A Guide to the Different Types of Cannabis Licenses in New York
Cannabis Licenses in New York: Here's What We Know
New York Cannabis Licenses:
New York, the fourth-largest state in the union, is poised to become a leader in cannabis since the Marijuana Regulation and Taxation Act (MRTA) made the plant legal to use and consume in 2021. Since then, New York's cannabis industry has been valued at $4.6 billion, which could grow to $5.8 billion over the next five years, according to a study by the New York Medical Cannabis Industry Association. This wave of opportunity has entrepreneurs from the Big Apple to the Adirondacks waiting to hop aboard the train to prosperity - but first, they need a license to operate. So, when and how can one procure a New York cannabis license?
The Current Status of Cannabis in New York
New York has established the Office of Cannabis Management (OCM) to regulate legal sales. The head of the Office is the Cannabis Control Board (CCB), led by Tremaine Wright as chair.
Wright disclosed that she doesn't expect the agency to finish crafting regulations or begin issuing business licenses for at least another 18 months. She went on to say that the board was working on building requisite policies for the new legal marijuana market, and that their timeline doesn't necessarily mean dispensaries will be open by then. This means that New Yorkers will have to wait until sometime in 2023 to purchase cannabis at recreational dispensaries.
Though much of the discussion surrounding New York cannabis licenses have been vague, the OCM has vowed to promote social and economic equity in the process of issuing adult-use licenses. Specifically, they have cited communities that have experienced disproportionate harm by the prohibition of cannabis and the War on Drugs. This applies to minority and women-owned businesses, distressed farmers, and service-disabled veterans. The Office established a goal of awarding 50% of licenses to social and economic equity applicants.
Once the CCB establishes guidelines and promulgates regulations, how the state intends to handle cannabis licensing will be clearer. New York is a highly regulated state, and cannabis is a highly regulated industry, so it's crucial for anyone seeking a cannabis license in New York to perform their due diligence and level-set expectations: a long road lies ahead - and a great deal of paperwork.
Types of Adult-Use Cannabis Licenses in New York
New York's Office of Cannabis Management has yet to announce its official guidelines, but they have posted a list of cannabis licenses. Since the MRTA is 128 pages long, we've broken it down and marked relevant sections for reference.
New York Cultivator License (MRTA § 68)
"Cultivation" refers to growing, cloning, harvesting, drying, curing, grading, and trimming of cannabis plants for sale to other categories of cannabis license and permit-holders. This license allows holders to perform the aforementioned actions. However, the CCB may create rules to allow cultivators to perform certain "minimal processing" types without the additional processor's license.
Cultivator license applications are now open. Only current authorized New York state hemp growers are eligible to apply in the initial phase. The fee is a non-refundable $2,000.
Limitations: a Cultivator can possess a Processor license and Distributor license. However, a Cultivator may not own a Dispensary.
New York Processor License (MRTA § 69)
"Processor" is a licensee that extracts concentrated compounds to manufacture cannabis or cannabis products. This license does not include the cultivation of the plant contained in the products. Processor licensees can therefore blend, extract, infuse, package, label and otherwise make or prepare cannabis and cannabis products for sale.
According to the Office of Cannabis Management, Adult-Use Conditional Cultivator License applications are open from March 15 to June 30, 2022. However, the OCM has not provided details on how to apply yet. More information to come.
Limitations: Processors can also possess a Distributor license. They may not own a Dispensary.
Cooperative License (MRTA § 70)
A "Cannabis Cooperative" can cultivate, process, and sell cannabis to Distributors and On-site Consumption sites, but not directly to cannabis consumers. A cannabis cooperative must qualify as a NY cooperative first. Specifically, a cannabis cooperative must be composed of NY residents as a NY LLC or LLP, be democratically controlled with one vote per member, limit returns to investors, and operate according to the International Cooperative Alliance principles.
Limitations: Cooperatives may not own a Dispensary, Microbusiness, or On-site Consumption site. No member of a Cooperative can be involved, whether directly or indirectly, in any adult-use cannabis license.
Distributor License (MRTA § 71)
"Distributor" means any person who sells wholesale cannabis products, except medical cannabis. Distributors acquire, possess, distribute and sell cannabis.
Limitations: a Distributor can also have a Cultivator or Processor license but only distribute cannabis and cannabis products cultivated or processed by that Cultivator or Processor. A Distributor may not also own a Dispensary, Microbusiness, or On-site Consumption site.
Retail Dispensary License (MRTA § 72)
A Retail Dispensary Licensee acquires, possesses, sells, and delivers cannabis from the licensed premises of a retail dispensary directly to consumers.
Limitations: Retail Dispensaries may not own a Cultivator, Processor, Microbusiness, Cooperative, or Distributor license. No person may own more than three Retail Dispensary licenses.
Microbusiness License (MRTA § 73)
A "Microbusiness" is a license that provides limited ability to cultivate, process, distribute, deliver, and dispense cannabis. The CCB will determine the size, scope, and eligibility criteria for microbusinesses in a manner that promotes social and economic equity applicants.
Limitations: Micro-businesses may not own more than one micro-business or any other type of adult-use license.
Delivery License (MRTA § 74)
"Delivery" means the direct delivery of cannabis products by a retail licensee, microbusiness licensee, or delivery licensee directly to the cannabis consumer. This license does not allow more than 25 individuals (providing full-time delivery services in a week).
Limitations: Delivery Licensees may not own more than one Delivery license or any other type of adult-use license.
Nursery License (MRTA § 75)
"Nursery" means a Cultivator can produce, sell, and distribute clones, immature plants, seeds, and other agriculture products used by licensed adult-use cannabis cultivators, microbusinesses, cooperatives, and registered organizations.
Limitations: a Cultivator may hold a Nursery license, but only to sell to other Cultivators, Cooperatives or Microbusinesses
On-Site Consumption License (MRTA § 77)
"On-site consumption" licensees can acquire, possess, and sell cannabis to consumers at an on-site location in a licensed area.
It is important to note that there is a list of statute limitations that the CCB may consider when an individual is applying for an On-Site Consumption license. For example, On-site Consumption premises cannot be within 500 feet of a school, or 200 feet from a house of worship may not feature any on-site gambling or fireworks.
Limitations: On-site Consumption licensees may not own more than one On-site Consumption license or any other type of adult-use license.
Expected New York Cannabis License Application Process
New York has not yet announced when they will be ready to receive adult-use applications or alluded to the dates of application deadlines. However, what is typical in other states that have already opened their legal markets is an excellent gauge for getting the proper information in order.
In every state that has legalized adult-use cannabis markets, all businesses that seek to enter the adult-use market as licensees must complete several steps along with thorough background checks. Broadly, states ask applicants to provide accurate information about the business, individuals, and entities associated with the business and demonstrate that they understand and plan to comply with the state commission's regulations specific to the applicant's license type.
These categories usually look something like this:
- Disclosure of In-State Interests
- Disclosure of Out of State Interests
- Capital Resources
- Bond or Escrow
New York Cannabis License Costs
New York has not released this information for adult-use cannabis licenses yet. For reference, NY Medical Marijuana requires applicants to submit a $10,000 non-refundable fee and a refundable registration fee in the amount of $200,000.
What we do know:
- There will be an application fee, and it will probably be non-refundable
- Fee amounts may be based on the type of license sought, the volume of product, or other factors
- Licensees will have to pay biennial (every-other-year) fees
- Equity applicants will have fees waived or reduced
The Bottom Line
New York’s adult-use market has the potential to grow substantially over the next several years. The state has yet to officially release information related to licensing eligibility, deadlines, or a guide to the application process. However, considering the CCB’s tentative timeline of 18 months until cannabis businesses can legally operate, those interested in applying should begin gathering relevant information as soon as possible.
Referencing application processes in states that have already established adult-use markets is a wise strategy; as soon as New York announces they are open to receiving applications, those that have already prepared can submit their applications early.
Again, New York is a highly regulated state and cannabis is a highly regulated industry, so expect an onslaught of guidelines and fiery hoops to jump through - but, those who successfully navigate New York’s process are sure to enjoy considerable success.