New York’s Revised Cannabis Regulations: What To Know
May 17, 2023
May 17, 2023
Prospective New York Businesses: Changes Are Here
“We have regs!” That’s what Cannabis Control Board Chair Tremaine Wright gleefully said after the Board unanimously approved the latest round of regulations for the adult-use cannabis program in New York this past Thursday.
While these regulations are not 100% finalized (there is still a 45-day public comment period which could see some technical language changed in the regulations) the consensus has been that these revised regulations are close to complete. And there is a lot to unpack here! Here are some of the biggest changes within the regulations that you should know about.
New Provisional Cannabis Licenses
One of the most significant additions to the regulations is the introduction of the provisional cannabis license. Referenced in the previous round of regulations from last year, these revised regulations expand on the details of provisional license greatly. Provisional licenses can be awarded to business applicants who meet all other criteria for their license type without a set location for their cannabis business.
This alleviates one of the biggest frustrations and concerns for prospective applicants when it comes to financing and investment. Previously, individuals may not be able to secure a location without a license, but without a location they may not have been awarded a license.
Now, applicants can be awarded a provisional license, receiving “pre-approval” for operating from the state which lasts for 12-months so they can subsequently search for a suitable location and expand the business’s team.
Clarity On Cannabis Delivery Licenses
Everyone knew delivery was going to be made available in New York, and we had some information on this prior to the revised regulations, but now we have much more details. This includes some last-minute amendments during Thursday’s Board meeting about the allowance of products a delivery individual can carry on their person.
For starters, the delivery license will be $4,500 (though if the applicant qualifies as a social and economic equity applicant, then they may pay a 50% reduced or even waived or deferred fee). There are restrictions on what a delivery license holder can do including prohibitions on delivering to individuals in motor vehicles and in public spaces, and not being allowed to have more than 25 individuals providing delivery services per week under each license.
When delivering, individuals can use multiple methods of transportation including via car, bike, scooter, or on foot. However, the amount of cannabis product allowable does vary based on mode of transportation. In an enclosed vehicle, a delivery person can have upwards of $20,000 worth of cannabis product, while in a non-enclosed vehicle (such as on foot) a delivery person can only have upwards of $5,000 of product.
Unique Cannabis Consumption Facilities
Similar to delivery licenses, we have additional insight into consumption facilities. In addition, on-site consumption license, retail dispensaries and microbusinesses can have a designated area called a Limited Retail Consumption Facility. This will only be allowable for individuals 21 years of age or older and allows customers to consume cannabis products which they have legally purchased in a controlled environment.
This will also pave the way for allowing restaurants to obtain a license and allow for the selling of infused foods and drinks. As well, municipalities can also identify consumption areas within their own jurisdiction, including for smoking and vaping, excepting areas from the Clean Indoor Air Act. There are some limitations in place such as hours of operations and distance requirements to other consumption facilities.
True Parties of Interest
One of the biggest updated in the revised regulations related to the true parties of interest. While many were hoping for some leeway when it comes to investment opportunities in business across the supply chain (for example, a current investor in a cultivator in California cannot be an active investor in a retailer in New York), such changes did not come.
However, the thresholds for a true party of interest (TPI) was adjusted. TPIs are individuals with a significant financial interest in a cannabis license or application and to be regarded as a TPI, an individual or business will need to meet the highest of these three criteria in receiving aggregate payments in a calendar year: 10% of gross revenue, 50% of net revenues, or $250,000. This is a change from the previous regulations which said a TPI needed to meet the criteria of 10% gross revenue, 50% net revenue, or $100,000.
Updated Registered Organizations (RO) Timelines
There has been a lot of good changes in these revised regulations, but one which has arguably garnered the most controversy relates to the updated timeline for registered organizations (RO’s, or more plainly medical/multi-state operators) to enter into the adult-use marketplace.
While there had been a significant delay in allowing RO’s to allow both medical and adult-use in their locations, the timeline has shrunk and we could see the first of these larger scale operations opening shop in the adult-use market as soon as December 29, 2023.
This has generated controversy because most retail licenses will not have even been awarded at this point (and most conditional adult-use retail dispensary (CAURD) license holders will likely have only just opened up), making it more difficult to smaller operations to gain a foothold in the state.
Future Regulation Changes are Imminent
These are just scratching the surface. We haven’t even gotten into the details of the new application clarity, distance requirements for retailers, boosts for microbusiness license holders, and environmental and sustainable goals, or the long anticipated Social and Economic Equity Plan. There’s more to come and we will be doing deep dives on some of the specific licenses and their updates in the coming days, so stay on the lookout!
Seasoned Guidance From Top Cannabis Consultants
With so many changes to New York’s new cannabis program and complex details emerging as we speak, it’s crucial you have a partner who can make sure no stones are left unturned and your application is positioned to meet all of the developing nuances.
Our team of cannabis experts in our New York office can help keep an active pulse on program changes for you, while simultaneously streamlining your cannabis license application from ideation to execution.
Reach out to get started and be sure to follow our New York state cannabis guide for updates as they arrive.