given away adhere to the guidelines provided by the New York State Commission on Ethics and Lobbying in Government. These guidelines state that:

    • “State officers and employees generally are prohibited from soliciting or accepting gifts of more than “nominal value” from individuals and entities that do business with the State. There are several exceptions to this prohibition. The rules on whether the acceptance of a gift is permissible are contained in regulation 19 NYCRR Part 933.

    • “Nominal value” is not specifically defined. The Commission on Ethics and Lobbying will generally consider something that has a fair market value of $15 or less to be of nominal value.”

    5. §129.4 (a) – Outdoor Signage

    CANY believes the language contained in §129.4 (a) (1), (4), and (6) is unnecessarily restrictive and does not account for various common scenarios in cannabis retail.

    (a) Outdoor retail store signage for the purpose of alerting individuals to the location of an adult-use cannabis retail dispensary is permitted provided such signs:

    • (1) are limited to the following information:

    • (i) business or trade name,

    • (ii) business location, and

    • (iii) the nature of the business;

    CANY feels this restriction is unnecessary and restrictive with no direct benefit to the public. It is not unreasonable to allow a business to use its logo or an image of its location/building, provided the logo/image itself adheres to the guidelines set forth by the OCM in this document.

    (4) are not illuminated by neon lights; 

    CANY is seeking guidance and reasoning for the exclusion of neon lights as a general point of clarification and also specifically as it relates to common signage, such as an “OPEN” sign. CANY is unaware of any other examples of retail locations that face such stringent state-mandated bans on commonly used signage and find it overly restrictive with no discernable public benefit.

    (6) do not total more than two four in number per licensee; and

    Retail locations differ dramatically in a state as diverse as New York, so while limiting a retail location to two signs may seem reasonable for a stand-alone building in suburban upstate NY, there are many examples of retail in New York City where traditional signage may be ineffectual due to permanent and semi-permanent blockages such as scaffolding, construction, lack of suitable sign location on the building itself, and even other signs. CANY is asking that the limitation on the number of signs on a retail location be lifted from 2 to 4.

    6. §129.2(c) – Adult-Use Marketing and Advertising General Requirements

    CANY asserts that §128.2(c) needs to be adjusted to remove said restriction from both paid broadcast advertising as well as from non-paid communications such as social media.

    • (c) Any marketing or advertisement, other than social media or television or radio, of cannabis or cannabis products shall include the following statements, in a conspicuous manner on the face of the marketing material or advertisement or be read aloud clearly at the same volume and pace as the rest of the advertisement.:

    • “For use only by adults 21 years of age and older. Keep out of reach of children and pets. In case of accidental ingestion or overconsumption, contact the National Poison Control Center hotline 1-800-222-1222 or call 9-1-1. Please consume responsibly.”.

    As identified by our issue with §129.3(a)(5), CANY believes that such regulation should not apply to non-paid communications and activities, such as social media. It’s unrealistic to mandate that such a warning be used for something like a tweet, which is character limited and after the warning statement is included, has only 30 characters remaining for the actual message of the tweet.

    Additionally, CANY would like the regulation adjusted to remove this requirement from broadcast advertising, where the warning itself will take the entire ad slot. CANY supports the message and understands the intent but would like common sense applied to exempt the aforementioned communication mediums.

    Packaging and Labeling & Marketing and Advertising Guidance for Adult-Use Licensees

    1. Section 3 (Page 10) – Guidance Document – Cannabis Product Packaging Prohibitions

    CANY asserts that Section 3 (Page 10) of the guidance document requires further clarification, or elimination, from the requirements, because it uses a subjective metric to determine if a color is allowed to be used or not.

    • Cannabis product packaging cannot be attractive to individuals under twenty-one. As defined in the “Definitions” section, packaging is attractive to individuals under twenty-one if it uses or includes:

    • bright colors that are “neon” in appearance, including any color which, when listed in a form of hue, saturation, and lightness, has a saturation value greater than 60%. And is one of the following Pantone colors: (List prohibited color numbers)

    The metric being used in guidance is subjective and will appear differently depending on the medium, system, lighting, or base color. CANY feels the complete ban on neon colors is unnecessary and should be eliminated.

    If this provision remains as official guidance, CANY requests that the OCM produce a list of the Pantone color numbers that are forbidden, as that is the only truly objective way to ensure compliance with the regulations.

    2. Section 11 (b) (Page 27-28) – Guidance Document – Format Specific Requirements – Brand Representative

    CANY asserts that Section 11 (b) (Page 27-28) of the guidance document requires clarification to exempt both social media and in-person events.

    • b. Brand Representatives. A brand representative is any individual who acts with the intention of causing, directly or indirectly, the purchase or use of a specific brand or cannabis product. A brand representative—and any materials using their representation of the brand—is considered an advertisement. Brand representatives may not violate restrictions on marketing and advertising, including making health claims.

    CANY is requesting that this requirement be further clarified to exempt both social media and in-person events. In the current form this provision unfairly limits the ability of a license-holder to communicate freely with consumers.

    Conclusion:

    CANY appreciates the opportunity to provide these comments in response to the proposed regulations on adult-use cannabis. CANY looks forward to a well-considered implementation of the regulatory framework and urge the OCM to consider making the above-referenced changes to the proposed regulations to allow for a more complete, fair, and robust rollout of New York’s adult-use cannabis program.

    If there are any follow-up questions on these comments, or if CANY can be a resource in any way, please feel free to reach out to us at contact@cany.org

    ¹ NYS Cannabis Law §13-1

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