The New York Office of Cannabis Management (OCM) has shared its proposed adult-use cannabis regulations ahead of the Cannabis Control Board’s (CCB) Nov. 21 meeting, where the board plans to consider the proposed rules and issue the state’s first adult-use dispensary licenses.
If the draft regulations are approved by the CCB on Monday, the proposal, which covers license types, rules for enforcement and more, will enter a 60-day public comment period, according to an OCM press release.
The proposed rules center on the activities authorized under seven adult-use cannabis license types, including cultivation, nursery, processing, distribution, retail dispensary, microbusiness and cannabis collective (co-op).
The licenses are outlined as follows, according to the press release:
- The regulations create 5 tiers of cultivation licenses that are differentiated by light source. The allotted square footage per license ranges from 5,000 – 100,000 square feet.
- The regulations incentivize sustainable cultivation practices and limited energy utilization including outdoor cultivation.
- Holders of this license will be allowed to sell immature cannabis plants and seeds to licensees, including to retail licensees but they cannot sell immature plants directly to consumers.
- These license-holders will help New York pioneer future advances in cannabis science genetics.
- Acknowledging the potentially cost prohibitive nature of manufacturing cannabis products, the regulations create three types of license authorizations under the processing license to allow for more entry points into the market:
- Minimal processing (branding/packaging and labeling)
- Blending/infusing (Must have a Good Manufacturing Practices facility)
- Extraction (Must have a Good Manufacturing Practices facility)
- Holders of this license can distribute cannabis to an adult-use dispensary from a processor.
Cannabis Collective (Co-op)
- In order to encourage more cooperatives in New York's cannabis market, the regulations allow for either cooperative association or traditional cooperative model so that these entities can receive investments.
- The regulations also allow holders of this license to scale up their operation in proportion to how many members join with a minimum of five members required to get the license (not inclusive of investors).
Retail Tier License:
- The regulations provide specificity to the design of dispensary operations including all security and staffing requirements.
- The regulations also provide dispensary operators with the additional authorizations to conduct delivery operations and to allow on-site consumption in approved locations.
- The regulations clarify activities authorized under this vertical license.
- The regulations set the amount of canopy authorized to be utilized by a microbusiness license holder at 3,500 square feet indoor or 10,000 square feet outdoor.
- The regulations also allow microbusinesses to have retail locations that are distinct from their cultivation and processing facility.
Delivery licenses will be covered in a future round of regulations, according to the press release.
The proposed regulations will allow New York to fully launch its adult-use cannabis program “by clarifying adult-use market architecture, defining activity allowed under each license type, setting out application criteria, establishing rules for the enforcement of the regulations, and more,” officials said in the press release.
“The broader regulations are designed to promote public health and safety, and establish an equitable, consumer-driven adult-use cannabis market to build upon initial program regulations advanced earlier this spring,” officials said.
The proposed regulatory framework is similar to the one that governs New York’s alcohol industry, according to the press release, and includes prohibitions on individuals having an interest in businesses across licensing types. In other words, cultivation, processing and distribution operations will be separated from retail.
“Essentially, if you operate or invest in a business on the supply side, you cannot also hold any interest in a retail business,” officials said in the press release. “This key principle of the new law creates opportunity, opens the market to more potential players, and will help establish a diverse and equitable industry.”
The proposed rules include criteria for social and economic equity licensees and outline opportunities for minority- and women-owned businesses, service-disabled veteran-owned businesses and distressed farmers, as well as those from communities that were disproportionately impacted by the war on drugs.
Overall, the draft regulations aim to discourage underage consumption, establish product quality and safety guidelines, outline employee training standards, and define business security requirements. All provisions are aimed at protecting public health and safety, according to the press release.
The proposed rules also incentivize sustainable craft cannabis operations that protect against energy-intensive or wasteful practices, according to the press release, and include requirements for New York’s existing medical cannabis operators to establish a “patient prioritization plan” to maintain an adequate supply for the state’s registered patients while expanding to serve the broader adult-use market.
The CCB is expected to issue the first adult-use cannabis dispensary licenses Monday, according to an NBC New York report, but New York has become the latest state where litigation could hold up the issuance of final cannabis licenses.
U.S. District Judge Gary Sharpe issued a preliminary injunction Nov. 10 that temporarily blocks state officials from distributing adult-use cannabis retail licenses in five of the state’s 15 regions, including Brooklyn, Central New York, Finger Lakes, Mid-Hudson and Western New York.
The injunction affects up to 63 of the 150 Conditional Adult-Use Retail Dispensary (CAURD) licenses that the OCM unveiled in August, and the ruling could potentially impact New York’s adult-use sales launch, which Gov. Kathy Hochul has said will still happen by the end of the year.