New York Lawmakers Approve Bill to Provide Conditional Adult-use Cultivator and Processor Licenses

As entrepreneurs and consumers eagerly await the implementation of New York’s adult-use program, lawmakers are taking steps to allow New York to effectuate its adult use cannabis program faster. Last week, the New York Senate and Assembly approved Senate Bill S8084A, a bill to provide provisional marijuana cultivator and processor licenses for existing hemp businesses. Championed by Senator Michelle Hinchey, the bill has been delivered to Governor Hochul and is awaiting signature. Below is a summary of the key terms and requirements of these new licenses.

Conditional Adult-Use Cultivator License

A conditional adult-use cultivator license will authorize the cultivation of cannabis outdoors or in a greenhouse with no more than twenty artificial lights, unless otherwise authorized by the Office of Cannabis Management (“OCM”). A conditional adult-use cultivator licensee may cultivate up to 43,560 square feet of flowering canopy outdoors or 25,000 square feet of flowering canopy in a greenhouse. A cultivator may cultivate both outdoors and in a greenhouse provided the flowering canopy in a greenhouse is less than 20,000 square feet and the total flowering canopy is equal to or less than 30,000 square feet. The cultivation of cannabis will only be permitted within the same or an adjacent county in which the conditional adult-use cultivator licensee had previously been authorized by the Department of Agriculture and Markets (“Department of Agriculture”) to grow hemp.

A conditional adult-use cultivator license will have the temporary authority to minimally process and distribute cannabis products, provided that such final products must be in the form of cannabis flower, unless the licensee also holds an adult-use processor or distributor license. Such authority to minimally process and distribute cannabis products expires on June 1, 2023. After June 1, 2023, any conditional adult-use cultivator seeking to process and distribute cannabis products will be required to apply for and receive a processor and distributor license to conduct this activity.

In order to be eligible for a conditional adult-use cultivator license, a cultivator must:

  • Have held a valid industrial hemp grower authorization that is in good standing from the Department of Agriculture as of December 31, 2021;
  • Have grown and harvested hemp for at least two of the past of the four years pursuant to that license;
  • Must be able to provide proof, as defined by the OCM, of the amount of hemp planted by the applicant during each of the two years that hemp was grown; and
  • Have an ownership interest of 51 percent or more of the entity that is the licensee.

The OCM will set out specific terms and conditions setting out requirements necessary to be awarded and maintain a conditional adult-use cultivator license, including but not limited to entering into a Labor Peace Agreement with a bona-fied labor organization that is actively engaged in representing or attempting to represent the applicant’s employees within six months of licensure, and the requirement that the licensee participate in an environmental sustainability program and a social equity mentorship program.  The social equity mentorship program will be directed to train individuals that qualify as a social equity applicant under the MRTA interested in becoming licensed cultivators.

Conditional Adult-Use Processor License

A conditional adult-use processor license authorizes the processing and manufacturing of cannabis products. A conditional adult-use processor license can only perform extraction activities if authorized under the licensee’s cannabinoid hemp processor licensee, and all extraction methods are subject to OCM approval. The processing of cannabis will only be permitted at the same location in which the conditional adult-use processor licensee is authorized to process hemp, unless expressly authorized by OCM.

A conditional adult-use processor license will have the authority to distribute cannabis products without holding an adult-use distributor license until June 1, 2023. After June 1, 2023,  conditional processors seeking to distribute cannabis products will be required to apply for a distributor license to continue this activity.

To be eligible to apply for a conditional adult-use processor license, a processor must:

  • Have applied for a cannabinoid hemp processor license before January 1, 2022;
  • Hold an active cannabinoid hemp processor license issued by the OCM; and
  • Have an ownership interest of 51 percent or more of the entity that is the licensee.

Vector illustration of a pattern of small marijuana leaves on a green map of New York.

Like the conditional adult-use cultivator license described above, the OCM will set out specific terms and conditions setting out requirements necessary to be awarded and maintain a conditional adult-use processor license, including but not limited to entering into a Labor Peace Agreement with a bona-fied labor organization that is actively engaged in representing or attempting to represent the applicant’s employees within six months of licensure, the requirement that a licensee participate in an environmental sustainability program and a social equity mentorship program.  The social equity mentorship program will be directed to train individuals that qualify as a social equity applicant under the MRTA interested in becoming licensed processors.

The conditional adult-use cultivation and conditional adult-use processing licenses are temporary. These licenses will not be issued after December 31, 2022 and will only be valid through June 30, 2024. Licensees must begin operations within six months of the date of issuance of the license or the license may be deemed as surrendered. Conditional adult-use cultivator and processor licenses will be subject to same authorizations, restrictions, and requirements applied to any adult-use cultivator or processor license issued under the MRTA, as well as to any new terms and conditions imposed by the CCB and OCM.

Update: This bill was signed into law by Governor Hochul on February 22, 2022. The OCM will be developing a license application process and opening the program as soon as possible. Read the press release here: https://www.governor.ny.gov/news/governor-hochul-signs-conditional-cannabis-cultivation-bill

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