New York Approves Draft Rules regarding Local Time, Place, and Manner Restrictions

On November 21, 2022, the New York State Cannabis Control Board (the “Board”) approved draft regulations under the Marihuana Regulation and Taxation Act (“MRTA”) that address, among other subjects, the scope of “municipal rulemaking,” or the authority retained by cities, counties, towns, and villages to enact “time, place, and manner” restrictions on the operation of adult-use retail dispensaries and on-site consumption sites within their jurisdiction.

Short of opting out from the marijuana retail market altogether, the MRTA permits municipalities to exercise control over the market by passing “local laws and regulations governing the time, place and manner of the operation of licensed adult-use cannabis retail dispensaries and/or on-site consumption site,” so long as the law does not make the operation of such facilities “unreasonably impracticable” as determined by the Board.  But while “time, place, and manner” restrictions have a long history in First Amendment jurisprudence, see City of Renton v. Playtime Theatres, 475 U.S. 41, 46 (1986), what do they mean in the context of regulating the marijuana retail market? Continue reading “New York Approves Draft Rules regarding Local Time, Place, and Manner Restrictions”

New York Expects 20 Dispensaries to Open by End of Year and Issues Guidance for the State’s First Adult-Use Retail Cannabis Dispensaries

On October 28, 2022, the New York Office of Cannabis Management (OCM) released forward-looking guidance for those seeking to operate within the state’s recreational cannabis market.

The Background

In January, Gov. Kathy Hochul published an extensive State of the State book, laying out New York’s plan for 2022, including $200 million loan fund in support of social equity applicants within the state’s nascent marijuana market.

The state government set a goal of opening dispensaries by the end of the year that will allow New Yorkers to legally purchase cannabis. Hochul told the editorial board of Advance Media, owner of the Syracuse Post-Standard, that the state would open 20 dispensaries by the end of the year, with another 20 opening each month thereafter.

On October 17, Hochul told reporters that New York is “on track” to open some cannabis dispensaries within months.

Under Hochul’s plan, it is up to the state to select and lease locations for the dispensaries, including 70 in New York City. While the state’s OCM has not yet announced any locations for dispensaries anywhere in the state, it recently issued guidance in clear anticipation of this plan unfolding in the near future.

The Regulations

The New York OCM’s “Guidance for Adult-Use Dispensaries” is a series of prospective regulations for Conditional Adult-Use Retail Dispensary (CAURD) licensees and applications and are immediately effective.

The 27-page document includes requirements and operational rules addressing everything from operations and compliance measures to marketing, sales and distribution parameters, while providing insight into the OCM’s plans for issuing licenses when the time comes. This includes topics of record-keeping requirements, required training for staffers, and inventory and tracking requirements, among others.

While these guidelines are not yet formally adopted and enacted as rules, they at least offer both CAURD licensees and regulators a “working” preview of the New York Cannabis Control Board’s (CCB) expectations for the forthcoming dispensaries.

Indeed, the document states that it “serves to provide the framework that will assist CAURD licensees plan for how to operate their dispensary before regulations are formally adopted. . . and provides clarity on what the Office’s expectations are in relation to those regulations and laws currently in place and the regulations that will be promulgated in the future.”

What Does This Mean for CAURD Licensees?

The state and regulators are gearing up for the opening and development of these dispensaries, possibly within the next few weeks, and throughout the next 15 months. CAURD licensees in New York should adhere to OCM’s newest guidance, in addition to existing Cannabis Law and Title 9 of the New York Codes, Rules and Regulations, until a copy of the final regulations is made available on the OCM’s website.

On November 3, a Business of Cannabis: New York panel discussion ensued, where much of the conversations centered on the importance of providing equal opportunities to small business and justice-involved entrepreneurs to participate in the industry. Panel participants included Tremaine Wright, Chair of the CCB, Crystal Peoples, New York State Assembly Majority Leader, and Jeremy Berke, Reporter for Business Insider.

The same day, Wright tweeted, “[New York] is on target to open stores by the end of the year.” Axel Bernabe, Chief of Staff & Senior Policy Director for OCM, who delivered the keynote more specifically assured, “In 15 months, we’ll have a fully established supply chain built on social equity. That supply chain will form the backbone of what we’re going to build on in the future.”

Qualifying New York small business owners and entrepreneurs should keep a close pulse on this evolving regulatory landscape over the coming weeks and months to ensure they remain in legal compliance and best positioned to take full advantage of this next phase of the state’s cannabis initiative.

An Update on New York’s Conditional Adult-Use Licensing Process

New York State legalized adult-use cannabis in March 2021 through passage of the Marihuana Regulation and Taxation Act (the “Act”), and the state is currently processing its first applications for retail dispensaries. The Act established the New York Office of Cannabis Management (the “OCM”), which is responsible for promulgating regulations under the Act as well as issuing licenses to participants in both adult-use and medical cannabis markets. Through the OCM, New York began issuing licenses for cannabis cultivation in April, and for processing – converting plants grown in the state to usable products such as edibles and vape oils – in August. Approximately 240 conditional cultivation licenses have been granted, and 15 conditional processor licenses.

New York’s legalization scheme includes a focus on social equity, whereby it is currently accepting applications only for “conditional” licenses, available primarily to businesses and nonprofits owned by or serving individuals affected by marijuana convictions. The state is currently reviewing applications for Conditional Adult-Use Retail Dispensary (“CAURD”) licenses – the application period was open from August 25 to September 25, and the state received approximately 900 applications, for 175 available licenses.
The state has two categories for CAURD licenses, which both have slightly different criteria. Up to 150 of these licenses will be issued to qualifying businesses, and 25 to nonprofits. To be eligible for a CAURD license, an applicant must be a business with at least 30% ownership interest held by a person who:

• First, is “justice-involved” – was either convicted of a marijuana-related offense in New York State before March 31, 2021, or who has a family member with such a conviction;
• Second, has owned at least 10% of a business which earned a net profit for at least two years; and
• Third, has a significant presence in New York – either lives in, or owns land or property in, the state.

Any type of business organization may apply for a CAURD license. Licensees may operate one retail dispensary, and are eligible to receive loans from the New York Social Equity Cannabis Investment Fund to pay for construction, renovations, and equipment associated with the dispensary location.

The second category of CAURD licenses is available to qualifying nonprofits, which must have a history of serving or employing currently or formerly incarcerated individuals, at least one justice-involved member, officer, or advising committee member, and a history of at least two years of net profits. One key distinction between the two types of licenses is that nonprofits are not eligible for financial support from the Fund, and must provide their own retail storefront, over which the OCM has approval authority.

While the OCM is currently reviewing applications and granting conditional licenses for cultivation, processing, and retail sales, it has not yet promulgated regulations governing general adult-use licenses – available to applicants not eligible for conditional licenses – but has stated it will do so in the coming weeks and months.

Could the NY conditional adult use retail dispensary program (CAURD) be in jeopardy?

A Maine law requiring all owners of medical marijuana businesses to be residents of the state was recently struck down by the US Court of Appeals for the First Circuit, which ruled that the statute is a violation of the “Dormant Commerce Clause” of the United States Constitution, which prohibits states from passing legislation that restricts interstate trade. In its opinion (Northeast Patients Group et al. v. United Cannabis Patients and Caregivers of Maine, the Appellate Court upheld a lower court ruling that the residency requirement is an unconstitutional restriction on interstate trade.
Under the Maine’s medical marijuana program, all directors or officers of a licensed medical cannabis dispensary are required to be residents of the state. Interestingly, Maine had already dropped its residency requirement for its adult-use market following an earlier legal challenge that was also based on the Dormant Commerce Clause but it sought to keep it in place for its medical cannabis program.
This could be a problem for NY’s new adult use cannabis program, as of the requirements is that the potential licensees must have been arrested (or are related to someone who was arrested) for a marijuana related crime in New York and must also have been a New York resident at the time of the arrest. This could like be deemed a residency requirement and thus lead to challenges not only to any individual licenses grants but the entire CAURD program.
Equally or possibly even more problematic is the fact that this ruling could also open the door to legal challenges to a variety of other State laws banning the exporting or importing of cannabis from other states, as the same rationale invalidating the residency requirements could come, as disallowing cannabis exports and imports between states could be construed as similarly placing unreasonable restrictions on interstate commerce.

 

New York Cannabis Control Board Approves 19 Adult Use Conditional Cultivator and 15 Adult Use Conditional Processor Licenses; Retail Dispensary License Applications Open August 25

By C. Neil Gray

On August 15, 2022, the New York Cannabis Control Board (the Board) held a public meeting via real-time stream to consider a number of agenda items.  Among the most notable of the topics taken up was the approval of conditional adult use cultivator licenses and conditional adult use processor licenses.

Chair Tremaine Wright opened the meeting by providing an update on the Seeding Opportunity Initiative (SOI) that was launched in Spring 2022.  Through the SOI, the Board has granted 223 adult use conditional cultivator licenses, resulting in the first farms cultivating regulated adult use cannabis in New York State.  Chair Wright also noted that the Board visited three of these farms in July and were encouraged by the progress and creativity demonstrated in such a short window of time.  After some additional opening remarks, the Board moved on to “further steps to advance the Seeding Opportunity Initiative” to “continue to build out New York’s Adult Use Cannabis supply chain.” Continue reading “New York Cannabis Control Board Approves 19 Adult Use Conditional Cultivator and 15 Adult Use Conditional Processor Licenses; Retail Dispensary License Applications Open August 25”

New York Cannabis Control Board Meeting, July 14, 2022

On July 14, 2022 the New York Cannabis Control Board (the “Board”) met to consider a variety of topics.  Most importantly, the Board approved the Conditional Adult-Use Retail Dispensary Regulations and the online application for a retail dispensary license. 

The initial focus of the meeting was on the approval of proposed Conditional Adult-Use Retail Dispensary Regulations.  (Generally referred to in the meeting as the “CAURD Regulations”.)  The Senior Policy Director of the New York Office of Cannabis Management noted that the CAURD Regulations were designed to provide retail dispensary licenses to applicants who met two eligibility requirements.  First, the applicant (or family member) must have had a cannabis related legal offense that occurred prior to the passage of the Marihuana Regulation and Taxation Act on March 31, 2021.  Second, the applicant must have experience owning and operating a qualifying business.  The Board unanimously approved the CAURD Regulations.  The Senior Policy Director also provided a form of online application for a retail dispensary license.  This sample form fleshes out the CAURD Regulations.  The Board unanimously approved the sample form of application.  The Board also ordered that a new application period for adult-use retail dispensaries licenses open and close on dates established by the Office of Cannabis Management. The Board did not indicate when the actual application would be made available for filing but notice of the application window must be posted on the Office of Cannabis Management’s website no less than 14 days before the application window opens and the application window must last at least 30 days. Continue reading “New York Cannabis Control Board Meeting, July 14, 2022”

New York’s Office of Cannabis Management Grants Cultivation Licenses and Encourages Enthusiasm for Dispensary Licenses

By Kathleen M. Kline

New York State’s Office of Cannabis Management (“OCM”) held a board meeting on May 19, 2020. As always, the meeting was available for observation by the public through online streaming. Continue reading “New York’s Office of Cannabis Management Grants Cultivation Licenses and Encourages Enthusiasm for Dispensary Licenses”

NY State Department of Taxation Creates New Webpage with Information on the Adult-use Cannabis Excise Tax.

New York State Department of Taxation and Finance has created a new webpage with information on the Adult-use cannabis products excise tax.

This cannabis excise tax will apply to both:

    • Distributors of adult-use cannabis products on sales of retailers, and
    • Adult-use retailers on sales to retail customers. 

If you plan to sell adult use cannabis you must register with the Department of Taxation (which is in the process of developing an online registration process and other guidance.   More information is available on the NYS Department of Taxation website  (https://www.tax.ny.gov/bus/auc/) 







NY Adult 

New York Conditional Cultivation License – Advanced Preparation (What You Can Do Now To Be Ready)

As we noted is our blog post earlier this week, New York recently adopted legislation to allow licensed hemp farmers to grow and process cannabis for the adult use market with the aim to have product available once retail sales are permitted.

While the New York Office of Cannabis Management has yet to release the form of application (and any implementing regulations), that doesn’t mean that potential applicants should sit idly by and wait.  In reviewing the legislation, its clear that there is plenty of work that can be done now. Continue reading “New York Conditional Cultivation License – Advanced Preparation (What You Can Do Now To Be Ready)”

NY Gov. Hochul signs conditional cannabis cultivation bill to speed-up recreational cultivation

New York Gov. Kathy Hochul signed new legislation on Tuesday that will allow hemp farmers in the state to apply for a conditional license to grow cannabis.

With this legislation, New York is creating a new Conditional Adult-use Cannabis Cultivator license, allowing hemp farmers to grow cannabis in the 2022 growing season to “position New York’s farmers to be the first to grow cannabis and jumpstart the safe, equitable and inclusive new industry we are building”. Conditionally licensed cannabis farmers must hit certain requirements under this law. Continue reading “NY Gov. Hochul signs conditional cannabis cultivation bill to speed-up recreational cultivation”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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