Are You Eligible for New York’s New Cannabis Licensing Opportunities?

The New York State Cannabis Control Board (CCB) is advancing regulations that will position individuals with prior cannabis-related criminal offenses to obtain the first round of adult-use retailer licenses...

The New York State Cannabis Control Board (CCB) is advancing regulations that will position individuals with prior cannabis-related criminal offenses to obtain the first round of adult-use retailer licenses. The CCB also approved a license application for hemp farmers seeking to grow adult-use cannabis, with applications set to open March 15, 2022. Both are part of what the state is calling its Seeding Opportunity Initiative.

“New York State is making history, launching a first-of-its-kind approach to the cannabis industry that takes a major step forward in righting the wrongs of the past,” Governor Hochul said in a press statement. “The regulations advanced by the Cannabis Control Board today will prioritize local farmers and entrepreneurs, creating jobs and opportunity for communities that have been left out and left behind. I’m proud New York will be a national model for the safe, equitable and inclusive industry we are now building.”

Implementation of the Marijuana Regulation and Taxation Act

The Marijuana Regulation and Taxation Act (MRTA) legalizes cannabis for adults 21 years of age or older. The Office of Cannabis Management (OCM) will license cultivators, processors, distributors and dispensaries to grow and sell cannabis in New York. The CCB, along with the OCM, is charged with developing rules and regulations for the adult-use industry.

Among other key provisions, New York’s cannabis legalization law establishes a two-tier licensing structure that will allow for a large range of producers by separating those growers and processors from also owning retail stores. It also creates licenses for producers and distributors, among other entities, and will implement strict quality control, public health, and consumer protections.

Conditional Adult-Use Retail Dispensary License

Under the proposed regulations, to be eligible for a conditional adult-use retail dispensary license, applicants must have a cannabis-related offense that occurred prior to the passage of MRTA on March 31, 2021, or had a parent, guardian, child, spouse, or dependent with a pre-MRTA cannabis offense in the State of New York.

Licensees must also have business experience. Under the proposed regulations, they must “hold or have held, for a minimum of two years, at least ten percent ownership interest in, and control of, a qualifying business, which means a business that had net profit for at least two of the years the business was in operation.”

The proposed regulations also address what application materials will be needed to apply for a conditional adult-use retail dispensary license and establish the parameters for how the OCM will review and evaluate applications.

State officials acknowledged that the focus on “equity entrepreneurs” means that existing medical cannabis businesses will have to wait for the next round of licensing. “Existing medical operators will absolutely be able to participate—but they knew and they supported the cannabis law. And the language included in the law that guides our actions today was that individuals who’ve been most impacted will be given priority as we build this adult-use market,” (OCM) Executive Director Chris Alexander said in a virtual press briefing. “I think there’s definitely an avenue and a pathway forward for those existing operators—those folks who have been supplying the patients of the state of New York for some years and they will be able to participate. But equity will lead, and those who’ve been most impacted will go first.”

Applications for licenses will open in the Summer of 2022. According to the Board, the first licenses are expected to be distributed by late summer or early fall 2022. 

Conditional Adult-use Cannabis Cultivator License

In February, Governor Kathy Hochul signed legislation (S.8084-A/A.9283-A) establishing a new Conditional Adult-use Cannabis Cultivator license, which allows existing New York hemp farmers to apply for a conditional license to grow cannabis in the 2022 growing season. The conditional license is a temporary license which is valid for up to two years. At the end of that period, if the licensee is found to be in good standing with the OCM, the licensee can apply for and receive a standard Adult-Use Cultivator license.

To be eligible to apply for an Adult-Use Conditional Cultivator License an applicant must meet all of the following requirements:

1. Have been authorized to grow hemp under the Department of Agriculture and Markets Industrial Hemp Research Pilot Program.
2. Be in good standing with the Department of Agriculture and Markets.
3. Have been authorized by the Department of Agriculture and Markets to grow cannabinoid or “CBD hemp” as opposed to growing hemp for grain or fiber.
4. Have grown and harvested cannabinoid or “CBD hemp” for two of the past four years (between 2018 – 2021) and be able to provide the Office with proof documenting such activities.
5. Hold at least a 51% or more ownership in the entity that held the industrial hemp grower authorization from the Department of Agriculture and Markets.

OCM advises that interested applicants should begin to assemble proof of the eligibility requirements listed above to be ready to apply for the Conditional Cultivator license when applications become available. The application portal is scheduled to open on March 15 and will be available on the Office’s website at www.cannabis.ny.gov.

What’s Next?

New York’s adult-use cannabis industry is evolving quickly. While licensing is currently limited to individuals that meet certain criteria, additional opportunities are likely coming soon. According to the OCM, it is diligently working on the roll-out of additional license opportunities for the broader market and hopes to be sharing more information soon.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New York, New Jersey and the United States at large. Prior articles in this series are below:

• New York Will Allow Hemp Farmers to Start Growing Adult-Use Marijuana
• Gifting Cannabis Lands New York Retailers in Hot Water
• Can SAFE Banking Act Finally Cross the Finish Line?
• Year in Review: Top Cannabis Legal Developments for 2021

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.