Is it possible to use a custom hook inside useEffect in React?

As far as I know, the hooks in a component should always be in the same order. And since the useEffect happens sometimes and not every render that does break the rules of hooks. It looks to me like your useGetDocument has no real need.

I propose the following solution:

1. Keep your useGetDocument the same.
2. Change your component to have a useEffect that has the document as a dependency.

Your component could look like the following:

const Component = (props) => {
    // Your document will either be null (according to your custom hook) or the document once it has fetched the data.
    const document = useGetDocument("products/" + products[selectedProduct].id + "labels/list");

    useEffect(() => {
        if (document && document !== null) {
            // Do your initialization things now that you have the document.
        }
    }, [ document ]);

   return (...)
}