First look at New NY Canna Regulations

Originally Published : November 21, 2022

Dear HL Clients and Friends,

We have been skimming, combing and digesting the 282 pages of the draft cannabis regulations that will officially be issued by the Office of Cannabis Management later today.  You see, we got early access to them and Joseph and I have been up all night geeking out over every little detail.  It’s a lot like liquor stores! Oh no, Community Boards again!

It’s exciting for all of us but especially for Joey Regs who is providing the first analysis of the proposed regulations.  He will breakdown what cannabis in New York will look like in the coming months as the industry revs up in anticipation of submitting license applications.  We are plugged in and at your service and we will send out a juicy FAQ newsletter next week with a more thorough analysis and we will host a webinar to keep you informed about everything.

If you do have an interest in getting into cannabis, don’t wait much longer or it will be too late.  A blunt statement because we love our clients and we want you to get in there and get a license if you want one and not be regretful because you hesitated. The cannabis application and the process will be a doozy and you will need a lot of time and resources to get it done right. Waaaaaay more time than you need to put together a liquor license.

Cannabis is here folks and NYC is going to be the center of the cannabis universe.

Joey Regs says….

We’ve been talking about draft regs being released in New York for Adult-Use Cannabis for what feels like an eternity.  Well friends, the wait is finally over.  In about three hours, New York’s full [draft] regulatory package will be officially “published” at this Month’s Office of Cannabis Management meeting, and a 60-day public comment period will commence.  We received a full copy yesterday though, and we’ve already worked our way through this beast of a document.

282 pages, and it reads much longer.  It’s dense, and there’s a lot to unpack. All things considered, I’m encouraged by what I’ve read.  There were no unpleasant surprises, and actually a few nice ones.  As forecasted, there’s a ton of familiar “liquor license” language.  As David mentioned above, we will be sending out a much juicier FAQ soon, and will be hosting another webinar to follow.  In the interest of some more immediate gratification though, we’ve highlighted some of the more noteworthy items from the document, and will break them down below.

Municipality Notice & Rulemaking
As we mentioned previously, there will be a standardized notification form that will go out to your local municipality in advance of you being able to file your application with the State.  And from the looks of the regs, it’s going to be exactly what we thought it would be – almost identical to the current liquor license version.

While local municipalities (and community boards) will be allowed some latitude w/r/t rulemaking, the State is essentially setting the parameters for that – so that local town or city boards don’t overstep (like many try to with liquor).
EXAMPLE: Municipalities can weigh in on store operating hours, but there will be certain hours that stores are allowed to operate – as of right – and cannot be restricted further.

Rolling Approvals
The State specifically chose not to review and approve CAURD applications on a rolling basis -meaning they didn’t begin reviewing any of the applications until the application window officially closed. I guess they recognized that idea wouldn’t work when they open the floodgates of the standard application window for the full suite of licenses. In black and white, the regs say, “Applications shall be accepted, reviewed, approved and issued on a continuous, rolling basis. ”What does this mean exactly? It means that if you’re even remotely interested in playing in this space, it’s time to get movingThere is now a decisive advantage to filing first.  And to file first, as soon as that application portal opens, the majority of the heavy lifting already has to be done.

License Types and Tiers
We’ve always generally known the license types that would be available, but now we truly know the specifics – including tiers, options, etc.
There will be three (outdoor, indoor, mixed) types of nursery licenses; four types of cultivation licenses (outdoor, mixed light, combo, indoor) – with many different tiers (by square footage) within each type; a Microbusiness license; a Processor (AKA Manufacturing) license; a Cooperative license; a Distribution license; a Delivery license; a Retail dispensary license; and Social Consumption license.

Provisional Licenses
Probably one of the most exciting parts of this document is that IF an applicant has their application approved by the Board, the applicant will be issued a PROVISIONAL LICENSE. This provisional license will allow the applicant to operate until such time that they can comply with the longer-term conditional items needed to activate their full license. This is massively helpful, and goes a long way towards putting new licensees in a position to succeed.

Extra Priority
An applicant who demonstrates that they are from a community that has been disproportionately impacted by the enforcement of cannabis prohibition may receive “Extra Priority” throughout the course of their application review if they have an income lower than 80% of the median income of the county where they currently live; and were convicted or were close to someone who was convicted of a marijuana-related offense.

Two-Tiered System – even more anti-MSO
We already know that these Regs were drafted specifically to create opportunities for the mom & pop entrepreneurs out there – and specifically meant to restrict MSO’s from playing in the space – at least initially.We saw the extra restrictive view of the two-tiered system in the guidance a few weeks ago – going beyond New York State’s borders, and enforcing the rules against any applicants’ business interests anywhere; and we saw TPI status and thus certain prohibition transferring to spouses and children as well. Well, New York has now taken it even one step further.

New York Retail Dispensary operators are going to have to agree to dedicate a minimum of 40% of their shelf space to cannabis products that have been cultivated and processed by mom & pop cultivators and processors – and specifically not the MSOs that have the right to be vertically integrated here already, due to their medical [grandfathered] status, for at least five years.

Geographic Restrictions
We highlighted some of the basic geographic restrictions to be aware of for you a few weeks ago, but now there are a few more.We already knew that you had to be more than 200’ away from a house of worship and 500’ away from a school.And we knew that the basic rules of measurement were going to be very similar to how the New York State Liquor Authority operates – closes usable door to closest usable door; building to be used exclusively as a church or school; only on the same block (unless you occupy the corner). Now, the regs tell us about some new measurements to be aware of:

– We cannot be on the same road as a bona fide “Community Facility,” which is defined as any property that provides daycare, a public park, a playground, public swimming pool, a library, or provides any other services or opportunities to children or adolescents.Now, we are not automatically not allowed to be on the same road as such a property, but the local municipality governing the location is specifically allowed to enact an ordinance restricting the same – should they be inclined.

– In a municipality of 20,000 or more people, no dispensary license will be issued within 1,000 feet of an existing dispensary license.

– In a municipality of less than 20,000 people, no dispensary license will be issued within 2,000 feet of an existing dispensary license.

There’s a lot more to breakdown in those 282 pages, and we’re going to get to that.  We just wanted to get you a little taste in advance of everyone else “breaking” this news for you later on today.  Stay tuned for info on our upcoming webinar.  It should be a good one.

Joey Regs Out
[email protected]

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