Guidance Readies Retailers for New York Adult-Use Sales

New York continue to take steps towards its goal of commencing adult-use sales within the next several weeks (if not months). Today, the Office of Cannabis Management (“OCM”) issued guidance for the conduct and operation of adult-use retail dispensaries, both specifically in reference to Conditional Adult Use Retail Dispensaries (“CAURD”), but more broadly, for all retailers moving forward.

In its twenty-seven (27) page guidance document, OCM began identifying the rules of the road for retailers seeking to operate in New York, addressing topics including:

  • Branding – licensees may operate with trade names, i.e., doing business as names, but cannot misrepresent that they are a medical cannabis dispensary through the use of terms such as drug, drug store, medicine, apothecary, doctor, or pharmacy, nor use names incorporating “pharma-“ or “medi-.”
  • Staffing – licensees must designate an “Employee in Charge” (“EIC”), who is responsible for core day-to-day functions of the facility, and may not serve as an EIC of more than one dispensary at a time.
  • Training – all staff must meet certain minimum training thresholds, as established by the Cannabis Control Board (“CCB”).
  • Hours of Operation – may only operate between 8 A.M. to 12:00 P.M., but municipalities may pass additional local laws further regulating hours of operation (but are prohibited from restricting operations to less than 70 hours a week).
  • Supply Chain – distributors must sell cannabis products to any retailer willing to pay cash, and OCM reserves the right to investigate any sources of payment made by a dispensary to a distributor.
  • Commercial Reasonableness – OCM reserves the right to invalidate any distribution or supply agreements that it deems commercially unreasonable or where discriminatory pricing practices are suspected.
  • Inventory – retailers are permitted to sell cannabis products, cannabinoid hemp products (provided they hold a separate cannabinoid hemp retailer license), paraphernalia, and branded merchandise (but only merchandise in the name of the selling licensee and not any other brands or licensees).
  • Menus and Prices – licensees must maintain a menu that includes price and total cost (including tax), and are prohibited from advertising giveaways, discounts, price reductions, point-based rewards systems, or customer loyalty programs (but may change the price of products within the facility).
  • Donations and Giveaways – retailers are precluded from giving away, including through donation, any cannabis products.
  • Drive-Thru – licensees may operate a drive-thru service window and/or drive-thru pre-order customer pick-up lane, but must have written approval from OCM before commencing such operations.
  • Delivery – licensees may provide delivery, but no more than 25 employees may provide delivery services for the licensee per week. Delivery may occur through multiple means, including car, van, bike, or foot.
  • Security System – security must include a perimeter alarm, video camera surveillance, a failure notification system, backup systems, and limited access areas.
  • Relocation of License – relocation is permitted, but only where the new location is consistent with public convenience and advantage standards, including by reference to: (a) other licenses in proximity to the location; (b) evidence that all necessary local licenses and permits have been obtained; (c) a demonstration of need; (d) effect on pedestrian or vehicular traffic and parking on the surrounding area; and (e) existing noise levels.
  • Method of Measurement to Sensitive Uses – the MRTA prohibits a dispensary from being located within 500 feet of a school, or 200 feet of a building used exclusively for religious warship. The guidance identifies the method for measuring that distance, including as measured from the nearest point of the sensitive use to the nearest entrance of the retailer (and defines, in detail, what constitutes a “door” for the purpose of determining what is or is not an entrance).
  • Signage – licensees cannot have more than two signs outside of the store.
  • Inspections/Audits – licensees are required to submit a corrective action plan within 30 calendar days of the issue date, which must include an assessment and analysis of the events that led to the noncompliance, procedure for addressing how the license intends to correct each area of noncompliance, explanation of how proposed corrective actions will be implemented and maintained, and the proposed date by which the noncompliance will be corrected.
  • Prohibited Health Claims – while retailers are prohibited from giving the impression that cannabis will cure or prevent any specific illnesses, diseases, treat any specific symptoms, or otherwise provide medical advice; dispensary workers may provide general information about the effects of cannabis consumption on the human body.
  • Undue Influence – A cultivator, processor, or distributor is prohibited from giving anything of value to a retailer to induce them to make a purchase, and OCM will presume that anything a cultivator, processor, or distributor gives to a retailer is meant to induce the retail dispensary to buy products.
  • Availing – OCM identifies that where a licensee turns control of a business over to an undisclosed party without any direction, supervision or oversight, availing has occurred, and could result in license violations.

Finally, and in what has become common with other guidance by OCM issued over the last several months, OCM reserves the right “to issue changes, corrections, and amendments to this guidance,” though conceding that following such a change, licensees will be provided a period of time to come into compliance with any such changes.

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