Over the last few years, various states have approved marijuana use, including New York.  Recently, the state enacted legislation to allow adult recreational cannabis use, offering a vast number of business opportunities for residents interested in this growing industry. To open a cannabis business, one must meet the requirements set forth by the new law and be granted a license.

On March 31, 2021, former Governor Andrew Cuomo signed the Marihuana Regulation and Taxation Act (MRTA), making New York the 16th state to allow adult-use marijuana after years of unsuccessful attempts and stalled efforts. New York now advances toward the establishment of a possible $4.2 billion sector that could grow to be one of the largest markets in the country.

The goal of this legislation is:

• to establish the Office of Cannabis Management, which will oversee the implementation of a comprehensive regulatory framework for medical, adult-use, and cannabinoid hemp,
• to build a cannabis economy that is regulated and taxed in the state, and
• to provide for a variety of social and economic justice initiatives that are associated with the industry.

New York Medical Marijuana Program

The first step toward legalizing medical marijuana was taken when Governor Andrew Cuomo signed the Compassionate Care Act in July 2014, establishing a comprehensive, safe, and effective medical marijuana program for New Yorkers. This law permitted the use of medical marijuana for the treatment of qualifying conditions such as cancer, HIV/AIDS, ALS, Parkinson’s disease, and multiple sclerosis, among others. 

Since that law’s original passage, between the years 2016 and 2018, the list of approved conditions has been updated multiple times to include chronic pain, post-traumatic stress disorder (PTSD), and opiate addiction therapy. The Department of Health website provides a complete list of qualifying conditions.

New York Medical Cannabis Business Opportunities

The Marihuana Regulation and Taxation Act (MRTA) also has provisions for expanding the Medical Marijuana Program. For the time being, the current regulations and program operations will stay in place as the Office of Cannabis Regulation is building the regulatory framework required to put these provisions into effect. Current medical marijuana program applications can be viewed on this page. 

Since June 2015, only five licenses have been awarded, and no further licenses have been granted. Furthermore, according to the MRTA, the Cannabis Control Board is required to register new Registered Organizations. A Registered Organization may operate up to eight dispensing sites with the initial two sites in unserved or underserved areas. When assessing new registered groups, racial, ethnic, and gender diversity shall be prioritized.

The MRTA also establishes a new cannabis research license that will help conduct cannabis research. The licensee is permitted to produce, process, purchase, and/or possess cannabis for the purpose of research. Cannabis grown or produced by a cannabis research licensee may only be sold to other cannabis research licensees. 

The application period for cannabis research licenses has yet to be declared. What we know so far is that an applicant for a cannabis research license must submit to the board a description of the research and the amount of cannabis to be grown or acquired. Each application will be evaluated based on the quality of the project, study design, value, and impact, as well as the applicant’s ability to conduct the project successfully and whether the amount of cannabis that the applicant intends to grow or purchase fits within the project’s scope and objectives.

More information regarding cannabis research can be found here.

Recreational Marijuana Legalization

As mentioned above, former Gov. Cuomo signed into law the Marihuana Regulation and Taxation Act on March 31, 2021, which legalized recreational cannabis for adults 21 years of age and older. A system of licensing will be established for cannabis businesses, including growers, manufacturers, distributors, retailers, and cooperatives.

The MRTA creates a new Office of Cannabis Management (OCM) governed by a Cannabis Control Board to oversee and implement the law. The OCM will regulate cannabis and will issue licenses as well as develop regulations that define when and how businesses can take part in the emerging industry. In addition to regulating the adult-use cannabis market, the OCM is in charge of overseeing the existing medical marijuana and hemp programs in the state.

On August 10, 2021, Andrew Mark Cuomo, former governor of New York, stepped down. The state’s first female governor, Kathy Hochul, succeeded him. Gov. Hochul’s appointment could be beneficial to the state’s adult-use cannabis industry. She has stated that one of her top priorities during her term will be to get the state’s marijuana sales program up and running. 

With Gov. Hochul’s final appointments, the state’s Cannabis Control Board was officially completed on September 22 — a significant step toward putting into effect the legislation passed by her predecessor. Gov. Hochul announced Reuben McDaniel and Jessica Garcia as her two appointees to the state’s adult-use marijuana regulatory board.

In the most recent news, the board had its first virtual meeting on October 5 to move closer to a legal and regulated recreational marijuana market. The board is finally getting down to the job of establishing the laws for growing, processing, and selling marijuana.

Important Local and Municipality Details For Cannabis Businesses

It is critical for anyone considering opening a cannabis business or dispensary to first research the regulations that apply to cannabis dispensaries in their area. The majority of states allow counties and towns to decide whether or not to permit cannabis businesses to operate in their jurisdictions. Before you start looking for a location for your cannabis company or dispensary, therefore, make sure it is legal for you to do business there.

In New York, towns, cities, and villages are allowed to opt out of permitting recreational marijuana to be sold and/or used on-site at retail dispensaries. Several towns, including Eastchester, Gerry, Somers, Chautauqua, and Cassadaga, have reportedly opted out. Local officials have until December 31 to decide. Once the deadline has passed, a municipality will no longer be able to opt out. In addition, those that choose to opt out still have the option to opt back in at a later date. 

Types of New York Recreational Cannabis Business Licenses

The information provided below outlines the eleven types of adult-use cannabis licenses available, as well as the ownership restrictions imposed by the MRTA.

• Adult-use Cultivator 

Licenses for adult-use cultivators allow for the acquisition and possession of cannabis for personal use as well as for distribution and cultivation. Cannabis can be sold from a cultivator to a licensed processor. A cultivator may not hold more than one cultivator license and cannot own a cannabis retail licensee.

• Adult-use Nursery

With a nursery license, one can legally produce, sell, and distribute clones, immature plants, seeds, and other agricultural products that are particularly used for the planting, propagation, and cultivation of cannabis by licensed cultivators, co-ops, microbusinesses, or registered organizations. One nursery license may be held by an adult-use cultivator.

• Adult-use Processor

A processor’s license entitles the holder to acquire, possess, process, and sell cannabis from approved adult-use cultivators’ facilities to licensed distributors. A single individual may not own more than one processor license. Additionally, a processor may get a distributor license purely for the purpose of distributing their own goods. Processors are not permitted to hold a cannabis retail tier license.

• Adult-use Distributor

A distributor’s license allows cannabis to be acquired, possessed, distributed, and sold from the licensed premises of a licensed adult-use processor, cooperative, microbusiness, or registered organization to duly licensed retail dispensaries, on-site consumption sites, and adult-use delivery licensees. A single person may not hold more than one distributor license. Distributors may not own a cannabis retail license.

• Adult-use Cooperative

A cooperative license allows an adult-use cooperative licensee to acquire, possess, cultivate, process, and sell cannabis from the licensed premises of the adult-use cooperative to licensed distributors, on-site consumption sites, registered organizations, and/or retail dispensaries, but not straight to cannabis purchasers. A single person may not hold more than one cooperative license. Cooperatives may not own a cannabis retail license.

• Adult-use Microbusiness

A microbusiness license allows the licensee to cultivate, process, distribute, deliver, and sell adult-use cannabis on a limited scale. A person may not have more than one microbusiness license. No microbusiness may own another type of adult-use license.

• Adult-use Retail Dispensary

A retail dispensary license allows the licensee to acquire, possess, sell, and deliver cannabis to cannabis consumers from a licensed retail dispensary. A person cannot have more than three retail licenses. Retail licensees are not permitted to own a license in the cultivation, processing, or distribution tiers.

• Adult-use On-site Consumption

An on-site consumption license allows the acquisition, possession, and sale of cannabis to consumers for use at an on-site consumption location. No individual may possess more than three on-site consumption licenses. Licensees for on-site consumption are not permitted to own a license in the cultivation, processing, or distribution tiers.

• Adult-use Delivery

A delivery license authorizes licensees to deliver cannabis and cannabis products to adult-use cannabis consumers. Individuals may not possess more than one delivery license. No delivery licensee may own another type of adult-use license.

• Registered Organization Adult-use Cultivator Processor Distributor Retail Dispensary

This license grants a registered organization the same privileges as adult-use cultivator, processor, distributor, and retail dispensary licensees. Any other adult-use license type cannot be owned or held by a registered organization.

• Registered Organization Adult-use Cultivator Processor Distributor

This license grants a registered organization the same privileges as adult-use cultivator, processor, and distributor licensees. No other adult-use license type can be owned by a registered organization.

How many New York cannabis licenses will be available?

The number of licenses to be given for recreational marijuana businesses in New York has not yet been set. What we know so far is that a target of 50% of licenses will be given to social and economic equity applicants such as individuals from cannabis-prohibition-affected communities, minority- and women-owned enterprises, disabled veterans, and distressed farmers. Additionally, grants, loans, and incubator programs are available to assist these individuals in the establishment of their businesses if they qualify.

New York Cannabis Business License Cost

To date, the fees for submitting an application have not yet been set by the Office of Cannabis Management. So far, we’ve learned that the application fee will most likely be non-refundable. In addition, there will be a license fee that will be charged every two years. License types, product volumes, and other variables can all determine how much a license will cost.

When will recreational sales begin in New York?

The date for the opening of recreational cannabis businesses and the commencement of sales remains a long way off. Before accepting any applications, the OCM must finalize and publish remaining rules, as well as establish a licensing application process for the allowed license types. The law doesn’t specify a date, but the first sales are likely to be in 2022. 

As the legalization of marijuana in the state of New York progresses and the Office of Cannabis Management develops its rules, guidelines, and timelines, we will keep you informed and provide our professional legal insight. Subscribe to our newsletter using the form below to stay up to date.