The creation of New York’s conditional adult-use retail dispensary license has made headlines. Although New York plans to issue only 50-100 of this new license type, the license type and its underlying rules and regulations is incredibly significant. Why?
First, because the OCM and CCB have issued actual rules and regulations that will apply to a specific license type. The rules and regulations are comprehensive and provide a clear template for rules and regulations for the other license types included in the MRTA. The promulgation of conditional adult-use retail dispensary rules and regulations are a clear indicator that all of the other adult-use rules and regulations are coming soon.
Second, these rules and regulations provide a roadmap for New York’s social equity program, particularly with respect to retail dispensary licenses. Many of the rules and regulations track the Social Equity Fund that we recently wrote about, again highlighting that the CCB and OCM are actively coordinating the interplay between the various aspects of the adult-use cannabis program.
The CCB and OCM made several comments in releasing the rules and regulations. Notably, after an applicant has met the minimum requirements, applications will be scored according to three criteria: (i) whether the applicant themselves or a family member was convicted of a marijuana conviction (more details below); (ii) where the arrest or conviction took place (also more details below); and (iii) how the applicant has operated its businesses in the past (still more details below).
But enough of about the big picture. With any rules and regulations, the devil is in the details and there are a lot of details to unpack here.
Eligibility generally falls into two buckets: (i) individuals or entities in which the ownership is comprised of at least one individual who was convicted of or related to an individual who was convicted of a marijuana-related offense prior to the enactment of the MRTA; and (ii) nonprofit organizations that intentionally serve justice involved individuals and communities with historically high rates law enforcement activity for marijuana-related offenses.
All applicants are required to demonstrate a significant presence in New York, either individually or by having a principal corporate location in New York. For entities, the New York “presence” requirement can be met by a majority ownership interest in the entity being held by individuals who are physically present in New York for at least 180 calendar days in the current year or 540 calendar days over the past three years.
For individuals/for-profit entities there are a few really interesting requirements:
For nonprofit entities, there are also some interesting requirements:
The rules and regulations include separate evaluation factors (which are separate from the application requirements). Some key evaluation factors:
On balance, it is pretty clear what the CCB and OCM are trying to do: emphasize awarding licenses to New Yorkers who were justice involved (from a cannabis perspective) and who have a track record of running successful and compliant businesses.
Assuming you meet all of the eligibility criteria, what gets your application denied? There are some specific no-no’s and some more malleable prohibitions. The specifics:
The “fuzzier” grounds for disqualification:
The application process for this license is going to be rigorous. There will be a $2,000 application fee and the rules and regulations contain 34 specific categories of information each applicant will have to provide (plus the standard catchall of “any additional information” requested by the OCM). Once the rules and regulations go through the public comment period and are finalized, application forms will be posted on the OCM’s website. If there are any deficiencies in the application, applicants will have 30 calendar days from the receipt of a deficiency notice to resubmit a complete application.
A few of the required categories of information that caught our eye:
Can conditional licensees apply for a “full” retail dispensary license?
Yes! The conditional license has a four year term. Licensee can apply for a non-conditional license 120 calendar days prior to the expiration of the four year conditional period. Generally speaking, the OCM will consider the licensee’s history of compliance and service to the community in which it is located as part of evaluating the transition application.
A few reminders. These are the proposed rules and regulations, which remain subject to public comment and final issuance. This post is only an overview of the rules and regulation. As public comments are received and more information is released in terms of the practical application process (i.e. timing), we will be here providing information on all developments. Stay tuned!
New York’s Conditional Adult-Use Dispensary License on Harris Bricken Sliwoski LLP.