NEW SLA RULES – BREAKDOWN

*****JOEY REGS ALERT*****

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JOEY REGS BREAKS DOWN NEW SLA RULES

AND THE YEAR IN CANNABIS

Dear Clients and Friends,

New York’s alcohol licensing regime has finally begun to catch up with the realities of modern hospitality. Over the past year, the State Liquor Authority (SLA) and the Legislature have enacted meaningful reforms that loosen regulatory constraints, create new license categories, and give licensed businesses practical tools to manage inventory shortages.

SLA UPDATE:

The following two developments deserve particular attention from all of our NY bar and restaurant peeps.

1. New Club & Corporate Dining Liquor License (Effective Feb 18, 2026)
One of the most significant new changes to the New York liquor law is the creation of a new private, for-profit club license category. Historically, only not-for-profit social clubs were eligible for a club liquor license — leaving businesses like membership lounges, corporate dining facilities, coworking spaces, and private social clubs without a clear and transparent path to sell or serve alcohol to members.  Of course we’ve figured out how to legally do it anyway, but it never felt quite right.

Under this reform, first signed by Governor Hochul in August 2025, for-profit membership establishments can apply for a dedicated liquor license that allows them to sell alcoholic beverages on premises to members and their guests — just like traditional clubs. Comparable to the structure of private clubs in other states, this license is purposely tailored to today’s prevalent member-driven hospitality models.  It will also allow for the registering of more formal management agreements with food and beverage partners – similarly to how it’s done with hotels.

We anticipate a fair amount of opportunity to arise out of this. There is also a version of this new license class that is specific to corporate dining environments. So, suddenly, the big banks or real estate development firms of NYC can fully license their employee/client/guest amenity spaces, without the need to be fully open to the public, nor the need to jump through the cumbersome regulatory hoops associated with trying to contort themselves to squeeze into some kind of ill-fitting licensing category.

Why it matters: This new license category fills a longstanding gap for a growing class of businesses that host members or guests in person and want to legally serve alcohol without shoehorning operations into license classes that don’t fit. It recognizes the evolution of social and workspaces while maintaining SLA oversight. Bravo, Albany!

2. Allowing On-Premises Licensees to Buy From Liquor Stores (Effective Mar 5, 2026)

Perhaps the most practical everyday change for operators is the new retail-to-retail purchasing flexibility carved out of the traditional three-tier system. For decades New York barred on-premises licensees (like restaurants and bars) from buying alcohol directly from liquor stores or wine shops — forcing them to rely exclusively on wholesalers, even in emergencies or inventory shortages.

As of March 5, 2026, licensed bars and restaurants will be able to purchase up to six bottles (wine or liquor) per week from any licensed off-premises retailer. Off-premises retailers (e.g., liquor stores) are likewise authorized to sell up to six bottles to each on-premises licensee per week. Both sides must retain transaction records on-site for potential SLA inspection.

Why it matters:

• It offers a lawful emergency stopgap when distributor deliveries are delayed or missing.
• It reduces the risk of inadvertent violations for employees who previously resorted to informal emergency purchases.
• It supports neighborhood liquor stores by broadening their customer base while maintaining reasonable limits and record-keeping requirements.

• Expanded eligibility for adult recreational businesses (e.g., axe-throwing venues, pool halls, go-kart tracks) to apply for on-premises liquor licenses.
• A new Brand Owner’s License that removes ownership barriers for New York-based alcohol brands.
• Permanent acceptance of DOT conditional approvals for outdoor dining permits, smoothing the summer service season for NYC restaurants and bars.

Taken together, these reforms signal a shift toward common-sense regulation that aligns legal frameworks with how hospitality businesses actually operate in the 2020s.  What a concept!

BOTTOM LINE
The SLA has taken meaningful steps to modernize antiquated alcohol laws, balancing regulatory safeguards with operational flexibility. The new club/corporate dining license opens doors for a class of businesses previously left in legal limbo, while the retail-to-retail purchasing rule gives everyday licensees a helpful tool to manage inventory challenges lawfully. Cheers to that, certainly.

However, as a reminder, we’re still over here, patiently waiting on meaningful Tied-House Rule reform and a solution to the obscene backlog for applications.  We will, however, take what we can get though.  Progress is progress and these new developments are certainly nothing to sneeze at.

CANNABIS UPDATE:

It’s been a while since we’ve spoken about cannabis. That’s not because nothing’s happening; it’s because there’s still so much further to go before anything truly exciting comes to the surface.  As we’ve mentioned previously, everything moves so damn slowly in the cannabis space.  There are a million micro movements behind the scenes for every noticeable surface development.  And while nothing groundbreaking has happened quite yet, things are brewing. We’ve got some local NY info, as well as some broader, National info for you below.

NY Canna Snapshot

As we close the books on another active year in New York’s cannabis market, it’s time for the need‑to‑know summary of what moved, shook, and sometimes stalled this industry. Between leadership churn at key agencies, courtroom showdowns, and regulatory flubs that nearly toppled operators — if you’re in cannabis in NY, you’ve felt the impacts, and we’re here to talk about it.

Here’s what happened, why it matters, and what we expect next.

1. Leadership Changes in the Regulatory Trenches

The Office of Cannabis Management (“OCM”) turnover continued.  2025 ended with a major shake‑up when the Acting Executive Director and Deputy Counsel were asked to step down amid controversy over enforcement decisions and a mishandled recall case. The Chief Administrative Officer now serves as Acting Executive Director. The Cannabis Control Board (“CCB”) also experienced disruption, including salary cuts and a change in Chair, reflecting broader political and operational strain.

Why this matters: Leadership instability almost always leads to regulatory uncertainty. When leadership changes, rules shift — and that makes compliance, planning, and investment far more difficult.  Especially for a nascent industry that’s still trying to get it’s feet under itself.

2. Major Lawsuits That Slowed the Rollout

Buffer Zone Litigation dominated the year. Regulators altered how they calculated the 500‑foot buffer between dispensaries and schools, putting hundreds of licensed operators at risk of closure or relocation. Retailers sued, and courts blocked enforcement of the revised interpretation through early 2026.  What a nightmare!

Could you imagine using a State agency’s specific guidance to pick your location and ultimately open a business, to then find out a year or so in, that the Agency screwed up and misinterpreted their own rules?!  Oh, and as a result, you may have to shut it all down and may never financially recover.  Folks, I am not making this up.  Other litigation included challenges to public convenience waivers, lawsuits tied to the rollout of the state’s seed‑to‑sale tracking system, and cases seeking to compel stronger enforcement against illicit operators.

Bottom line: Courts became de‑facto policymakers, and litigation froze or reversed key regulatory actions. Thus, further reinforcing, Cannabis = slow.

3.  Bright Spots

Despite turbulence, the legal market continued to grow. Retail sales increased, more dispensaries opened, and courts repeatedly stepped in to protect compliant businesses from retroactive enforcement. Regulators also intensified efforts to shut down illicit sellers.

The Bottom Line:
This year highlighted how difficult it can be to build a regulated industry amid leadership churn, shifting rules, and courtroom intervention. But consumer demand remains strong, courts are protecting compliant operators, and the framework can still be stabilized with consistent leadership and clearer regulation.

Cannabis will not fail in NY. The demand is too high, and let’s face it, we’re a resilient bunch.  In the year ahead, I’m expecting to see: Legislative fixes to clarify buffer rules; Stabilization of OCM leadership; OCM rollout of additional application types; Full enforcement of seed‑to‑sale tracking; Continued litigation shaping policy; and plenty of new NY Canna businesses opening.

Federal Canna Update

In a development that has quickly become one of the most significant federal cannabis headlines in decades, President Trump has announced his intent to move marijuana from Schedule I to Schedule III under the federal Controlled Substances Act.  This move does not legalize cannabis federally — but it does meaningfully change the legal and financial landscape for state‑licensed operators. Here’s the concise, practical takeaway.

WHAT HAPPENED

Marijuana has long been classified as a Schedule I substance — a category reserved for drugs deemed to have no accepted medical use and a high potential for abuse. President Trump has now directed federal agencies to advance a rescheduling to Schedule III, a category that recognizes accepted medical use and carries fewer regulatory restrictions.

WHY IT MATTERS
First, taxes. Schedule I status is what triggers Internal Revenue Code Section 280E, which may sounds familiar. This is the rule that prevents cannabis businesses from deducting ordinary business expenses when it comes to filing their taxes. Rescheduling Marijuana to Schedule III could ultimately allow operators to take standard deductions — potentially transforming balance sheets and profitability across the industry.  And these are HUUUUUUUGE swings.  We’re talking about profit margins going from 20% to 60% in certain instances.

Second, research. Schedule III status would significantly reduce barriers to medical and scientific research, opening the door to expanded clinical studies, FDA‑regulated trials, and greater pharmaceutical development.

Third, federal posture. While limited, this shift represents a formal acknowledgment by the federal
government that cannabis has accepted medical use — a foundational change that will influence regulators, courts, and lawmakers going forward.

WHAT IT DOES NOT DO
This announcement does not:
• Legalize cannabis federally
• Permit interstate cannabis commerce
• Override state regulatory frameworks
Those changes would still require congressional action.

WHAT COMES NEXT
Rescheduling must proceed through a formal federal rulemaking process led by the DEA, including public notice and comment. That process will take time and could face legal or political delays. Even if completed, additional legislation will be needed to address banking access, interstate commerce, and broader federal‑state conflicts.

BOTTOM LINE
People are seemingly misinterpreting what Trump’s press conference actually was.  It was not a declaration that Marijuana is now a Schedule III substance, but rather a public directive to the agencies involved, to get started on the process, which could take some time and could face legal challenges.

Regardless, this would still be one of the most consequential federal cannabis policy shifts in decades. If implemented, rescheduling could relieve major tax and research burdens while signaling a more rational federal approach. Operators and investors should view this as meaningful momentum, tempered by the reality that full federal legalization remains a legislative question.

We’ll continue to monitor developments and provide updates as this process unfolds.  As always, we’ll take any positive Canna developments wherever we can get them.

– Joey Regs out

Any questions about the SLA or Cannabis you can simply respond to this alert or email Joseph at [email protected]