Upon enactment, the MRTA immediately decriminalized the use, purchase, and possession of up to three ounces of cannabis and up to 24 grams of concentrate by adults 21 and older. It has also created a general framework for licensing and taxing cannabis companies for adult use and has entrusted two new regulatory agencies – the Office of Cannabis Management (OCM), which will be led by a yet-to-be-formed Cannabis Control Board (CCB) Develop and implement a comprehensive regulatory system for the licensing, cultivation, production, distribution, sale and taxation of all cannabis-related businesses in the state – ie adult cannabis, medicinal cannabis and “cannabinoid hemp”. While existing medical cannabis and cannabinoid hemp companies can continue to do business under existing state (pre-MRTA) regulations, adult cannabis business cannot lawfully operate until licensed by OCM / CCB
Overview of license types, requirements and restrictions for adults
MRTA authorizes OCM / CCB to create a number of different license types that generally correspond to the specifically permitted activities described below. The law’s licensing framework is designed to encourage ownership by New Yorkers, small businesses, and social justice applicants (and prevent license concentration among large, vertically integrated multistate operators) by prohibiting most businesses and individuals from holding multiple licenses Types. There are a few exceptions, however. For example, MRTA includes a limited exemption that allows qualified companies operating under the existing New York Medical Cannabis Program (Registered Organizations) to obtain multiple licenses, as described below. In addition, the MRTA does not require that any applicant entity own a New York resident. In fact, a company can apply for a license if a minority of its directors are non-US citizens, if any of its officers are US citizens or permanent residents. However, the OCM / CCB regulations will further clarify applicants’ eligibility.
Companies looking to get into New York’s burgeoning adult cannabis industry need to be patient. Before OCM can even begin accepting applications or issuing licenses, a number of time-consuming administrative processes must be carried out. For example, the CCB (which will be responsible for overseeing licensing by OCM) has yet to be formed. And before licenses can be issued, OCM / CCB must first enact regulations to actually implement and operationalize the general requirements of MRTA, which will likely require time-consuming, multilevel public announcement and commentary on rules. If the CCB is created this summer and the regulations are passed by the end of the year, OCM / CCB could potentially start licensing in early 2022. Cities, towns and villages can ban the retail sale and on-site consumption of cannabis for adults by local ordinances no later than December 31, 2021, but cannot ban the other activities approved by MRTA.
Application requirements will be set out in upcoming regulations, but at least officers, directors and other directors of applicant companies should be willing to provide: personal and demographic information; Information on company structure and investments; Fingerprints for a background check; Information on the premises to be licensed, such as the address and proof of authorization for use for the two-year license period; and annual accounts. Once issued, the initial licenses are valid for a period of two years, with an option to extend.
Fees and Taxes
In addition to charging an application fee, MRTA also allows the OCM / CCB to charge an additional two-year fee based on the amount of cannabis to be grown, processed, distributed and / or dispensed, or gross annual revenue for a license period. MRTA also sets an excise tax on the sale of cannabis by a distributor to a retailer based on the THC content of the cannabis product and the type of end product. If the adult product is retailed to a consumer, the sale is subject to an additional 9% state tax and 4% local tax (this is a statewide “local tax” imposed by the state on behalf of the municipality) . where the pharmacy is located).
Reform of social justice and the criminal justice system
MRTA instructs the CCB to prioritize applications from applicants who come from communities disproportionately affected by cannabis enforcement, or who present themselves as minority or women-run businesses, distressed farmers, or disabled veterans (“Applicants for social and economic justice ”). Specific admission criteria are set by the CCB. Social and economic justice applicants enjoy several benefits, including: fee waiver or discount, access to low or interest free loans, and free advisory services such as small business coaching and financial planning. The state plans to give 50% of the licenses to minority or women-owned companies, distressed farmers, or veterans with disabilities. MRTA also prohibits the sale or transfer of a social justice license for three years after initial authorization unless the license is sold or transferred to another company that qualifies for a social justice license and the transfer is made by approved by the CCB. The law also reforms criminal penalties for cannabis-related violations and allows automatic overturning or re-convictions of convictions for activities decriminalized by the MRTA.
Adult license types
- Cultivator: Licensees may grow and harvest cannabis for adult use, and may also hold a processing license and a distribution license. Licensees are only allowed to sell cannabis that they have harvested themselves.
- processor: Processors can buy cannabis from licensed breeders who process cannabis (by mixing, extracting, infusing, packaging, labeling, branding, and otherwise manufacturing or preparing cannabis products) and sell cannabis products to licensed dealers. They can also have a distribution license that allows them to distribute and sell the cannabis they process.
- Distributor: Licensees may buy and sell adult cannabis and cannabis-derived products to licensed retailers or licensed local consumption points. Distributor licensees may also hold shares in companies with a cultivation license and a processing license, but in this case they are limited to the distribution of cannabis that is grown and processed by those licensees. A Distributor may not, among other things, be a shareholder in, receive a share of the profits from, or have similar interests in a micro cannabis company, retailer, or licensee for local use.
- Retailers: Retailers are allowed to sell and supply cannabis and cannabis products from a licensed location. A licensee may own, receive a share of the profits from, or have a similar interest in up to three licenses for retail spending. A retail store must be classified for commercial use and located at least 150 feet from each school and 60 feet from any place of worship. Retail applicants must be able to prove that they are entitled to use the premises for the duration of the license term (two years for initial licenses).
- Consumption on site: Licensees may sell cannabis and cannabis-derived products for consumption – including smoking and vaping – to anyone aged 21 and over within the licensed premises. A licensee can own up to three consumption licenses, receive a profit share, or have a similar interest in them. The same requirements that apply to retail stores apply to on-site consumption facilities.
- Micro-enterprises: The size, scope and eligibility of cannabis micro-businesses are determined by the CCB. Licensees are permitted to cultivate, process, distribute, supply and sell their own cannabis and adult cannabis products to a limited extent (i.e. vertical integration). They can also distribute their products to other retail licensees. A micro-enterprise cannot be a partner or similar interest in any other license.
- delivery: Licensees supply cannabis independently of any other licensed activity (compared to dealers who supply and buy / sell and retailers who may also supply to customers). You cannot have more than 25 people licensed full-time paid delivery services per week. Delivery licensees cannot co-own or have similar interests in more than one delivery license (e.g., a company cannot have multiple delivery licenses operating in different cities across the state).
- kindergarten: Licensees may make, sell and distribute clones, immature plants, seeds and other agricultural products that are used by other licensees for the cultivation, propagation and cultivation of cannabis.
- Registered Organization License to Process Adult Processors for Retail Use for Retail: Existing medical registered organizations are allowed to participate in the listed adult use activities but are only allowed to make adult retail sales at three of the registered organization’s medical pharmacies. In addition, licensees are only allowed to sell their own products. Ultimately, licensees must maintain their medical cannabis license and continue to offer the sale of medical cannabis at a level to be determined by the CCB.
- Registered Organization Distributor distribution license for cultivators for adult use: Similar to the above category, licensees are allowed to participate in cultivation, processing and distribution activities for medicinal purposes and for adults, but are only allowed to distribute their own products.
- Cooperatives: The cooperative license enables vertically integrated operations within a closely owned unit. Permitted activities include acquisition, ownership, cultivation, processing, distribution and sale of the licensed premises. Members must be residents of New York who democratically control the cooperative with one vote per member. The cooperative must be registered as an LLC, LLP, or other structure authorized by the CCB and must operate in accordance with the 7 Cooperative Principles published by the International Cooperative Alliance in 1995. A person can only be a member of a cooperative and cannot become a shareholder or have similar interests in any other license. The CCB issues additional regulations for cooperatives.
Effects on hemp in New York
While many states choose to regulate hemp separately from other types of cannabis, MRTA consolidated the regulation of all cannabis-related activities in the state under the supervision of one regulator – CCB / OCM. It remains to be seen whether the CCB / OCM will proceed with regulations regarding hemp, especially since the New York Department of Health’s cannabinoid hemp program was launched just last year.