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Legally Growing and Selling Cannabis in New York

MRTA

The time has come. New York passed the Marihuana Regulation and Taxation Act in 2021 paving the way for legal production and use of Marijuana in the State of New York. Adults can now smoke weed without criminal consequences, but growing “pot” still has a plethora of rules to follow.  There is a regulatory board in charge of setting the rules for cannabis. The first wave of farmers have been given the go-ahead to start growing in order to build up the legal supply.

What to Know Before You Grow

Please note that for all licenses you must have an LLC or some other business entity. The Office of Cannabis Management has preliminarily created three different licenses:

  • Cultivator
  • Processor
  • Dispensary

Cultivator License

Cultivation licenses are running through a trial period currently. The application process closed in June of 2022 and licenses were only given to people who already have legal hemp operations. It is not clear when these applications will reopen, but speculation is within the next year. There will be A TON of competition when it comes to getting licensed, so it is crucial to start preparing now.

This first wave required applicants to have a detailed business plan, site plan, documents proving the legality of your original operation, and financial disclosures. If the license is granted, you can grow up to 46,500 square feet (1 acre) of plants outdoors OR 25,000 square feet of plants in a greenhouse. You can grow both indoors and outdoors, but there are further crop restrictions. These restrictions may change in the future. If you do have a hemp operation, it needs to be separate from the marijuana operation.

Cultivators are allowed to do “minimal processing” with the current licenses. When the new licensing opens, cultivators will not be allowed to do any processing. A processor license will be required. As the law stands, you cannot have an ownership interest in cultivation and retail sales. This may change.

Processor

Processor licenses were originally only for current cannabinoid hemp processors. The application process has reopened and closes August 31st, 2022. In order to apply for this license, you need a business plan, primary place of business, extraction methods, documentation of your cannabis source, GMP audit, and more.

There are two types of licenses. One allows for manufacturing only, while the other allows for extraction and manufacturing. As a processor, you are not able to grow any cannabis, but you can manufacture it into a usable good.

As part of your ongoing requirements there are limitations to how the product can be branded. The branding cannot be attractive to people under 25 years of age and this applies to the terminology on, and coloring of, the packaging. There are also strict manufacturing guidelines, data collection procedures, and identification requirements.

Dispensary

These are sometimes referred to as CAURD licenses. The applications are not currently live, but when they are they will be processed through New York Business Express online portal. The licensing board has already made it very clear that they will be accepting a limited number of applications and your application should be competitive.

You can qualify as a business or as a non-profit. If you are applying as a business, 30% or more of the business has to be owned by individuals who meet the following criteria:

  • Justice Involved
  • Qualifying Business Experience
  • Sole Control of the Business
  • Significant Presence in New York State

So what does that mean? A justice involved individual is someone who was impacted by a marijuana offense in the State of New York. More specifically, the individual, their dependent, or someone they were dependent on (such as a parent or spouse) must have been convicted of a marijuana related offense. This person also has to have experience owning at least 10% of a qualifying business prior to applying for the license, and must have at least 30% ownership of the dispensary business. A qualifying business is any business that turned a profit at least 2 years they were active. This individual also has to have control of the business, meaning they have the power to make major decisions. Finally, to satisfy the significant presence requirement, the qualifying individual just has to have some sort of connection to the State of New York. This can be residency, assets, real property, or anything also that will show a connection to the state.

This is an intense application process with some strange requirements. To sum this all up, in order to get a dispensary license you have to be a person who was impacted by marijuna laws, has business experience, has control over the business, and has connection to New York.

Where Can I Operate?

The first dispensaries to open with CAURD licenses will be spread throughout the state. There are 14 regions and applicants will be able to rank their top 5. You will be granted a location by the licensing board and cannot move that location for 4 years. In addition, you will have 12 months after being granted a license to begin operations.

As for processing licenses, your license is only good through your existing hemp processing license. This means you will have to use the same facility. There is a process to add additional processing facilities and request location changes.

If you are applying for a cultivation license, you do not have to grow in the same location as your hemp operation. Although, you are required to grow in the same county or an adjacent county in which you are authorized to grow hemp.

Why Does This Seem So Complicated?

The truth is: It is complicated. New York State is being particularly precautious about the introduction of the marijuana industry. No one knows how much that will change in the near future, but the expectation is that the application process will be less stringent and more accessible soon. For the time being, you will only be able to take advantage of this new industry if you have some existing connection. That does not mean it is impossible. There are partnerships that can be formed and ways to enter the industry. The law is also constantly changing, so be sure to check back with us for any updates to the legal requirements of applications. The current application process is rigid and difficult and it helps to have someone on your side who has been through the process and can assist you every step of the way. Click here to speak with an attorney who can make your marijuana dreams come true.

The information included in this blog post is for educational purposes only and is not intended to confer legal advice. Lawyer for Business – 86 The Commons, Grand Island, NY 14072.

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Buffalo Business Lawyer Serving New York State
Andrea A. Tarshus, Esq. is an award-winning attorney that delivers top-notch service to her clients. She has a diverse background representing business clients from many sectors and sizes.

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