Ask Me Anything: New York

Ask Me Anything: New York Cannabis Questions

Answers for all your questions about the New York cannabis market and licensing process.

Who qualifies for  social equity, adult-use cannabis retail dispensary licenses in New York?

The Marijuana Regulation Taxation Act (MRTA) sets the following qualifications for social equity applicants: 

  • Individuals from communities disproportionately impacted by cannabis prohibition
  • Minority-Owned Businesses
  • Women-Owned Businesses
  • Veteran-Owned Businesses
  • Distressed Farmers

What are the ownership requirements for a cannabis business entity to be considered a social equity applicant?

To be considered a social equity applicant, the business must maintain 51% or more ownership by those qualifying under social equity status. According to the Marijuana Regulation Taxation Act, “such minority ownership is real, substantial and continuing; in which such minority ownership has and exercises the authority to control the day-to-day business decisions of the enterprise independently.”

What would disqualify applicants from consideration who meet the qualifications for the social equity grants?

The MRTA states applicants must demonstrate “good moral character.” Individuals with additional criminal charges such as robbery, homicide, possession of weapons, and non-cannabis drug offenses would not qualify. Individuals applying for the first round of justice-involved licenses must meet the MRTA requirements for social equity applicants as well as maintain ownership in a business with two years of consecutive net profit. 

Who is the New York Chief Equity Officer and what responsibilities do they have?

Damion Fagon, a former board member of the New York Cannabis Growers & Processors Association, will be New York’s first Chief Equity Officer. The Chief Equity Officer oversees the social and economic equity initiatives of the Office of Cannabis Management (OCM). In addition to developing the Social and Economic Equity Plan, he is responsible for establishing a public education program dedicated to Communities Most Impacted (CMIs) by cannabis prohibition with information on cannabis licenses and community support. The Chief Equity Officer is required to submit an annual report on its findings to the Board in 2023.

What are turn-key operations, and how does it apply to New York adult-use licensees?

The first tier of adult-use, justice-involved licenses are expected to run as turnkey operations, with the support of the Cannabis Control Board (CCB) and the Dormitory Authority State of New York (DASNY). The CCB and DASNY will assist in financing the construction and real estate costs of each justice-involved facility while also creating a consistent dispensary operations model for each licensed facility. 

What is the significance of community boards for prospective adult-use licensees? 

The Marijuana Regulation Taxation Act requires applicants for a retail dispensary or an on-site consumption license to submit a notice of intent to apply to the community board where they will operate. The community board is entitled to issue an opinion for or against granting the license. The statement will become part of the public record that the Office of Cannabis Management uses to make recommendations to the Cannabis Control Board on whether to grant or deny the license. 

What is the difference between a Microbusiness license and a Cooperative license?

Microbusinesses enable a licensee to vertically-integrate, authorizing the limited cultivation, processing, distribution, delivery, and sale of their own adult-use cannabis and cannabis products directly to retail consumers.

Cooperative licenses allow acquisition, possession, cultivation, processing, and sale from the licensed premises of the adult-use cooperative by distributors, on-site consumption sites, registered organizations, and/or retail dispensaries, but not directly to cannabis consumers. A cooperative must also be organized under cooperative principles, such as democratic control by the members.

Can I simultaneously apply for a cannabis consumption lounge license and retail delivery license? Are there restrictions when applying for multiple licenses?

You can simultaneously apply for a cannabis consumption lounge and retail delivery license but there are different levels of limitations when applying for different license types.  You can find more information on licensing conditions and ownership limits from the Office of Cannabis Management here.

What are the limitations of an adult-use cannabis delivery license?

Cannabis delivery licenses may not have more than 25 individuals providing full-time paid delivery services to cannabis consumers per week under one license. No person may own more than one delivery license.

Who are the members of the Cannabis Control Board (CCB)? What are they responsible for?

The CCB is responsible for approving the legal framework for New York’s cannabis industry, which includes approving applications and licenses, and approving the rules and regulations. Members of the CCB are listed as follows:

  • Tremaine Wright: Chairwoman of the New York State CCB
  • Jen Metzger: Former State Senator
  • Adam Perry: Partner at the Buffalo law office of Hodgson Russ
  • Reuben McDaniel III: The President and CEO at DASNY (Dormitory Authority – State of New York)
  • Jessica Garcia: Assistant to the President of the Retail, Wholesale Department Store Union (RWDSU), UFCW

What is the Social Equity Cannabis Investment Fund? What entity will be responsible for it?  

The Social Equity Cannabis Investment Fund, proposed by Governor Hochul and the New York State Legislature, is a public-private partnership created for social equity entrepreneurs to succeed. The state will invest in a private fund to finance the leasing, equipping, and supporting of conditional adult-use cannabis retail dispensaries in New York State. Social Equity Impact Ventures, LLC is the investment group that will sponsor and manage the $200 million New York Social Equity Cannabis Investment Fund.

What are the limits of an adult-use cannabis nursery license?

An adult-use cannabis cultivator may hold one nursery license which authorizes the “production, sale, and distribution of clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of cannabis by licensed adult-use cultivators, cooperatives, microbusinesses, or registered organizations.”

What is the Dormitory Authority of the State of New York, and what is its significance for adult-use retail cannabis dispensaries?

The Dormitory Authority of the State of New York is responsible for providing construction, financing, and assistance services that serve the “public good.” Additionally, they will be responsible for real estate selection and build-out of retail dispensary locations. 

What is the cost of the adult-use retail dispensary application?

The cost of the application is $2,000.00. 

What are the expected out-of-pocket expenses for those who qualify for social equity and are awarded government funding?

It depends on the type of license. The average cost of a dispensary varies nationwide. However, quotes have reached upwards of $1 million. After state-sponsored funding and grants, the estimated out-of-pocket expenses start at least at $250,000.00 for those who qualify for social equity.

What are Labor Peace Agreements (LPAs), and why are they important for adult-use cannabis licensees?

A labor peace agreement is an agreement an organization takes with any union or other labor organization that “seeks to represent” employees working under the human services contract. LPAs are listed as a requirement for all those applying for cannabis business licenses.

What is the difference between conditional and standard adult-use cannabis licenses?

Conditional cannabis business licenses have a set of conditions that permit certain groups of licensees the ability to obtain and keep licenses before the general population. These conditions include social equity status and more stringent license term restrictions and requirements. Standard adult-use denotes the rest of the adult cannabis industry demographics.  

What is the limitation, if any, for adult-use for personal cannabis grows?

New Yorkers can grow up to three mature cannabis plants and three immature plants in their home for personal consumption.

What taxes are established under the Marijuana Regulation Taxation Act (MRTA)?

MRTA imposes a 9% state tax and 4% local tax for retail sales of cannabis. In addition, MRTA imposes an additional requirement that adult-use distributors pay taxes based on the amount of THC per milligram:

  • 0.5 cents for cannabis flower 
  • 0.8 cents for cannabis concentrate
  • 3.0 cents for edibles

How will New York use tax revenue created through the adult-use cannabis market?

All cannabis tax revenue must be deposited in the New York State Cannabis revenue fund. Revenue covers reasonable costs of administering the program and implementing the rules and regulations. The remaining funding will be split in three ways:

  • 40% to Education
  • 40% to Community Grants Reinvestment Fund
  • 20% to Drug Treatment and Public Education Fund

What are the requirements of an adult-use cannabis distributor license? What are the limitations?

A distributor cannabis business is licensed to sell wholesale cannabis products to dispensaries and consumption lounges. Distribution licensees cannot have a direct or indirect interest in any microbusiness, dispensary, consumption licensee, or registered organization. Distribution licensees are permitted to obtain a cannabis cultivator or processor license but can only distribute products cultivated and/or processed by the licensee.

What are the requirements of an on-site consumption license? What are the limits?

An on-site consumption license authorizes the acquisition, possession, and sale of cannabis to consumers for use at the on-site consumption location. There is a limit of three consumption lounge licenses per applicant and the licensees may not hold cultivation, processor, or distribution licenses.

What are the requirements of a cannabis processor license? What are the limits? 

A cannabis processor license allows the licensee to extract concentrated cannabis and/or compounds, blends, extracts, infuses, or manufacture concentrated cannabis or cannabis products. A cannabis processor’s license authorizes the acquisition, possession, processing, and sale of cannabis from cultivators to distributors. You can only have one cannabis processor license, and a  processor can obtain a distributor license for their own products. Processors may not own or have any interest in a cannabis retail dispensary. 

What are the tiers for currently available adult-use cannabis  licenses? If so, who will qualify per tier?

New York State has released  cannabis business licenses in multiple tiers since Marijuana Regulation Taxation Act (MRTA) was passed:  

Cultivation:

  1. Tier 1: Conditional Hemp Cultivator License
  2. Tier 2: Adult-Use Conditional Cultivator License
  3. Tier 3- Adult Use Cultivator License 

Processors:

  1. Tier 1: Adult-Use Conditional Hemp Processor License
  2. Tier 2: Adult-Use Conditional Processor License
  3. Tier 3: Adult-Use Processor License

Retail Dispensary:

  1. Tier 1: Conditional Adult-Use Dispensary  License
    1. Justice-Involved individuals 
    2. Social Equity individuals
  2. Tier 2: Adult-Use Dispensary  License

Are there limits to vertical integration? Do they apply to registered organizations and medical dispensaries?

The Marijuana Regulation Taxation Act (MRTA) prohibits vertical integration for all other licensees except microbusinesses and the registered organizations currently operating in the medical program.

How can Point Seven Group Help?

The team of cannabis consultants and professionals at Point Seven Group have worked extensively in the U.S. and international cannabis markets and are familiar with the unique challenges of the cannabis industry. Follow us on social media to stay up to date with more cannabis industry updates!

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