Hudson Valley Cannabis News – Rockland County Business Journal

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Guidance Issued For Cannabis Growers’ Showcases

August 1, 2023 – According to the CCB, a Cannabis Growers Showcase or CGS means a temporary event approved by the Office authorizing AUCC and AUCP licensees to showcase cannabis products which shall be sold by CAURD licensees to customers. The “guidance” was published on July 20, 2023.

A Conditional Adult-Use Retail Dispensary (CAURD) licensee or an Adult-Use Conditional Cultivator (AUCC) licensee may apply to be a Cannabis Grower Showcase Organizer (CGSO) for a Cannabis Grower Showcase or “CGS”, granting them authorization for temporary retail sales at an approved location.

The guidance is extremely detailed and complex, and seems to undermine the intent of the program  — to provide outlets for unsold cannabis products, to connect growers and retailers, and to provide additional outlets for retaiil sales to blunt the prevalence of illegal sellers offering substandard product.

To be eligible, the CGSO must partner with at least three (3) or more cultivators and a licensed dispensary. The CGS Vendor will be authorized to sell cannabis products, produced, and distributed by the participating AUCCs, to customers. For every three (3) AUCCs participating, one (1) Adult-Use Conditional Processor (AUCP) may participate. For every three (3) AUCCs participants beyond the first three (3), an additional CAURD may participate as an additional CGS Vendor. At least one (1) of the participating AUCCs must be someone the CAURD does not currently carry in their storefront or delivery only inventory.

All participating CGS Vendors must be CAURD licensees with final retail authorizations, including those who have been approved to operate temporary delivery only locations and have received a license certificate from the Office of Cannabis Management and adult-use cannabis tax registration from the Department of Taxation and Finance. In other words, unless you are an approved licensee with an approved and operating retail location, you can’t participate.

And, all Cannabis Growers Showcase Organizers must submit a letter of approval signed by an official or representative from an administrative body responsible for event permitting in the city, town, or village where the CGS is to take place on official letterhead, that states the location, days, and times at which cannabis products are being offered for sale or sold. Cannabis Growers Showcases may only be held on premises in municipalities that have not opted-out of allowing cannabis retail dispensaries to operate within their jurisdiction pursuant to Section 131 of the Cannabis Law. A list of municipalities that have opt-ed out of retail dispensaries is available on the Office’s website: https://cannabis.ny.gov/local-government.

Authorized inventory for retail sale at a CGS include:
• cannabis products;
• cannabinoid hemp products (only if granted a Cannabinoid Hemp Temporary Retail Permit by the Office to sell hemp);
• cannabis paraphernalia;
• merchandise including stationary, gifts, and other minor incidentals;
• branded merchandise and apparel containing the licensee’s brand, including jewelry and accessories (in adult sizes only); and
• other items as approved by the OCM.

No samples of cannabis products are allowed to be offered at a CGS.

To view the complete guidance, click here...

Plans For Growers Showcase Events At Concerts, Fairs And Festivals Moves Forward

July 23, 2023 – New York’s Cannabis Control Board approved a measure last week that would allow, though only temporarily, the sale of cannabis products at “growers showcase” events.

The Cannabis Control Board approved the so-called “Cannabis Grower Showcase Initiative,” allowing farmers to partner with licensed retailers to sell pot at events, including farmer’s markets.

“Showcase” sales can occur at concerts, fairs and festivals, though no actual regulations governing this new sales vehicle have been proffered or developed. Experience with the Board dictates that regulations may still be a far-away occurrence, if past practices equal prologue.

The plan is intended to help New York growers who have had to warehouse the hundreds of thousands of pounds of marijuana cultivated last year with few places to sell legally. The state’s slow roll out of retail sales has put dire financial strain on many growers.

Early discussions indicate that each event would require the sale of product from at least three cultivators and one retail licensee to qualify. Sales would only be permitted in venues in municipalities that allow cannabis retailing, and within those municipalities, local zoning may limit the availability of venues. Also, the venues cannot be at places where “it can reasonably be expected that the primary audience is going to be underage,” state Director of Cannabis Policy John Kagia said.

For example, while a farmers’ market may be a “showcase” venue, it can only happen if the location of the farmers’ market was zoned for retail cannabis sales.

The state’s commitment to “showcase” sales is difficult to gauge, as the agency has flip-flopped on allowing the sales of product outside its licensed retail locations.

The Cannabis Association of New York issued a statement Wednesday cautiously commending the board for approving the measure. “This is an initiative we have supported with thoughtful and evidence-based recommendations to the Office of Cannabis Management,” CANY said in its statement.

“But now, as with any new program, the devil is in the details. We await the details of the ‘grower’s showcase’ and look to see how the OCM will put this into practice.”

Two More Licensed Adult-Use Cannabis Retailers Open

June 19, 2023 – Marijuana Monday welcomes the Flynnstoned Cannabis Company, 219 Walton St Syracuse, NY 13202, (315) 299-9334; License Number: OCM-CAURD-23-000010

Hours:  Sunday, 10:00am-8:00pm; Monday through Thursday, 10:000am-9:00pm, Friday-Saturday, 10:00am-10:00pm; Website:flynnstoned.com

Also, and a bit closer to home, welcome to Sesh, NYC, a delivery only location. No in-person sales are allowed at this location.  According to its website, Sesh serves customers in the Bronx, lower Westchester, and upper Manhattan. License: OCM-AURC-TD-P23017; Website: myseshnyc.com

With the opening of these locations, there are now 15 licensed retailers across New York State. For a complete list, click here.

New York’s Cannabis Control Board Approved 34 Additional CAURD Licenses Thursday

Seven licenses were approved for the Finger Lakes region – the last region to receive approvals after litigation holding up the issuance of licenses there was resolved.

In addition to the seven Finger Lakes licenses, licenses were also awarded as follows: Bronx (2), Brooklyn (7), Central New York (2), Manhattan (2), Mid-Hudson (10) and Queens (4).

The provisional licensees are now able to submit final application materials to the state, enabling them to receive final licensure and open their retail dispensaries.

Currently there are 15 open cannabis retailers statewide and over 40 in development. Over 250 licenses have been approved across the state, with 21 percent of New Yorkers now living in a city with legal cannabis access.

OCM also reported that New York legal cannabis sales so far this year total $22.6 million.

At the meeting, growers continue to express frustration over the slow speed of the industry roll-out, saying the lack of sales outlets are causing financial hardship and endangering their continued participation.

Efforts to Close Down The Illicit Retail Market Gain Traction – Enforcement Outside NYC Started Last Week

The Office of Cannabis Management and the Department of Taxation and Finance began their first joint inspections authorized by new enforcement laws the week of June 5, 2023, in New York City, where inspections will remain active and ongoing. The two agencies inspected 11 shops in Manhattan last week.

All of the shops inspected in New York City last week were selling cannabis without a license and were issued Notices of Violation and Orders to Cease Unlicensed Activity.

The following shops were inspected last week:

• Varieties on Broadway – 736 Broadway
• Roll 2 Nation – 738 Broadway
• Baby Jeeter – 793 Broadway
• Maze – 16 St. Marks Place
• LaGuardia Smoke – 510 LaGuardia Place
• Nomad – 59 West 30th Street
• Play lane – 117B W 23rd Street
• Cannabis Culture – 403 8th Avenue
• Smoke Factory – 287 7th Avenue
• Go Green Dispensary – 603 6th Avenue
• Daydream – 1181 Broadway

“We continue to take action against bad actors who seek to skirt around our laws,” Governor Hochul said. “Unlicensed dispensaries violate our laws, put public health at risk, and undermine the legal cannabis market, and we will continue to take these critical enforcement measures to protect New Yorkers from illicit, unregulated sales.”

On May 3, 2023, Governor Hochul signed legislation enabling for the enhanced, statewide enforcement by OCM on unlicensed cannabis businesses. The legislation now enables OCM to also assess civil penalties against unlicensed cannabis businesses, with fines of up to $20,000 a day for the most egregious conduct, and starts the process of potential closure of a retail location selling cannabis without a license among other penalties.

The new law also makes it a state crime to sell cannabis and cannabis products without a license.

Inspections also took place at storefront businesses not licensed to sell cannabis in Ithaca and Binghamton.

The following shops were inspected in Ithaca:

• Black Leaf — 103 East State Street, Ithaca, NY
• Zaza Convenience — 101 East State Street, Ithaca, NY
• The Rezz — 312 Fourth St, Ithaca, NY

The following shops were inspected in Binghamton:

• Green Magic – 144 Henry St
• Takeoff 2 – 63 Chenango St

Governor Hochul Unveils New Statewide Cannabis Public Education Campaign

“Why Buy Legal New York” Will Encourage New Yorkers to Purchase Safer, Regulated Cannabis Products from Licensed Dispensaries

April 22, 2023 – Governor Kathy Hochul announced the launch of “Why Buy Legal New York”, a public education campaign promoting safer, informed, legal purchases of cannabis from licensed dispensaries in New York State.

The campaign focuses on three key pillars: protecting public health and promoting social equity and community reinvestment. Governor Hochul made the announcement alongside the New York State Office of Cannabis Management at CUNY Law School in New York City. The “Why Buy Legal New York” announcements explain and emphasize the potential health risks associated with purchasing cannabis products from unlicensed businesses and why regulated cannabis products are safer. It also outlines how buying legal supports the advancement of New York’s social and economic equity goals for communities across the State.

“To bolster the public health and safety of all New Yorkers, we are providing them with information they need to make informed decisions and enjoy cannabis responsibly,” Governor Hochul said. “As we continue to build a healthier and more equitable cannabis market, I am proud to launch this important public education campaign to promote safer, legal purchases of cannabis from licensed dispensaries throughout our state.”

The primarily digital campaign will target cannabis consumers 21 years old and over and includes various educational materials, such as “The Guide to Safer Cannabis Consumption”. These materials will provide information on how to find legal dispensaries in New York and tips on how to consume cannabis safely. Materials are available at: https://cannabis.ny.gov/consumers.

Section 280E Tax Relief Available To Cannabis Businesses In New York State; Federal Relief Proposed

April 18, 2023 – Earl Blumenauer, a Congressman from Oregon, introduced a bill this week that would allow legal marijuana businesses to take tax deductions they have been historically denied, despite their availability to other legal businesses.

The Small Business Tax Equity Act (H.R. 2643), would allow marijuana businesses operating in compliance with state laws to take business deductions associated with the sale of marijuana. Section 280E of the federal tax code currently prevents cannabis businesses from deducting ordinary expenses associated with running a small business, including rent, utilities, and payroll.

Legally operating marijuana businesses cannot claim the Work Opportunity Tax Credit when they hire veterans, cannot depreciate American-made irrigation equipment, and cannot take any credit or deduction relating to construction or operation costs to revitalize or restore a building.

“State-legal cannabis businesses are denied equal treatment under 280E. They cannot fully deduct the cost of doing business, which means they pay two or three times as much as a similar non-cannabis business,” said Blumenauer, founder and co-chair of the Congressional Cannabis Caucus. “This grotesquely unfair treatment incentivizes people to cut corners. If Congress wants to get serious about supporting small businesses and ending the illicit cannabis market, it is commonsense that we allow legal cannabis operations to deduct business expenses, just like any other industry.”

Even if passage of federal legislation is an uphill climb, New York State has taken steps to decouple state taxation from federal returns.

A law contained in New York State’s Budget carved out an exemption from IRC Section 280E. This exemption allows NYS-licensed cannabis businesses to take tax deductions for business expenses and claim credits at the state level that they are barred from utilizing on their federal returns.

By decoupling the state tax code from the federal law for purposes of 280E, New York-licensed cannabis businesses would see significant tax savings beginning in tax year 2023.

Many states simply mirror federal tax policy in their own tax codes. Because of this, the federal tax code’s restrictions on cannabis businesses also blocks state-level deductions unless a state acts to exempt these businesses from these restrictions.

Because of the connection to federal returns, it is estimated that many cannabis businesses pay effective tax rates of up to 80%. To help resolve the issue, New York has joined California, Colorado, Oregon, Massachusetts, and other states to provide relief. Nineteen states have decoupled state returns from federal returns.

A bill pending in Connecticut would similarly decouple state and federal tax returns. When neighboring states have different tax structures, competition suffers.

Forcing a business operation to pay taxes on gross revenue, where it cannot deduct payroll, rent, utilities and other expenses is a recipe for near-certain economic failure, and encourages the continued proliferation of the illicit marijuana trade.

A Tangle of Lawsuits Is Crippling New York’s Entry Into Legalized Cannabis Sales

March 29, 2023 – Let’s face it. New York’s legalization and launch of licensed cannabis retailers has been less than perfect. Okay, it’s been a disaster. To date, there are only a handful (less than five) retail cannabis operations open, and those are only open conditionally.

Illicit sellers and retailers abound, offering marginal product, paying no taxes, and unafraid of State or local law enforcement.

The preference given to those with prior involvement with cannabis-related offenses has closed the market to the thousands of other operators vying to open up shop. The system of in-state preferences has basically shut down the industry in the Hudson Valley and other areas of the state, while a federal lawsuit grinds its way through courts that are part of a system that still holds cannabis to be illegal.

What’s to be done to jump-start the industry, or to keep it from collapsing under its own regulatory weight?

A group of New York-affiliated medical cannabis operators filed a complaint against the state’s regulators asking the Court to open available licensing options to all retail dispensary applicants – not just those with prior marijuana convictions. The Coalition for Access to Regulated & Safe Cannabis (which includes Acreage Holdings, PharmaCann, Green Thumb Industries, and Curaleaf, and several hopeful dispensary owners) filed suit against New York’s Office of Cannabis Management (OCM) and the Cannabis Control Board (CCB), the two agencies charged with devising and implementing the state’s cannabis legislation.

The lawsuit filed in Albany County Supreme Court on March 16 alleges: (1) unconstitutional overreach and policymaking; (2) the abdication of the agencies’ duties, and (3) negligent actions that needlessly put New Yorkers’ health and safety at risk.

Plaintiffs allege that defendants failed to fulfill the requirements of the Marijuana Regulation and Taxation Act (MRTA), the law that legalized cannabis in New York in March 2021. It’s main argument though is that defendants failed to follow the law itself and provide all applicants with equal access to retail dispensary licenses. They say the entire Conditional Adult-Use Retail Dispensary (CAURD), which restricts eligibility to those with prior involvement in cannabis-related offenses, runs afoul of the law, and has no basis in statutes that established legalized cannabis.

They argue that the agency had no right to limit access to dispensary licenses to a specific group of individuals, as opposed to providing equal access to all to available licenses.

The list of failures continues: a delay of 20 months in proposing regulations for the marketplace, still unfinished; constant changing guidance for growers and processors; failures to realize promised state-subsidized real estate and loans; allowing the cultivation of large quantities of cannabis before establishing a retail infrastructure to sell it; and countless other incidents of mismanagement and incompetence.

The complaint narrative blames the defendants through inaction of allowing the illicit market to thrive, not stopping tainted cannabis products from entering the illegal market, and depriving communities of essential tax revenue.

The narrative also refers to a report (detailed earlier in this newsletter) commissioned by the New York Medical Cannabis Industry Association (NYMCIA) and others that highlighted that about 40% of marijuana products sold in New York’s unlicensed businesses contain potentially harmful contaminants. And it blames the state for failing to shut down unlicensed operators while pointing out the folly of sending “cease and desist letters” to illegal sellers and the failures of law enforcement operations to impact the illegal markets. Estimates are that over 1,400 unlicensed businesses are operating throughout the state, resulting in the likely loss of around $2.6 billion in tax revenue over the next seven years.

Plaintiffs (in a blend of an Article 78 and request for declaratory relief) have asked the court to declare OCM’s CAURD license unconstitutional and outside the agency’s legal authority. It asks the Court to require regulators to take legal action against all illegal cannabis stores. And most important to their interests: to open the licensing process for adult-use retail dispensaries to all applicants now, including registered organizations and those who qualify under the MRTA’s social and economic equity provisions.

Second Circuit Court of Appeals Modifies Injunction, Clearing The Path To Issuance of Dispensary Licenses in Hudson Valley

Finger Lakes Remains Under Injunction; Only A Handful of Rockland County’s Villages Opted In For Retail Licenses

March 29, 2023 – In a one-paragraph Order, issued late Tuesday afternoon, the Second Circuit Court of Appeals cleared the path for the New York State Office of Cannabis Management (OCM) to issue retail cannabis dispensary licenses in the Hudson Valley, Brooklyn, Central and Western New York. The Circuit Court left in place a ban on the issuance of licenses in the Finger Lakes but set an expedited briefing schedule to address issues affecting that region.

The ban arose last November, when a District Court Judge in the Northern District of New York entered a sweeping order halting OCM’s ability to issue retail licenses in the Hudson Valley and other areas. An out-of-state applicant for dispensary licenses claimed his company was discriminated against based on a system of preferences favoring in-state applicants.

The plaintiff, Variscite NY One, Inc. of Michigan, convinced Judge Gary Sharpe that the system New York used to award licenses violated the Commerce Clause of the US Constitution. The Commerce Clause generally prohibits a state from favoring its own residents over out-of-state applicants in commercial matters.

Judge Sharpe halted the issuance of licenses in every region where Variscite sought one, including the Hudson Valley.

OCM’s efforts to lift the injunction or at least modify it at the District Court level went nowhere. OCM was also denied a stay from the District Court pending appeal.

In seeking to modify the injunction, or limit its application in the District Court, OCM argued that no applicant could have obtained a retail dispensary license in more than one area of the state because the number of applicants in each area precluded any applicant from securing a second regional license. It also argued that even if Variscite had received full credit for in-state residency, it would not have otherwise scored high enough to secure a retail dispensary license.

OCM appealed to the Second Circuit and sought again to have the injunction lifted or modified. Its arguments resulted in a partial victory yesterday, clearing the path for issuance of licenses in every area except for the Finger Lakes – Variscite’s first preference for licensure.

The Second Circuit entered an order late Tuesday afternoon saying, “The district court’s injunction is modified so that it bars the issuance of conditional adult-use retail cannabis dispensary licenses only in the Finger Lakes region.”

The NYS Office of Cannabis Management tweeted that, “We are excited to begin advancing licenses to these regions shortly.”

“New York’s brand-new cannabis industry is making significant progress to promote social equity and right the wrongs of the past, creating the fairest and safest market in the nation,” New York Gov. Kathy Hochul said in a prepared statement. “This decision will allow New York’s social equity entrepreneurs to open safe, regulated cannabis dispensaries in Central New York, Western New York, the Mid-Hudson Region and Brooklyn. For the first time, New Yorkers in nearly every region of the state will have access to safer, high-quality, adult-use cannabis products. I am committed to ensuring New York continues to lead the nation in our safe and equitable approach to the cannabis market.”

The temporary injunction against OCM prevented the issuance of 18 licenses, six of which would have allowed retailers to operate in the Mid-Hudson Region. The identities of the six Mid-Hudson retailers are being withheld pending a formal announcement.

Earlier this month, OCM announced its intent to issue an additional 150 retail dispensary licenses on top of the 150 previously authorized.

According to a database compiled by Office of Cannabis Management, in Rockland County, only the Villages of Haverstraw, Nyack, Piermont, Chestnut Ridge and Airmont have opted-in to allowing retail dispensaries in their municipal borders. These villages have opted-out of allowing on-site consumption lounges.

Hudson Valley Retail Dispensary Licenses Could Issue Soon If Second Circuit Court of Appeals Lifts Injunction

Argument is set for March 28^th at the Second Circuit Court of Appeals in Manhattan

March 20, 2023 – The Second Circuit Court of Appeals is being asked to stay the preliminary injunction issued by United States District Court (Northern District of New York). The injunction issued below barred the New York Office of Cannabis Management (OCM) from issuing any conditional adult-use retail dispensary (CAURD) licenses in the Finger Lakes, Central New York, Western New York, Mid-Hudson and Brooklyn regions during the pendency of the lawsuit.

The injunction is why there are no retail dispensaries opened or licensed in the Hudson Valley. The plaintiff below (Variscite NY One, Inc.) convinced Judge Gary Sharpe that he was being discriminated against as an out-of-state applicant and that OCM was favoring in-state applicants in contravention of the Commerce Clause of the US Constitution. The Commerce Clause generally prohibits a state from favoring its own residents over out-of-state applicants in commercial matters.

OCM’s efforts to lift the injunction or at least modify it at the District Court level went nowhere. OCM was also denied a stay from the District Court pending appeal. Now, in the appellate case in the Second Circuit Court of Appeals, OCM is trying again to get a stay, or a modification of the injunction that would allow it to finally issue licenses in the affected areas.

In its motion for a stay, OCM argues that Variscite met the “significant presence” licensing requirement because it is incorporated in New York; therefore, the cannabis company is not being discriminated against. OCM also argues (as it did at the District Court)  that Variscite’s application did not otherwise score high enough to qualify for a license, essentially saying that he could not have secured a license even if he was given full in-state credit because of other factors in his application.

OCM also argued:

The residency requirements do not violate the Dormant Commerce Clause because they do not discriminate against out-of-state actors, and if the requirements do “burden” interstate commerce, that does not exceed the state’s interest to rectify the harm caused by its historical marijuana laws and the selective enforcement of those laws.

The state will suffer irreparable harm if the injunction is not lifted. “The preliminary injunction leaves the putative recipients of 54 dispensary licenses indefinitely unable to do business and threatens the economic stability of cannabis growers and manufacturers who will, as a result of the injunction, lack enough buyers for their goods.”

Variscite argued against lifting stay blocking New York from issuing the licenses, saying the state is aiming for a “backdoor dissolution” of the injunction that would leave him without the possibility of a remedy.

When New York legalized marijuana, it established residency requirements to curtail outside entities from entering and dominating a newly legalized state market from afar. Meanwhile, the law is very unsettled on residency requirements with many experts believing that until marijuana is legalized nationally, the Commerce Clause does not apply and cannot be violated because there is no legal interstate commerce of cannabis – a drug illegal under federal law.

Courts don’t regulate illegal markets.

With a trial date in the District Court set for mid-2024, the uncertainty surrounding New York’s cannabis market continues, further delaying the approval of 54 licenses in the five territories under injunction.

Let’s just say that the regulatory landscape for the cannabis industry is still very much unsettled.

Women in New York Are Being Left Behind In Retail Dispensary Licensing

March 13, 2023 – In two rounds of license awards, women won only seven percent of Conditional Adult-Use Retail Dispensary (CAURD) licenses in the first round and 14 percent in the second round.

New York’s social equity program was designed to grant CAURD licenses to qualified entrepreneurs who have either been convicted on a marijuana charge or who had an immediate family member similarly situated. The program was designed to mitigate decades of disproportionate drug enforcement, particularly in communities of color.

To further make up for past harms, New York is also committing to startup funding and real estate assistance to licensees.

So, why have women not fared well in the issuance of licenses? Is it because marijuana enforcement laws were disproportionately aimed at young men of color?  Statistics tell part of the story.

Between 1997 and 2007, 91 percent of people arrested for marijuana possession in New York City were male, according to a report from the ACLU of New York. Of that male cohort, young Black and Latino men were overwhelmingly the prevalent demographic  in marijuana possession arrests during that time period.

To open the door to more women, New York crafted its regulations to include immediate family members of convicted individuals in the qualifying pool of applicants.

“My team early on made an effort to make sure that women have a pathway to get a CAURD license,” said Damian Fagon, chief equity officer of the Office of Cannabis Management.

Despite that effort, a review of the scoring, qualifying based on a conviction is weighted higher than one based on a family member, effectively building in a bias toward men.

There have been calls for both more transparency and reconsideration in the application process — particularly when it comes to awarding points for the “justice-involved questions” on the license application.

The OCM does not make applications, the information contained therein, or its scoring results public when it comes to license awards, as public disclosure may advantage certain applicants who might shape their applications toward those categories weighted more heavily. Secrecy in the awarding of licenses is OCM’s way.

The built-in bias against women remains the norm, and no efforts are underway to re-tilt the tables. Preferences for distressed farmers and disabled veterans will also likely favor men as demographically men dominate those categories as well.

The expansion from 150 to 300 licenses recently did improve the raw numbers for women, but women still remain grossly under-represented in the retail dispensary market.

New York’s Office Of Cannabis Management Asks District Court To Modify Its Injunction And Allow Retail Cannabis Sales In Hudson Valley

December 27, 2022 – An injunction entered against New York’s Office of Cannabis Management (OCM) last month is preventing the issuance of any retail cannabis dispensary licenses in the Hudson Valley and four other regions in New York State. But a court filing by the OCM last week may clear the way for approved licensees in the Mid-Hudson region and three other blocked areas to open retail dispensaries.

The case was originally filed by Variscite NY One, Inc., through Michigan-based Kenneth Gay, its 51 percent owner, who claimed that application requirements for retail dispensary licenses in New York violated the Commerce Clause of the U.S. Constitution because the law favored New York residents over out-of-state applicants. The Commerce Clause generally prevents a state from favoring its own residents over out-of-staters in commercial matters.

Variscite had filed an application listing five areas where it sought a retail license, including its first preference, the Finger Lakes, as well as Central New York, Western New York, the Mid-Hudson Region, and Brooklyn. New York is divided into fourteen different geographic zones for retail licensing. Based on the information available to the Court at the time, it agreed with Variscite and issued an order granting Variscite temporary relief, which has prevented OCM from issuing licenses in the five regions.

OCM in its recent filing is attempting to show the court that only licenses in the Finger Lakes region should be at issue, while the other regions shouldn’t be affected because of the way the New York law is written. The law says an applicant can only get its first choice of region when there are an insufficient number of applications for its second and later choices. At best, Variscite would only be eligible for a license in the Finger Lakes region, according to the filing.

In its request to modify the injunction, OCM stated that approved retailers, processors and cultivators in the Hudson Valley (and the other affected regions) would be irreparably harmed if the Court did not narrow the injunction to the one area where the Petitioner may have be eligible for a retail dispensary license.

OCM also states in its affidavit that Variscite would not have even qualified for a license in the Finger Lakes region because it did not score high enough on the qualifying application to have been selected.

OCM also told the Court that the injunction affects the economics of “54 potential retail dispensaries, 121 licensed cultivators, and 16 processors,” many of whom have invested millions of dollars in their operations relying on OCM’s licensing regulations. What the defendant is saying is that if the retailers can’t get up and running, then the entire eco-system of the cannabis market will be disrupted.

The OCM received more than 900 applications for Conditional Adult Use Retail Dispensary (CAURD) licenses. The Board recently approved 36 provisional licensees, including 28 qualifying individuals, and eight nonprofit CAURD applicants outside the five areas included in the lawsuit. The temporary injunction against OCM prevented the issuance of an additional 18 licenses, six of which would have allowed retailers to operate in the Mid-Hudson Region. The identities of the six Mid-Hudson retailers are being withheld pending the outcome of the litigation.

Per the law, up to 175 licenses will be granted; roughly 150 may be granted to individual applicants, and about 25 to nonprofit applicants. It it expected that there will be 17 Mid-Hudson licenses approved.

In addition to asking to modify the injunction, OCM has also filed an appeal, a request to the court to delay enforcement of its order, and a motion to dismiss Variscite’s complaint.

Variscite filed a similar case in California, also claiming a violation of the Commerce Clause, but earlier this month the District Court in California dismissed the complaint, finding Variscite lacked standing to pursue its case. The court in denying Variscite’s claims also questioned if the Commerce Clause even “applies to federally illegal cannabis markets.”

It remains uncertain as to whether Commerce Clause violations are applicable to markets and products that are still illegal under federal law. Marijuana is a Schedule I substance under the Controlled Substances Act.

The case number in New York’s Northern District is: 1:22-cv-01013-GLS-DJS.

How Do You Know If Your Cannabis Retailer Is Legitimate (Licensed)?

December 16, 2022 – We recently reported on the dangers of purchasing adulterated cannabis from unlicensed retailers in New York City. But, how does a consumer know if their retail outlet is actually licensed by New York State? State officials are taking steps to steer consumers to licensed retailers. With the first round of retailers ready to open their doors, the OCM unveiled a state-sanctioned icon and scannable QR Code that will be posted in the window of every licensed storefront in the state. Purchasers who buy from unlicensed retailers deprive the state of tax money and may take their health into their own hands.

“It is critical that consumers know and trust that the new, legal cannabis market offers tested products and follows protocols designed to protect public health,” said Tremaine Wright, chair of the Cannabis Control Board.

The state is also planning a marketing program called “Why Buy Legal New York” that’s set to launch in 2023. Other efforts to crack down on illegal sales are also in the works to shut down illegal storefronts and trucks selling illicit and often tainted marijuana and cannabis products.

Home Delivery? Really?

December 9, 2022 – In an effort to assist a fledgling cannabis market and enable retailers who have yet to open their doors distribute their products, the Office of Cannabis Management has issued delivery guidelines that allow for home delivery of cannabis products. The new regulations will allow:

OCM Asks District Court Judge To Modify Injunction And Allow Sales In Enjoined Areas, Including Hudson Valley

December 12, 2022 – In a recent court filing in the Northern District of New York, the OCM has asked the Court to modify its injunction against issuing adult retail dispensary licenses in Central New York, Western New York, the Mid-Hudson Region and Brooklyn. In support of its motion, OCM relies on the fact that a petitioner/licensee, Variscite NY One, Inc., could have only received a license in its “first” choice area because there were more than the requisite number of applicants in the other areas. Under the rules established by the OCM, licenses would only be issued in 2nd or later choices if there was an inadequate number of applicants in the other areas.

As it relates to the Mid-Hudson region, OCM reports that it received 75 applications for 17 available licenses, and that approved retailers, processors and cultivators in the Hudson Valley (and the other affected regions) may be irreparably harmed if the Court does not narrow the injunction to the one area where the Petitioner may have be eligible for a retail dispensary license. Petitioner’s first choice for location was the Finger Lakes region.

OCM reports that the injunction affects the economics of 54 potential retail dispensaries, 121 licensed cultivators, and 16 processors, many of whom have invested millions of dollars in their operations relying on OCM’s licensing regulations. OCM adds in its affidavit that the applicant that sought and received the injunction would not have qualified for a license in the Finger Lakes region anyway, as it simply did not score high enough on the qualifying application to have been selected.

The case number in the Northern District is: 1:22-cv-01013-GLS-DJS.

A Hard Look At New York City’s Illicit Cannabis Dispensaries

November 29, 2022 – A report prepared by the New York Medical Cannabis Industry Association, the New Jersey Cannabis Trade Association, and the Connecticut Medical Cannabis Council reveals significant problems in New York City’s unlicensed and unregulated cannabis retail market. The report says that many of these locations falsely advertise the sale of THC products as legal or licensed, misleading consumers and selling products blatantly masquerading as popular name-brand chocolates, candies, gummies, and other well-known snacks.

In addition to deceptive advertising practices, these illicit operations and their products represent a significant public health concern. From 2019-2020, more than 2,000 individuals were hospitalized, and 60 people died due to illness caused by vaping-associated lung injury (EVALI), a phenomenon that was largely linked back to additives in illicit THC vapes like those currently sold in these illegally operating shops.

Testing of the products sold reveals an existing major health crisis. Results revealed the presence of several harmful contaminants, such as E. coli, pesticides, heavy metals, and salmonella in 40 percent of the illegal products purchased, including vapes. Many of the products tested did not contain the amount of THC advertised on the label and in one case, featured double the amount of listed THC. After reviewing the items under the state’s proposed branding regulations, 100 percent of the products failed.

And, tests conducted at independent labs found the presence of E.coli, salmonella, and pesticides in various products offered for sale. E.coli and salmonella were found in flower and edible products purchased at some locations. E. coli in cannabis can cause many types of infection and is most often associated with diarrheal illness and lung infections that can become dangerous. Also, if inhaled, salmonella bacteria can cause severe fevers and fatigue symptoms that can remit and relapse. Salmonella infection can also be extremely difficult to treat and can have prolonged detrimental effects.

Several products also contained heavy metals, including nickel and lead. Ingesting these contaminants in cannabis is also a cause for concern. Certain metals have the potential to cause headaches, nausea, and in cases of prolonged exposure, cancer, and organ failure. Respiratory illness can also occur upon combustion and inhalation of contaminated flower. To read the report, click here.

Proposed Regulations Affect Cultivators, Establish License Types and Tiers

The Office of Cannabis Management (OCM) has proposed changes to its adult-use cannabis program, with some changes specifically affecting cultivators.

The proposed regulations and licenses support a structure similar to New York’s alcohol industry, separating supply (cultivation, processing, distribution) from retail. The regulations maintain prohibitions on individuals having an interest in businesses across tiers. Essentially, operators or investors in a business on the supply side cannot also hold any interest in a retail business. This separation opens the market to more potential players and prevents the likelihood of concentrating economic power in a few stakeholders.

As the regulations affect cultivators, they create different tiers of cultivation licenses that are differentiated by light source. The allotted square footage per license ranges from 5,000 – 100,000 square feet. They also incentivize sustainable cultivation practices and limited energy utilization including outdoor cultivation.

Cultivators are divided into categories based on the size of the cultivation canopy and the type of cultivation: (1) outdoor; (2) mixed light; (3) combination of outdoor and mixed light; and, (4) indoor. Within each category, there are five different tiers based on “canopy” size ranging from less than 5000 square feet up to 100,000 square feet.

Under the regulations, “canopy” or “cultivation canopy” is an area measured in square feet using clearly identifiable boundaries of all areas(s) that will contain non-immature cannabis, vegetative or flowering, excluding seedlings or small clones. Under the regulations, canopy areas may be non-contiguous.

The regulations are not final until after a 60-day public comment period.

Cannabis Control Board Approves First Conditional Adult Retail Dispensaries, But No Licenses Issued In Rockland or Hudson Valley

NYS Cannabis Control Board Approves 28 Licenses for Business Owners with a Cannabis Conviction or a Family Member with a Cannabis Conviction, 8 Approved for Nonprofit Organizations.

November 25, 2022 – The Office of Cannabis Management received over 900 applications for CAURD licenses. At today’s meeting, the Board approved 36 provisional licensees, including 28 qualifying individuals and 8 nonprofit CAURD applicants. At least one CAURD license was granted in each available region of the state.

Because a federal judge temporarily blocked New York State cannabis regulators from issuing licenses in certain regions of New York, including the Hudson Valley, no conditional licenses were issued pending the outcome of that litigation. Regulators said that 18 additional successful applicants would have been announced in the first wave if a recent injunction by a federal judge hadn’t blocked them from issuing licenses in the Finger Lakes, central New York, western New York, Mid-Hudson and Brooklyn.  Six of those licenses on hold are from the Mid-Hudson Region.

Going forward, up to 175 licenses will be granted in total: as many as 150 to individual applicants and up to 25 to nonprofit applicants and licenses applications will be sent to the Board for its consideration on a rolling basis.

Additionally, the Cannabis Control Board approved an additional 16 Adult-use Cannabis Conditional Cultivator Licenses, growing the total number of approved Adult-Use Cannabis Conditional Cultivator Licenses to 277. The approval of 8 Adult-Use Cannabis Conditional Processor Licenses raises the total issued by the Board to 33, and the approval of three laboratory permits brings the total to seven.

Judge Blocks Licenses for Some Cannabis Dispensaries in New York

November 10, 2022 – A federal judge temporarily blocked New York state cannabis regulators from issuing retail licenses amid a lawsuit by an applicant denied approval to operate in the state.

U.S. District Court Judge Gary Sharpe issued the injunction based on a legal challenge brought by a Michigan-based operator. Variscite challenged those provisions in the law that require that licenses for retail cannabis dispensaries be awarded to people who have been affected by New York state drug laws.

Variscite’s owner was previously convicted of a marijuana-related offense in Michigan. The affected regions  — the Finger Lakes, Central New York, western New York, the Mid-Hudson region and Brooklyn — are areas in which Variscite had sought and been denied a license to operate.

Read the 29-page injunction here. The basis of the injunction was that the limitation to in-state licensees violates the federal interstate commerce clause, which generally prevents states from preferring its own residents over the residents of other states without a showing that its regulations or law are narrowly tailored to accomplish a legitimate purpose and that the preference to residents of its own state was in fact a legitimate purpose that could not be accomplished by other means.

“We don’t comment on pending litigation. The Office of Cannabis Management is committed to the Marijuana Regulation and Taxation Act’s goals of including those impacted by the state’s enforcement of cannabis prohibition in the market that we are building and we are additionally committed to getting New York’s cannabis supply chain fully operational,” said Office of Cannabis Management spokesman Freeman Klopott. “The Cannabis Control Board will soon have before it applications for the Conditional Adult Use Retail Dispensary license which will start closing that supply chain.”

Will President Biden’s Pardons Lead To De-Scheduling Marijuana And Passage Of The SAFE Banking Act

October 20, 2022 – On October 6, President Biden announced that he would issue pardons for all prior federal convictions for simple possession of marijuana, and urged state governors to do the same. President Biden also directed the Secretary of Health and Human Services (HHS) and the Attorney General to “initiate the administrative process to review expeditiously how marijuana is scheduled under federal law. ” Marijuana is classified as a Schedule I drug, along with heroin and LSD.

Questions abound as to the possibility that the executive action will usher in cannabis banking reforms. Should cannabis actually be de-scheduled, banks and financial institutions will be more willing banking with cannabis companies. And, there is wide-spread belief that Biden’s announcement may move Congress to finally pass the SAFE Banking Act, or some version of it.

The SAFE Banking Act – which has passed the House of Representatives seven times in recent years but has never been taken up in the Senate – would enable cannabis businesses to access the federal banking system and also allow providers to the cannabis industry such as attorneys, accountants, lenders and landlords to contract with and accept payment from cannabis businesses without the risk of violating federal law.

Applications for NY’s First Retail Marijuana Locations Are In

October 6, 2022 – With the first round of applications for New York’s Conditional Adult-Use Retail Dispensary licenses closed, some 900 hopeful entrepreneurs are now awaiting action on their applications.

New York’s Office of Cannabis Management has yet to publish regulations for any of the state’s nine general adult-use cannabis license categories. However, according to Syracuse.com, the state will issue up to 150 CAURD licenses, and recipients will open New York’s first legal adult-use dispensaries pursuant to those licenses.

Individuals who qualify for a CAURD license must have been arrested in New York for a cannabis offense (or have a family member who was) before March 31, 2021, and have run a profitable business for at least two years. License recipients will have access to storefronts that are currently being secured and will be built out into dispensary spaces by the Dormitory Authority of the State of New York (DASNY).

New York Set to Hobble ‘Legal’ Cannabis with Taxes and Regulations

September 6, 2022 – “Since June 1, the New York’s Cannabis Control Board has issued 162 recreational cultivation licenses,” Bloomberg Tax recently noted. “Those fortunate enough to obtain one of New York’s recreational cannabis licenses will be forced to contend with a gauntlet of state and local taxes.”

The analysis, prepared by three accountants, detailed a long list of sales taxes, corporate taxes, and “recently enacted adult-use cannabis taxes.” Given the number of jurisdictions involved and uncertainty as to how they’ll apply to businesses that won’t be able to open their doors until the end of the year, at soonest, the authors declined to guess at the final tax burden. But it will be high, and compliance a guessing game with penalties awaiting those who cross the authorities. It’s a good bet that many entrepreneurs accustomed to operating in the illicit market will remain underground rather than risk the costs and hassles of legal operation as envisioned by Empire State officials. After all, technical legalization hobbled by stiff taxes and regulation has already stumbled elsewhere. Read more…

An Update on New York’s Recreational Cannabis Market

As of June 1, New York state’s Cannabis Control Board has issued 162 recreational cultivation licenses. The first recreational retail licenses aren’t expected to appear until the end of 2022. According to Chris Alexander, executive director of the state’s Office of Cannabis Management, final regulations are still being designed. And while some dispensaries will probably be licensed by end of 2022, a mature market isn’t expected for another two to three years.

Also, by signing the 2022-2023 state budget into law, New York Gov. Kathy Hochul enacted Senate Bill S8009, freeing state cannabis taxpayers from the burdensome impact of IRS Code Section 280E, beginning January 1, 2023.

Section 280E disallows deductions and credits on federal returns for expenditures connected with the illegal sale of drugs, requiring retail cannabis businesses to add back such significant expenses as rent and wages for sales staff. Like California, however, New York state now allows these and other standard business deductions on state returns.

OCM Issues Public Service Announcement

June 20, 2022 – The New York State Office of Cannabis Management (OCM) recently released a public service advertisement calling attention to the state’s goals of creating a diverse and inclusive industry and repairing harm done during cannabis prohibition.

The advertisement released today is the first cannabis related advertisement in the nation focusing on the disproportionate enforcement of cannabis prohibition to appear on broadcast television. It highlights the wide disparity in arrest rates for cannabis offenses for Black, Brown, and White New Yorkers during the 30 years prior to cannabis legalization. It states that Black people in New York were 15 times more likely to get arrested for cannabis than White people over the last 30 years; Latinos were 8 times more likely. Despite these disparities, data has shown that cannabis use among different races is essentially the same. The data points are based on New York State arrest data from data from the U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics.

View the PSA here.

Misdemeanor and felony marijuana arrest data by race/ethnicity and county from 1990 to 2020, and notes about the data, are available on the OCM website.

New York Regulators Approve Marketing Rules for Legal Cannabis

June 7, 2022 – New York regulators voted to approve draft regulations for the packaging and advertising of licensed cannabis products in advance of the launch of recreational marijuana sales later this year.

Under the draft regulations from the New York Cannabis Control Board, companies will be permitted to advertise their products on television, radio, social media and other platforms. But the proposed rules include strict provisions designed to protect children from being influenced by cannabis marketing.

“Protecting public health, reducing harm and promoting sustainable industry practices are key components of legalizing cannabis for adult use and I look forward to considering these regulations as we develop the industry,” Cannabis Control Board Chair Tremaine Wright said in a statement quoted by the New York Post. “We are committed to building a New York cannabis industry that sets high standards for protecting children and keeping products safe and sustainable.”

Labels for cannabis products must include the serving size, potency, ingredients, and directions for usage and storage. Packaging and advertising that contain cartoon characters, bubble lettering, neon colors, references to candy, or other elements likely to appeal to person younger than 21 are not allowed.

The regulations also forbid the use of endorsements from celebrities who appear to be younger than 21 and ban the use of common terms in the cannabis culture lexicon including “weed,” “pot,” “stoner,” and “chronic.” Misleading claims of health benefits and indications that the product is “safe” or “organic” are also prohibited, as are actual images of marijuana or people vaping or smoking.

More details about cannabis marketing can be found here.

Green Kulture and Two Chicks and Flowers in partnership with NY Small Farma host “Erasing the Stigma” at Rockland Community College Cultural Arts Center

May 15, 2022 – Erasing the Stigma, is an informational cannabis event on May 20, 2022, 5pm to 8pm at RCC Cultural Arts Center Theater. This FREE event in partnership with NY Small Farma LTD will be produced by NY based cannabis cultivation company Green Kulture; and NY based cannabis lifestyle brand Two Chicks and Flowers. Erasing the Stigma aims to bring awareness to the plight of BIPOC who have been affected by the ‘War on Drugs’ who are now eligible to apply and operate legally in the cannabis industry in New York State.

This informational event was carefully constructed with Rockland county local government officials, cannabis advocates, attorneys, business owners and community leaders aimed to bring awareness and provide information to aspiring New York BIPOC and minority entrepreneurs for the highly anticipated licensing process forthcoming. This initiative is particularly laudable as the cannabis industry continues to grow not only nationally but in New York State, with the entrant of more brands and entrepreneurs POC into the space to meet the growing needs of cannabis consumers.

Green Kulture and NY Small Farma LTD will join forces with Two Chicks and Flowers who recently hosted their cannabis informational event titled “A Piece of The Pot” on December 7, 2021 in Brooklyn’s BedStuy Restoration Plaza which includes a similar layout for Erasing the Stigma.

Registration for ‘Erasing the Stigma’ will be a first come, first RSVP approach as this is a FREE public community event limited to the 500 seats capacity theater via a dedicated EventBrite link. In accordance with New York State guidelines, attendees will be required to provide proof of vaccination prior to entering the venue.

Approval of First 52 Adult-Use Cannabis Conditional Cultivation Licenses to Farms in New York

April 15, 2022 – The Cannabis Control Board approved 52 Adult-use Cannabis Conditional Cultivator Licenses across the state. These are the first adult-use cannabis licenses granted in New York State and they advance the Seeding Opportunity Initiative. 

The approved licenses are from a pool of more than 150 that have been submitted to the Office of Cannabis Management (OCM) following the March 15 opening of the online application portal. The OCM will continue to review applications on a rolling basis and will work to get them to the Board for approval as quickly as possible. A list of the licenses approved today is available here.

New Yorkers With Marijuana Convictions Will Get First Retail Licenses

March 9, 2022 – New York State plans to introduce retail sales of marijuana by year-end 2022. Abundant stores of product will be available to licensees grown by New York farmers. New York may also lease storefronts to facilitate the opening of dispensaries. The first licensees must be either a person convicted of a marijuana-related offense or an immediate family member of one.

The policy, to be announced by Gov. Kathy Hochul on Thursday, is part of a concerted push to assure that early business owners in the state’s projected billion-dollar marijuana industry will be members of the communities adversely affected by the state’s criminal justice system. To read the full fact sheet, click here.

CONDITIONAL USE CANNABIS CULTIVATOR LICENSES FOR NY HEMP FARMERS

February 22, 2022 – Governor Kathy Hochul signed legislation creating a new Conditional Adult-use Cannabis Cultivator license, establishing a pathway for existing New York hemp farmers to apply for a conditional license to grow cannabis in the 2022 growing season for the forthcoming adult-use cannabis market. Under the law, conditionally licensed cannabis farmers must meet certain requirements, including safe, sustainable and environmentally friendly cultivation practices, participation in a social equity mentorship program, and engagement in a labor peace agreement with a bona fide labor organization.

With a conditional adult-use cannabis cultivation license, farmers can grow outdoors or in a greenhouse for up to two years from the issuance of the license. It also allows them to manufacture and distribute cannabis flower products without holding an adult-use processor or distributor license, until June 1, 2023. Cultivators are limited to one acre (43,560 square feet) of flowering canopy outdoors or 25,000 square feet in a greenhouse and can use up to 20 artificial lights. They can also split between outdoor and greenhouse grows with a maximum total canopy of 30,000 square feet as long as greenhouse flowering canopy remains under 20,000 square feet.

The OCM will be developing a license application process and opening the program as soon as possible. To qualify for an Adult-use Cannabis Conditional Cultivator License an applicant must have been an authorized industrial hemp research partner for the Department of Agriculture and Markets, cultivating hemp for its non-intoxicating cannabinoid content for at least two of the past four years and in good standing as of December 31, 2021, when the research program ended.

Holders of the license must also participate in a social equity mentorship program where they provide training in cannabis cultivation and processing for social and economic equity partners, preparing them for potential roles in the industry. Growers will also have to meet sustainability requirements to ensure the cannabis is grown in an environmentally conscientious way.

January 16, 2022: Cannabis Career Institute Online (CCI Online) announced today that they are co-hosting a one-day workshop, Cannabis Business Opportunities in New York, with Rockland Community College. The workshop will showcase the full scope (from seed to sale) of business and career opportunities in the New York Cannabis Industry. The workshop will be held virtually on February 10th, 2022. The cost of admission is $219, and you can register here.

Opening remarks for the event will be delivered by Michael A. Baston, President Rockland Community College. Panels will be made up of entrepreneurs, social equity business owners, economic developers as well as municipality representatives, including Grant Valentine, Deputy Mayor for the Village of Chestnut Ridge and Consultant for New York State Cannabis Association of Minorities & Women Professionals.

Panel topics to be discussed include, Seizing Cannabis Market Expansion Opportunities: Social Equity, Diversity & Inclusion, Job Creation as well as Employment & Legal, Banking/Finance, Entrepreneurial Perspectives of Owning Your Own Cannabis Business. By interacting with the extensive list of panelists, participants will gain crucial information needed to successfully enter the emerging market of recreational cannabis and the expanding medical cannabis market.