Cannabis industry stakeholders are grappling with New York’s proposed adult-use packaging and labeling regulations, which, in a largely unprecedented move, include a sustainability program that directs licensees to incorporate at least 25% post-recycled consumer content into their packaging.

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The state’s Cannabis Control Board (CCB) proposed the initial rules and accepted public comment on them through Aug. 15. The New York Office of Cannabis Management (OCM) is currently sifting through the feedback and working on revised regulations that will again go before the CCB for approval once all comments are assessed, according to Lyla Hunt, the OCM’s deputy director of public health and campaigns.

“I just want to underscore the balance of the wide array of different critical public policy goals in releasing the packaging and labeling regulations,” Hunt said. “We’re really excited to move the needle and to be leading here on the environmental component. We’re really excited to work to help continue those good efforts.”

As Cannabis Business Times previously reported, the draft regulations include provisions to ensure that cannabis packaging is child-resistant, tamper-evident and nontoxic. The proposal also includes required labeling components such as warnings, serving size, potency, ingredients, and usage and storage instructions. In addition, the draft rules require a universal symbol—which includes a triangle containing a cannabis leaf and the word “THC,” as well as a circle containing “21+” and an outline of New York that’s labeled “New York State”— on all cannabis packaging.

The initial guidelines prohibit packaging that could be attractive to individuals under the age of 21 (e.g., packaging that incorporates cartoons, characters, celebrities or toys), as well as packaging that includes false or misleading statements (e.g., “organic,” “craft” or health claims) and multiple brand logos.

Since the state has started issuing conditional adult-use cannabis licenses to cultivators and processors that are now working in the field, Hunt said regulators have been releasing updated guidance as it becomes available so that licensees “have something to hang their hats on” and can begin producing compliant packaging and labeling for the adult-use market, which is expected to launch by the end of the year.

“When we looked to … crafting regulations in New York’s market, we always looked to learn from other states and incorporate best practices [and] lessons learned,” Hunt said. “With packaging, labeling, marketing and advertising, it’s a confluence of factors that we’re trying to balance. We want to make sure there’s an array of products that are attractive to consumers, but not attractive to individuals under 21, so that we can safeguard public health and safety and protect youth. But we’re also … making sure we have the right warnings and requirements and components on the label to signal to consumers what’s important, but also recognizing that the real estate, if you will, on the label is limited.”

To align with their sustainability goals, regulators want to ensure cannabis packaging is smaller in size, Hunt added, and they have crafted provisions that require all licensees to implement an environmental sustainability program for cannabis product packaging that may include reuse (after sanitation) or the use of non-plastic or compostable materials. In addition, the proposed regulations require licensees to annually report key metrics on the implementation of their environmental sustainability program.

“Part of the sustainability program is to incorporate a minimum of post-consumer recycled content of up to 25%, and to make sure that those packages and labels can be recycled and are compostable, where applicable,” Hunt said. “Bioplastics can be incorporated, and then [the rules mandate] that licensees incorporate some type of sustainability programming, whether it be … vape battery returns or sanitization and reuse of certain components of packaging.”

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Hunt added that the sustainability provisions in New York’s packaging regulations are not only meant to lessen the nascent adult-use cannabis market’s environmental impact, but also to create a way to constantly evaluate and tweak the rules based on industry feedback and new technology.

“We wanted to go a little bit farther and also have a mechanism to … see what is happening in the industry,” Hunt said. “Then we can improve upon it and work with licensees and do essentially a needs assessment, … checking in with them and adapting as we move forward. Especially in the area of bioplastics, the technology is constantly advancing, so there’s this need to be adaptive and responsive.”

Maintaining Compliance

Lauren Rudick, an attorney with New York-based Hiller, PC and the co-founder of the firm’s cannabis law practice, said that while it is common  for states to require an environmental sustainability plan in their cannabis business license applications, New York officials are “taking sustainability much more seriously” than regulators in other states, and New York’s adult-use cannabis licensees need to plan for that.

“There’s some excellent packaging made from recycled plastic found in the sea or hemp or a variety of different types of systems to ensure that it’s meeting those 25% requirements,” Rudick said. “You want to choose a vendor that has experience, understanding and respecting that you’re working within a very heavily regulated environment.”

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Rudick said New York regulators are also taking additional—and somewhat unprecedented—steps to ensure that cannabis packaging does not appeal to children.

“The state has articulated some very detailed ways for us to meet those determinations, including prohibiting the use of neon colors and then going so far as to provide a spectrum as to what neon constitutes so we can determine what’s neon,” Rudick said. “Certainly, [there is] no use of cartoon images, no use of foods that are traditionally attractive to children [and] no distortion of any common trademark that’s used to designate candy, [such as] Skittles.”

The original set of proposed regulations even prohibited the use of certain cannabis cultivar names, Rudick added, such as those that contain the words “bubblegum” or “cookies,” but, based on industry feedback, these restrictions have been lifted.

“Originally, the prohibition would apply to any cannabis branding, and now they’ve sort of walked that back and said that if it’s a strain name, it’s different from your marketing or your branding or anything else,” Rudick said.

Nevertheless, she said regulators will be “taking a very, very hard look” at cannabis packaging to ensure it adheres to all the state’s guidelines, and licensees found in noncompliance will likely be subject to recalls.

“That’s really what this is about, whether the product needs to be destroyed or whether it can be remediated,” Rudick said. “Generally, you can’t sell products that are mislabeled or contain unlawful information. Those products would be subject to a recall, and it would invoke all kinds of transportation logistics and expenses associated with warnings and legal cover, insurance concerns, and then possible remediation. So, it’s very important to develop a recall plan.”

And with the tight restrictions on labeling, Rudick said there is some concern about how brands will be able to differentiate themselves in New York’s adult-use cannabis market.

“Play the cards you’re dealt,” she said. “Embrace the opportunity for a new brand identity. This is what’s going to be required; the sooner you can get on board with that, the better. So, find a way to create that bridge. The whole point of a brand identity and a trademark is to identify the source of goods. So, continue to put out that consistency. Whatever attracted your consumer base in the first place, remain loyal to that. There’s a lot more that you can be loyal to other than a particular image on your packaging. All is certainly not lost.”

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As New York’s cannabis operators begin to settle into their state-compliant brand identities, Rudick said they should not overlook the importance of a trademark analysis, which can help companies avoid lawsuits.

“There’s a lot of confusion,” she said. “Federal courts have been very inhospitable to resolve competing trademark claims. It’s very much the wild west, and it’s incumbent on any business owner who’s about to pour assets into any development of brand to go into the steps of making sure that the trademark is something that’s protectible [and] that you’ve undertaken that diligence, because quite frequently, your trademark can become your most valuable asset. Particularly in cannabis where product cannot cross state lines, the trademark certainly can. So, as people gear up to participate in the New York market, they should be thinking beyond New York and be thinking about what a global market looks like and then just invest in their brands with proper trademark work.”

Preparing to Launch

House of Puff, a New York-based online retailer of cannabis accessories, is the second business venture for Kristina Adduci, who initially founded an art magazine that she recently exited.

“The quick and short of it is I grew up in a strict Puerto Rican household, so, as you can imagine, I … was never really exposed to cannabis before,” Adduci said. “I went to college, grad school, [and] didn’t consume. And it wasn’t until I moved to New York … [that] I decided I was going to consume for the first time in my late 20s. But when I went to go do that, … a lot of the cannabis accessories on the market were obviously not meant for me, not marketed toward me. … I decided to use my art background and the contacts I had in my rolodex to create products for women, especially women of color—more chic, easy and not confusing.”

House of Puff collaborates with artists on designs for its rolling papers, pipes and other product offerings, and the company gives a portion of the proceeds back to not only the artists, but also to community organizations.

“Our last collaboration … was with an artist by the name of Chris Wilson,” Aducci said. “He was incarcerated at the age of 16. He spent about 17 years in prison and 117 days in solitary confinement. His artwork, Positive Delusions, which we licensed from him to put on rolling papers, chronicles his time during solitary confinement. A portion goes back to Chris to support his work and another portion goes back to Solitary Watch, which is trying to end solitary confinement in the U.S. So, I like to say that House of Puff sits at the nexus of cannabis, social justice and art.”

House of Puff plans to one day launch a brick-and-mortar dispensary  in New York’s adult-use cannabis market, and in the meantime, while the company continues to operate as a brand, Aducci has familiarized herself with the state’s packaging and labeling requirements, which she worries might be too restrictive.

“As a New York brand, we’ve put our brand first,” she said. “We’re marketers. We’re going to have to get more creative and figure out how open are these [regulations] … to interpretation? Are we going to have to take more risk than we’re used to? If you’re putting out, let’s say, a package of prerolls or edibles and you spend $100,000 on that packaging and then all of a sudden somebody says, ‘Guess what? The neon pink is too neon.’ I think all of us are going to have to band together and swap notes on how to approach this from a unique but careful standpoint.”

Branding is what helps House of Puff stand out from the crowd, Aducci added, particularly with the company’s collaborations with artists, which she hopes House of Puff can continue under the new regulations.

“It’s what makes us unique from any other brand,” she said. “Whether you’re in cannabis or you’re in any [consumer-packaged-good] space, your colors, your fonts, your designs—that carries your company, it carries who we are and who I am and why I built this in the first place. And I want people—women—to go to a shelf and [see that we] we stand out, … especially working with artists and the give-back component that we have. It would be a shame [if] we wouldn’t be able to sell some of our stuff based on artwork colors.”

And while Aducci supports the sustainability provisions laid out in New York’s proposed packaging rules, she has concerns about how the rules might impact products’ shelf life or the packaging’s child-resistant features.

“I support prohibiting single-use plastics in all aspects of product packaging,” she said. “We know what it does to our environment and our industry is pretty guilty of that, unfortunately. I think there are a lot of unique ways that we can go about this. I think the use of non-plastic, compostable materials [and] hemp is great, but I think sometimes the downside of using hemp paperboard … is it might not be practical for products that have a longer shelf life, for example.”