New York regulators have approved the state’s first-ever licenses for recreational marijuana retailers. Most of the businesses are owned by people who’ve been impacted by the drug war, while others are run by nonprofit organizations that have a history of helping people reenter society after incarceration.
The Cannabis Control Board (CCB) also gave the green light to new regulations for the market on November 21.
The approval of the first 37 dispensary licenses along with a package of rules for the industry comes just days after officials selected 10 teams of firms to build out about 150 turnkey storefront facilities for social equity marijuana retailers to operate out of once the market officially launches.
“Not only have we legalized, but we’re also building a legal adult-use market with an equity-driven approach.”
“This is a monumental moment, and it represents the last leg of the cannabis supply chain that requires licensure,” Tremaine Wright, chair of the CCB, said.
BREAKING: In a historic decision, the #NYCCB has approved the first round of CAURD licensees.
28 Justice-involved individuals & 8 Nonprofit organizations will make the first adult use-sales by New York farmers and bring countless opportunities to our communities. #NYCCB
— NYS Office of Cannabis Management (@nys_cannabis) November 21, 2022
“Not long ago, the idea of New York legalizing cannabis seems unbelievable,” she continued. “Now, not only have we legalized, but we’re also building a legal adult-use market with an equity-driven approach that embodies the ambitious goals” of the state’s reform law.
OCM Executive Director Chris Alexander said that he’s especially glad to see the first retailer approvals’ focus of justice-involved individuals, stating that those people should be “the bedrock of our industry.”
“It’s incredible to see how the team here has worked so hard to bring it to life,” he said. “There’s more CAURD licenses under review and we will continue to issue licenses on a rolling basis as we have for other license types—but right now I’m pleased to present this first batch of retail licenses.”
Axel Bernabe of the Office of Cannabis Management (OCM) said earlier this month that the state was on track to imminently approve the first Conditional Adult Use Retail Dispensary License (CAURD) dispensaries. That has now happened.
Speaking about the adult-use regulations at the November 21 meeting, Bernabe said they were developed to “create protections for small businesses that ensure the wealthy and well-connected do not dominate the market.”
But there’s already a hitch in the retailer rollout, with a federal judge recently issuing an injunction in response to a lawsuit that temporarily blocks regulators from approving CAURD licenses in certain regions of the state, like Central New York and Brooklyn.
For now, the CCB has approved licenses for 29 dispensaries owned by justice-involved individuals, along with eight controlled by nonprofits.
— NYS Office of Cannabis Management (@nys_cannabis) November 21, 2022
Meanwhile, the new rules approved at the meeting cover various license types—including cultivation, nursery, processing, distribution, retail dispensary, microbusinesses, and cannabis collectives/co-ops— while delivery licenses will be handled in a future round of regulations. The proposals also address testing, packaging and enforcement actions.
There will be a 60-day public comment period on the regulations before they can officially go into effect.
One especially notable aspect of the draft rules concerns the state’s current medical cannabis businesses. Those firms would have to pay an initial $5 million fee for the right to sell marijuana in the adult-use market, and would need to wait three years after the first sales by CAURD licensees begin in order to get started themselves. There would also be additional fees over time.
For now, regulators have said on several occasions in recent months that they’re positioned to have the first batch of adult-use marijuana storefronts open by the end of the year, and with the first batch of license approvals they are hopeful that can happen—though time is running short.
In September, state regulators closed a one-month window for accepting applications for the state’s first cannabis retailer licenses—and 903 businesses run by people who have been harmed by the drug war completed and submitted their forms.
Officials say that they will be selecting 150 CAURD applicants in total before expanding the application pool to others.
In order to qualify for the special retail license, applicants must have faced a conviction on a cannabis-related charge prior to the enactment of legalization in the state, or have a direct relative with such a conviction, and they must also have experience of operating a qualifying business.
Regulators have also expanded the definition of a qualifying “justice-involved” individual to include people who were arrested for marijuana but convicted on a lesser charge, which advocates view as a positive step that will broader the applicant pool.
Additionally, regulators say that up to 25 of the CAURD licenses will go to eligible nonprofits—”specifically organizations with a history of serving justice-involved individuals and creating vocational opportunities for them.”
Those organizations will not be entitled to the Social Equity Cannabis Fund and they couldn’t access the state-approved turnkey facilities, so they’d have to operate their own compliant storefronts.
In anticipation of the CAURD license applications opening, Mayor Eric Adams of New York City recently announced the launch of a new program to promote cannabis industry equity by supporting entrepreneurs most impacted by the drug war.
The Cannabis NYC initiative aims to initially help would-be dispensary operators complete the licensing application process, but is also promising to provide “support beyond the license” by connecting “aspiring cannabis entrepreneurs to no-cost services, along with technical assistance, to support successful businesses.”
The CCB also approved the state’s first round of recreational cannabis processor licenses in August. The board has further approved numerous conditional cultivator applications, which are being granted to existing hemp businesses in the state.
In September, regulators additionally voted to adopt home-grow rules for medical cannabis patients, as well as another round of conditional marijuana processor and cultivator business applications.
The adoption of the medical cannabis home-grow resolution came about a year after draft regulations were first proposed, and several months after the board accepted revised rules following a public comment period.
With respect to retailers, Alexander of the OCM said in July that the office diligently reviewed and responded to public comments on the proposed rules for conditional retailers, but there’s still been some frustration among stakeholders who feel that the input was not thoughtfully incorporated.
For what it’s worth, a poll found that most New York voters are against the proposal to prioritize retail licenses for justice-involved people.
Separately, the OCM also recently publicized dozens of cease-and-desist letters that they have sent to businesses accused of illegally selling marijuana as the state prepares to launch its adult-use market.
But there’s been skepticism about the accuracy of the office’s enforcement targets. Some businesses that were named as operating illicit marijuana shops say they never received the notice; others, including one event and catering business, say that were wrongfully targeted, denying that they’ve been involved in cannabis sales.
As it stands, adults 21 and older can possess and publicly consume cannabis, as well as gift marijuana to other adults as long as they aren’t being compensated.
In June, the CCB also approved a series of proposed rules for marijuana packaging, labeling, advertising and testing requirements.
Gov. Hochul said it’s important to “create opportunities for all New Yorkers, particularly those from historically marginalized communities.”
Meanwhile, New York Governor Hochul recently signed budget legislation that includes provisions to let marijuana businesses take state tax deductions that are available to other industries, despite an ongoing federal ban on cannabis.
State Senator Jeremy Cooney (D) filed a standalone bill in December seeking a similar carve-out for the state’s burgeoning cannabis market. Assemblymember Donna Lupardo (D) followed suit in her chamber. Cooney also filed a bill in May to allow regulators to disclose certain information about cannabis licensees to financial institutions to promote marijuana banking.
Hochul has repeatedly emphasized her interest in efficiently implementing the legalization law.
The governor released a State of the State book in January that called for the creation of a $200 million public-private fund to specifically help promote social equity in the state’s burgeoning marijuana market.
That proposal was also cited in the governor’s executive budget, which was released in January. The budget also estimated that New York stands to generate more than $1.25 billion in marijuana tax revenue over the next six years.
Hochul said that while cannabis business licenses had yet to be approved since legalization was signed into law last year, the market stands to generate billions of dollars, and it’s important to “create opportunities for all New Yorkers, particularly those from historically marginalized communities.”
OCM has also been putting out PSAs to promote public education about the marijuana policy change, including a first-of-its-kind taxpayer-funded marijuana ad that aired in most of New York during an NBA Finals game in July. The PSA boldly addressed the racially discriminatory harms of cannabis criminalization and highlighted steps that state regulators are taking to right the wrongs of prohibition.
The CCB also wants the opportunity to showcase its marijuana PSA campaign on the social media app TikTok, but it was told by the company previously that it could not use the platform because of its existing ban on the use of the word “cannabis.” The department recently sent a letter to TikTok, requesting a policy change for government marijuana-related ads that concern public education.
Other Drug Policy Reform Avenues in New York
In July, Hochul announced that the state had awarded $5 million in funding to community colleges to support the development and improvement of courses and programs specifically meant to help people secure jobs in the marijuana industry.
The New York Senate approved a bill in June that would require public health insurance programs to cover medical marijuana expenses and clarify that private insurers are allowed to do the same.
Both chambers of the state legislature have passed a measure to encourage businesses to use hemp materials for packaging, construction and other industrial purposes.
The state Department of Labor separately announced in recent guidance that New York employers are no longer allowed to drug test most workers for marijuana. Even prior to the enactment of legalization, New York City officials had established a local ban on pre-employment drug testing for cannabis.
A recent legal directive from the New York City Law Department (NYCLD) has put police and firefighter drug testing policy in the spotlight after a document leaked from the New York Police Department (NYPD) signaled that officers would no longer be subject to pre-employment, random or scheduled screening for cannabis because of the legal analysis. A firefighters union claimed credit for the new directive, saying that it was responsive to inquires that it made to the city.
Separately, Adams says he’s looking into the idea of authorizing marijuana to be grown in greenhouses on the rooftops of public housing buildings—an ambitious proposal that’s unlikely to sit well with the federal government, which provides funding to support the NYC Housing Authority (NYCHA).
A New York senator filed a bill in May that would legalize what would essentially be licensed community marijuana gardens for people who aren’t able to cultivate cannabis at their own homes.
Also that month, a New York Assembly committee advanced a bill to establish a statewide safe consumption site program, allowing regulators to authorize facilities where people could use currently illicit drugs in a medically supervised environment.
Meanwhile, a New York lawmaker introduced a bill last year that would require the state to establish an institute to research the therapeutic potential of psychedelics.
Another state legislator filed a bill in December to legalize psilocybin mushrooms for medical purposes and establish facilities where the psychedelic could be grown and administered to patients.