New York Approves Firms To Build First Social Equity Marijuana Dispensary Storefronts Days Before Key Regulators Meeting
New York officials announced on Friday that they’ve selected 10 teams of firms to build out about 150 turn-key storefront facilities for social equity marijuana retailers to operate out of once the market officially launches, which is expected before the end of the year.
This news comes days ahead of a scheduled meeting of the Cannabis Control Board (CCB), which is expected to approve initial social equity retailer licenses while separately advancing new regulations for the market on Monday.
But there’s already a hitch in the retailer rollout, with a federal judge issuing an injunction last week in response to a lawsuit that temporarily blocks regulators from approving Conditional Adult-Use Retail Dispensary (CAURD) licenses in certain regions of the state, like Central New York and Brooklyn.
The key to achieving New York's equity goals is creating a sustainable, consumer-driven cannabis market.
Monday, 11/21 the CCB will consider regulations to:
🏗️Clarify market architecture
Authorize license activity
✅Establish enforcement rules & more
— NYS Office of Cannabis Management (@nys_cannabis) November 17, 2022
Regardless of how the legal case plays out, steps are being taken to get the state’s marijuana market online within weeks, and Friday’s announcement about the turn-key storefront development project is critical to making that happen.
The Dormitory Authority of the State of New York (DASNY) said in a notice that agencies have collaborated to approve 10 teams of firms that will “design and construct the first adult-use retail cannabis dispensaries to be opened in New York.”
“The firms were selected to develop approximately 150 turn-key sites across New York State for entrepreneurs who have received a Conditional Adult Use Retail Dispensary License (CAURD) through the New York State Office of Cannabis Management,” it says.
New York’s Social Equity Servicing Corporation (SESC) is “currently working” on finding sites where the the initial dispensaries will be located, with funding from the $200 million Social Equity Cannabis Fund that Gov. Kathy Hochul (D) authorized.
Meanwhile, CCB will meet on November 21 and potentially approve the first set of CAURD licenses, Axel Bernabe of the Office of Cannabis Management (OCM) said earlier this month.
On Thursday, OCM separately previewed regulations that they’ve developed for the broader adult-use marijuana market and which will also be voted on at the upcoming meeting.
The rules rules cover various license types, including cultivation, nursery, processing, distribution, retail dispensary, microbusinesses, and cannabis collectives/co-ops. OCM said that delivery licenses will be handled in a future round of regulations.
“The regulations will fully launch the adult-use program in New York by clarifying adult-use market architecture, defining activity allowed under each license type, setting out application criteria, establishing rules for enforcement of the regulations, and more,” the office said in a press release.
“If the regulations are approved by the Cannabis Control Board (Board), they will be shared for a 60-day public comment period,” it says.
Regulators have said on several occasions in recent months that they’re on track to have adult-use marijuana storefronts open by the end of the year, but the recent comments from Bernabe are more specific about the timeline. He said the state is in a “position” to meet that goal.
State regulators closed a one-month window for accepting applications for the state’s first cannabis retailer licenses in September—and 903 businesses run by people who have been harmed by the drug war completed and submitted their forms.
It’s not clear how many conditional licenses will up for the first approvals, but officials say that they will be selecting 150 applicants in total before expanding the application pool.
In order to qualify for the special retail license, applicants must have faced a conviction for a cannabis-related offense prior to the enactment of legalization in the state, or have a direct relative with such a conviction, and they must also have experience 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 for a lesser offense, 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 non-profits—”specifically organizations with a history of serving justice-involved individuals and creating vocational opportunities for them.”
Those non-profit 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, the mayor 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.”
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, OCM Executive Director Chris Alexander 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 Yorkers voters are against that proposal to prioritize retail licenses for justice-involved people.
Separately, 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, CCB also approved a series of proposed rules for marijuana packaging, labeling, advertising and testing requirements.
Meanwhile, 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.
Sen. 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 have 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.
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.
Here are some other ways that New York lawmakers and regulators are working to promote drug policy reform as the state prepares to implement retail marijuana sales:
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.
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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 that was 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.
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Photo courtesy of Mike Latimer.