New York’s cannabis regulators issued the highly-anticipated revised adult-use industry rule package this week, laying the groundwork for the future of the state’s cannabis industry.
On Wednesday May 10, the Office of Cannabis Management unveiled the proposals, which are now subject to a 45-day comment period, to eager industry stakeholders.
The new rules present some major changes from the initially proposed plans, and have received a mixed reaction from the industry, despite widely being recognised as a welcome step forward.
These rules and more will be discussed in detail at Business of Cannabis’ upcoming event: ‘NYC Sessions: New Regs in New York – What next for operators?’
Taking place on June 7, 2023, at Work N Roll NYC, the Chief of Staff & Senior Policy Director of New York’s OCM Axel Berable will be diving into the state’s market roll out, alongside a number of other key speakers, including Millennial Strategies Partner Jeff Guillot.
Key Points
Medical Cannabis Operators
Perhaps most significant is a major reduction in the time that the 10 licenced ‘registered organisations’ (ROs), existing multi state medical cannabis businesses who control the medical market in New York, will have to wait before being allowed to enter the recreational market.
As part of the original plans, ROs were required to wait three years before they were able to enter the recreational market, enabling ‘justice involved’ licensees to get a head start.
This time limit has now been reduced by two years, meaning that ROs will be able to break into the state’s recreational market from December 29, 2023, one year after the launch of adult-use sales in New York.
Furthermore, the first co-located recreational and medical dispensaries for each RO will cost $5m in licensing fees.
RO’s will be allowed to open their first co-located dispensary from December 29, 2023, but will be unable to open a second and third store until June 29, 2024.
True Party of Interest
Next there were further adjustments made to the controversial ‘true party of interest’ (TPI) rules.
Under New York’s initial guidelines, licence applicants are required to disclose all TPIs, individuals or entities with an ownership interest, financial interest or contractual entitlement to themselves, including spouses and future rights to ownership such as options.
The rules for who qualifies as a TPI have now been amended, seeing an increase in the annual compensation arrangement threshold ‘from the greatest of 10% of gross revenue; 50% of net revenues; or $100,000, to the greatest of 10% of gross revenue; 50% of net revenues; or $250,000’.
Provisional Licensing
Elsewhere, the regulations surrounding the provisional licences and the process of securing one have now been formalised.
Applicants who are yet to secure a location for their cannabis business will be provided a provisional licence, lowering the up-front costs and give them state ‘pre-approval’ to aid their search for a site, fundraising, capital and hiring processes.
These renewed regulations now lay out the application process for prospective applicants in detail, allowing them to prepare their required documents and information before the process officially launches,
Consumption
On-site consumption rules have now been published for the first time, offering a number of pathways for licenced businesses to allow adults of 21 or over to consume cannabis in ‘Limited Retail Consumption Facilities’.
This will enable CAURD licensees to designate areas which must be inside the same building as their dispensary where customers can consume products they have purchased there.
Aside from offering on-site consumption licences for businesses, the new rules will also enable local governments to designate areas within their jurisdictions for cannabis consumption by exempting them from the Clean Indoor Air Act.
Business of Cannabis: NYC Sessions are back on 23 February 🗽
Join us in the heart of the Big Apple for an intimate night of talks, networking, an open bar and a dedicated cannabis consumption lounge at Work’n’Roll in Chelsea.
Get your tickets now ➡️ https://t.co/gR7Zrvn9oe pic.twitter.com/uBk3gIW0uK
— Business of Cannabis (@BofC_Global) January 17, 2023
A number of other rules were announced or amended, including enabling microbusinesses to purchase up to 500 pounds of cannabis biomass a year, and the full document can be read here.
The newly revised regulations have received a fairly mixed response from the industry so far, though the businesses community has praised the fact that the near final form regulations now enable them to begin making solid business plans.
Separate legislation passed days earlier, which moved to criminalise unlicensed sales of marijuana once again, received a much less ambiguous negative response.
As part of the state budget passed last week, New York Governor Kathy Hochul announced new measures designed to crack down on the state’s booming unlicensed cannabis market, which is thought to support nearly 2000 dispensaries.
While its proponents argue the move is necessary in order for the licenced legal market to be able to grow and operate, however others have criticised the move as a major step backwards, undoing much of the hard work done so far to end incarceration for cannabis offences.
Grab your tickets for ‘NYC Sessions: New Regs in New York – What next for operators?’ here.
