New York Cannabis Control Board: Seventh Meeting News Highlights

On Thursday, March 10, 2022, the New York State Cannabis Control Board (CCB) of the Office of Cannabis Management (OCM) held its seventh and longest public meeting to date, during which it made significant progress in developing the adult-use regulatory framework contemplated by the Marijuana Regulation and Taxation (MRTA). As detailed further below, the CCB: (i) previewed its proposed conditional adult-use retail dispensary regulations, (ii) approved the application form for conditional cultivator adult-use cultivator licenses and announced the application period for these licenses, and (iii) provided an update on the Social Equity Cannabis Investment Fund; among other items.

Conditional Adult-Use Retail Dispensary Regulations

During the meeting, the CCB directed the OCM to post for public comment the proposed regulations for the conditional adult-use retail dispensary licenses to businesses run by owners disproportionately impacted by the criminalization of cannabis. To be eligible for this initial license, applicant must:

  • Have had a pre-MRTA cannabis related offense in the State of New York, or had a parent, guardian, child, spouse, or dependent with a pre-MRTA cannabis related offense in the State of New York.
  • Have experience owning and operating a qualifying business in the State of New York.

The proposed regulations outline an application and selection process. Applications for these priority licenses will open in the Summer of 2022. The first licenses are expected to be distributed by late summer or early fall 2022. According to the OCM, this positions equity-entrepreneur-owned dispensaries to make the first adult-use cannabis sales in New York State by the end of 2022 while speeding the delivery of investments into communities across the state that were most impacted by the disproportionate enforcement of cannabis prohibition. A subsequent regulation package will outline the requirements for safely operating a retail dispensary.

This new license class is part of the broader Seeding Opportunity Initiative, which was previewed by OCM Executive Director Chris Alexander in the Executive Director Report during the meeting. The program was formally announced by Governor Hochul yesterday, and creates three programs that prioritize New York Farmers and equity entrepreneurs:

  1. Seeding Opportunity Initiative Farmers First Program: Provides an adult-use conditional cultivator license from the OCM to eligible New York cannabinoid hemp farmers.
  2. Seeding Opportunity Initiative Equity Owners Lead Program: As described above, provides a Conditional Adult-Use retail License from the OCM to eligible equity-entrepreneur applicants – these will be the first adult-use retail licenses to be given out.
  3. New York Social Equity Cannabis Investment Fund: Governor Hochul proposed this $200 million program in her FY 2023 Executive Budget, the nation’s first to make funding available for equity entrepreneurs at the forefront of the adult-use cannabis market. Through the program, funding would support the development of turnkey dispensary facilities for equity entrepreneurs licensed through the Seeding Opportunity Equity Owners Lead Program. The proposal remains under discussion with the Legislature.

Conditional Adult-Use Cultivators

The CCB kicked off the discussion regarding the conditional adult-use cultivator application form and window by providing a legislative overview of the S.8084-A/A.9283, the legislation, signed into law by Governor on February 22, 2022, creates a new Conditional Adult-use Cultivator license authorizing eligible hemp growers to apply for a license to grow cannabis containing over 0.3% THC for the upcoming adult-use market. A more detailed summary of the law can be found here.

To be eligible to apply for a Conditional Adult-Use Cultivator License an applicant must:

  1. Have been authorized to grow hemp under the Department of Agriculture and Markets Industrial Hemp Research Pilot Program.
  2. Be in good standing with the Department of Agricultural of Markets.
  3. Have been authorized by the Department of Agricultural and Markets to grow cannabinoid or “CBD hemp” as opposed to growing hemp for grain or fiber.
  4. Have grown and harvested cannabinoid or “CBD hemp” for two of the past four years (between 2018-2021) and be able to provide the Office with proof documenting such activities.
  5. Hold at least 51% or more ownership in the entity that held the industrial hemp grower authorization from the Department of Agriculture and Markets.

Additionally, licensure is conditioned upon an applicant meeting certain eligibility criteria and program compliance. Requirements in the new law include (1) safe, sustainable, and environmentally friendly cultivation practices; (2) participation in a social equity mentorship program; and (3) a labor peace agreement with a bona fide labor organization.

Following the overview, the CCB approved the application form for the license, which consists of an online application to be filed on the New York Business Express portal. A mock-up of the application can be found here.  First applicants will log in and create a New York Business Express Business Profile. Next, applicants will upload information pertaining to their previous authorization to grow hemp under the Department of Agriculture & Markers program. Lastly, application will attest to the requirements of the license including adherence to the statutory requirements such as participation in a social equity mentorship program and maintain a labor peace agreement. The license includes the submission of a non-refundable $2,000 license and application fee.

The CCB also approved the application window, which will open on March 15, 2022 and remain open until June 30, 2022. Licenses will authorize cultivation for two years. The OCM will be holding a webinar in the coming days for interested applicants to learn more about the eligibility standards, application process, and forthcoming guidance. This will be recorded and posted on the OCM’s website.

Social Equity Cannabis Investment Program Update: Release of Request for Information

Board member Reuben McDaniels also provided an update regarding Governor Hochul’s proposed Social Equity Cannabis Investment Fund. The Dormitory Authority of the State of New York (DASNY) released a Request for Information (RFI) to gather the best ideas for setting up and operating the Social Equity Cannabis Investment Program. The RFI is not a Request for Proposal (RFP), although Board member McDaniel remarked that DASNY does intend to issue an RFP for a general manager of the fund at a later date. Information received under the RFI may be considering in any future procurement relating to the establishment and development of Social Equity dispensaries or other cannabis related initiatives. Proposals must be submitted no later than Wednesday March 16th at 3:00pm. More details can be found on DASNY’s website:  https://www.dasny.org/opportunities/rfps-bids/2022/new-york-social-equity-cannabis-investment-fund-rfi.

Medical Program Update

Executive Director Chris Alexander provided updates regarding the Medical Program, most notably that the OCM is currently assessing public comments on medical home cultivation regulations and will share more information soon. Additionally, the OCM is dedicating additional resources to expedite patient registration and support the new patient certification and registration system launched earlier this year.

Executive Session

During the meeting, board members voted to privately discuss pending and proposed litigation matters. The board did not specify what the private discussion was about, but it may have been in connection with the legal dispute between MedMen and Ascend Wellness Holdings over a stalled investment transaction.

Conclusion

Despite the initial delays in the rollout of New York’s adult-use program, in just under a year since the passage of the MRTA, the CCB and OCM has developed an initial framework for licensing which could accelerate the timeline for initial adult use sales. We will continue to closely monitor developments in connection with the MRTA’s rules and regulations. If you have questions regarding the contact of this alert or the MRTA generally, please contact Jesse Alderman, Cannabis Practice co-chair, at jalderman@foleyhoag.com, or another member of the Firm’s cannabis team.

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