Act Now to Take Advantage of New York’s New Cannabis Licensing Opportunities

New York is now accepting adult-use cannabis applications...

New York is now accepting adult-use cannabis applications. The application window officially opened on October 4, 2023, and will last two months. All adult-use license applications must be submitted by 5:00 PM EST on Monday, December 4, 2023.  

New York’s Adult-Use Market

New York legalized adult-use cannabis in March 2021. Pursuant to the Marihuana Regulation and Taxation Act (MRTA), the first round of licensing was reserved for social and economic equity (SEE) applicants, defined as those individuals “from communities disproportionately impacted (CDI) by the enforcement of past prohibition, minority- and women-owned businesses, distressed farmers, and service-disabled veterans.” The law also established a two-tier system, which prevents licensees on the supply side of the market from having more than a minimal financial interest in businesses on the retail side of the market.

The process to open New York’s legal market has been bumpy, due to both regulatory delays and legal challenges. To date, the Office of Cannabis Management (OCM) has licensed 270 conditional cultivators, 40 conditional processors, distributors, and 23 conditional adult-use retail dispensaries to grow, distribute, and sell cannabis.

Long-Anticipated General Application Round Now Open

The recently launched general adult-use cannabis licensing round is poised to greatly expand New York’s recreational cannabis market. According to OCM Executive Director Christopher Alexander, the OCM anticipates issuing “over a thousand, closer to 1,500 licenses” as part of the latest licensing window.

The OCM is accepting adult-use cannabis license applications for the following license types:

• Cultivators: A cultivators is one who grows, clones, harvests, dries, cures, grades, and trims cannabis plants for the purpose of resale. A cultivator’s license authorizes the acquisition, possession, distribution, cultivation, and sale of cannabis from the licensed premises of the adult use cultivator to a licensed processor.
• Processors: Processor means any person authorized to extract concentrated cannabis and/or compounds, blends, infuses, extracts, or otherwise manufactures concentrated cannabis or cannabis products for the purpose of resale. A processor license authorizes the acquisition, possession, processing, and sale of cannabis from the licensed premises of adult-use cultivators to licensed distributors.
• Distributors: Distributors are those who sell at wholesale cannabis and cannabis products for purposes of resale. A distributor’s license authorizes the acquisition, possession, distribution, and sale of cannabis products from the licensed premises of a licensed adult-use cultivator, adult-use processor, adult-use cooperative, microbusiness, or registered organization, authorized to sell adult-use cannabis to licensed retail dispensaries and on-site consumption sites.
• Microbusinesses: A microbusiness operator is any person who may act as a cannabis producer for the cultivation of cannabis, adult-use processor, distributor, and retailer. A microbusiness license authorizes the limited cultivation, processing, distribution, delivery, and sale of their own adult- use cannabis products and cannabis.
• Retail Dispensaries: Retail dispensary operator means any person authorized to acquire, possess, sell, and deliver cannabis products from the licensed retail dispensary premises to cannabis consumers.

Additionally, businesses with existing adult-use conditional cultivator (AUCC) and processor (AUCP) licenses can apply to transition to non- conditional adult-use cultivator and processor license.

For retail dispensary and microbusiness applicants that are applying with proof of control over the proposed licensed premises, there will be an expedited application window that will close on Friday, November 3, 2023, at 5:00PM Eastern Time. The OCM will begin the review of applications submitted during this window to expedite the review of retail dispensary and microbusiness applications. The retail dispensary and microbusiness application window will remain open after November 3, 2023, until December 4, 2023, for applicants that apply after November 3, or are applying for a provisional license (without proof of control over the proposed licensed premises).

Key Components of NY Cannabis Application

All licensees must be at least 21 years of age and not be otherwise prohibited from holding a license under the MTRA. There are three main components of the application process, including:

• The Primary License Application: This section collects basic information about the business pursuing the license, the license type, and desired activities.
• The Social and Economic Equity (SEE) Certification: This section requests information from applicants seeking to determine whether the applicant qualifies for Social and Economic Equity status.
• The True Parties of Interest (TPI) Disclosures: This section includes questions to determine the TPIs of the applicant seeking licensure, which is used for monitoring and enforcing the vertical and horizontal ownership restrictions. As discussed in greater detail here, the threshold for determining whether a TPI disclosure must be submitted is based on the TPI’s ownership stake or controlling interest in the applicant.

All applicants must submit proof of control over a proposed premises to complete the application and be considered for a final license, except applicants for retail dispensary and microbusiness licenses. If additional time is needed to secure a premises, an applicant for a retail dispensary or microbusiness license can apply without premises details. If deemed eligible and selected for a license, they will become provisionally approved and have twelve (12) months to secure a premises and submit documentation before being licensed on a final basis and operational.

Unlike New Jersey’s licensing process, the OCM will not score applications, but rather use a random order “queuing” process. Applications for each license type will be collected during the application windows and pooled based on the license type sought, SEE certification and provisional status. Applications for retail dispensary licenses, both provisional and final, will be further split evenly between New York City and the rest of the state. After an application window closes, applications will be queued (ordered) in their distinct pools using a randomized process.

Next Steps for Prospective Applicants

The opening of the general licensing application window is great news for the New York cannabis market. As this is the first widely available application window, we expect there will be a lot of interest in all license types. We strongly advise all potential applicants to thoroughly review all of the OCM guidance to ensure you understand all of the eligibility and application requirements. To avoid any missteps that can harm your chances of securing a license, we also encourage businesses to consult with a member of the Scarinci Hollenbeck Cannabis Law Group.

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:

• What HHS’s Recommendation to Reschedule Cannabis Really Means
• What the Cannabis Industry Should Know About the Hemp Access and Consumer Safety Act
• Big Changes Coming to New Jersey Cannabis Licensing

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.