NEW BUSINESS OPPORTUNITIES IN THE NEW YORK CANNABUSINESS SPACE
The New York “Cannabis Regulation and Taxation Act” should take effect on the first of April, 2020. There are plenty of new business opportunities in the New York cannabusiness space. This guide describes the licenses and permits that will be available for these exciting new ventures.
PART 1 - LICENSESThe *Cannabis Regulation and Taxation Act* should take effect on the first of April, 2020. There are plenty of new business opportunities in the New York cannabusiness space and our legal team is gearing up for these exciting new ventures. These businesses will need to be regulated by the Division of Alcoholic Beverage Control*s new State Office of Cannabis Management. Our legal team is experienced representing businesses in front of the State Alcoholic Beverage Control*s State Liquor Authority and is well-positioned to hit the ground running for licensing and other regulatory issues. The law anticipates that the same qualifications for on-premises consumption of alcoholic beverages (restaurants and bars) will apply to retail establishments for on-premises cannabis consumption.
Cannapreneurs includes growers, cultivators, processors, distributors, retail dispensaries, on-site (on-premises) consumption businesses and ancillary businesses such as producers of cannabis containing edible foods and beverages. However, similar to the alcoholic beverage industry, the regulations are expected to impose a three-tier system that restricts participation in both wholesale and retail segments, eliminating the possibility for vertical integration of the cannabis industry in New York. There are some exceptions for existing grandfathered medical marijuana licensees.
There are a number of licenses that will be available to cannapreneurs:
Adult-use cultivator license * for the acquisition, possession, cultivation and sale of cannabis from the licensed premises to *duly licensed processors.* This can be combined with one processor and one distributor license.
Adult-use processor license * the acquisition, possession, processing and sale of cannabis from an adult-use cultivator by such licensee to *duly licensed distributors.* Processors must purchase cannabis from licensed cultivators and can sell cannabis to distributors only. A processor licensee can have up to three processor licenses.
Adult-use distributor license * the acquisition, possession, distribution and sale of cannabis from a licensed adult-use processor, microbusiness cultivator, or registered cooperative to duly licensed retail dispensaries. Similar to the alcohol industry*s tied house restrictions, a distributor licensee may not have any economic interest in any retail dispensary license.
Adult-use retail dispensary license * the acquisition, possession and sale of cannabis from the licensed premises to cannabis consumers. No person may have a financial or controlling interest in more than three retail dispensary licenses. A retail dispensary would not be permitted to sell more than one ounce of cannabis per consumer per day, nor more than 5 grams of cannabis concentrate per consumer per day.
On-site consumption license * Adult-use retail dispensaries (can apply to have an on-site license (which cannot sell more than 1 gram of cannabis to a consumer for on-site consumption).
Adult-use cooperative license * the acquisition, possession, cultivation, processing and sale from the licensed premises of the adult-use cooperative by such licensee to duly licensed distributors and/or retail dispensaries. No retail sales to cannabis consumers.
PART 2 - PERMITSThe law anticipates that the same qualifications for on-premises consumption of alcoholic beverages (restaurants and bars) will apply to retail establishments for on-premises cannabis consumption. The list of available permits simulates the permit structure for alcoholic beverages.
Available permits will include:
1. Industrial cannabis permit to purchase non-consumable cannabis for (a) apparel, energy, paper, and tools; (b) scientific, chemical, mechanical and industrial products; or (c) any other industrial use as determined by the State Office of Cannabis Management.
2. Nursery permit to produce clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of cannabis, and to sell such to licensed adult-use cultivators, registered cooperatives, and certified patients or their designated caregivers.
3. Solicitor*s permit to offer for sale or to solicit orders for the sale of any cannabis products, medical cannabis and/or hemp cannabis, as a representative of a registered cooperative or licensee governed by the State Office of Cannabis Management.
4. Broker*s permit to act as a broker in the purchase and sale of cannabis products, medical cannabis and/or hemp cannabis for a fee or commission, for or on behalf of a person authorized to cultivate, process, distribute or dispense cannabis products, medical cannabis or hemp cannabis within New York.
5. Trucking permit to allow for the trucking or transportation of cannabis products, medical cannabis or hemp cannabis by a person other than a registered cooperative or licensee governed by the State Office of Cannabis Management.
6. Warehouse permit to allow for the storage of cannabis, cannabis products, medical cannabis or hemp cannabis at a location not otherwise registered or licensed by the State Office of Cannabis Management.
7. Delivery permit to authorize licensed adult-use cannabis dispensaries to deliver adult-use cannabis and cannabis products directly to cannabis consumers.
8. Cannabinoid permit to sell cannabinoid products derived from hemp cannabis for off-premises consumption.
9. Temporary retail cannabis permit to authorize the retail sale of adult-use cannabis to cannabis consumers, for a limited purpose or duration.
10. Caterer*s permit to authorize the service of cannabis products at a function, occasion or event in a hotel, restaurant, club, ballroom or other premises, which shall authorize within the hours fixed by the State Office of Cannabis Management, during which cannabis may lawfully be sold or served on the premises in which such function, occasion or event is held.
11. Packaging permit to authorize a licensed cannabis distributor to sort, package, label and bundle cannabis products from one or more registered cooperative or licensed processors, on the premises of the licensed cannabis distributor or at a warehouse for which a permit has been issued by the State Office of Cannabis Management.
12. Miscellaneous permits to purchase, receive or sell cannabis, cannabis products or medical cannabis, or receipts, certificates, contracts or other documents pertaining to cannabis, cannabis products, or medical cannabis, in cases not expressly provided for by the law, when in the judgment of the State Office of Cannabis Management it would be appropriate and consistent with the policy and purpose of the law.
PART 3 * PREFERENCES FOR LICENSESMBE, WBE, Disadvantaged Farmers and Incubators all are given special consideration. The law is drafted to favor small business and give special consideration to license applications.
Under Article 15-A of the Executive Law, an MBE is a business enterprise in which at least fifty-one percent (51%) is owned, operated and controlled by citizens or permanent resident aliens who are meeting the ethnic definitions listed below:
* Black: Persons having origins from any of the Black African racial groups.
* Hispanic: Persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Native American or Latin American origin, regardless of race.
* Asian-Pacific: Persons having origins from the Far East, Southeast Asia or the Pacific Islands.
* Asian-Indian Subcontinent: Persons having origins from the Indian subcontinent.
* Native American or Alaskan Native: Persons having origins in any of the original peoples of North America.
Woman-Owned Business Enterprise (WBE) and MWBE Under New York Executive Law Article 15-A is a business enterprise in which at least fifty-one percent (51%) is owned, operated and controlled by citizens or permanent resident aliens who are women. The ownership must be real, substantial and continuing, and the minority members and/or women must exercise the authority to independently control the day-to-day business decisions. Each minority or woman owner upon whom certification is based cannot have a personal net worth exceeding $3.5 Million after allowable deductions. These are allowable deductions under the law: Primary residence or the mortgage for that residence, Ownership interest in the applicant firm and Up to $500 thousand of any qualified retirement savings plan. Firms must not employ more than 300 individuals. The firm must operate independently of other firms, must demonstrate it is an active business and generally, the business must be in operation for at least one year. Out of state applicants should be certified as a MWBE in their home state, if a similar process exists, before applying for MWBE certification in New York State.
Under USDA regulations, a socially disadvantaged farmer comes from (or entity who is owned at least 50% by) one of the following identified groups:
* American Indians or Alaskan Natives
* Blacks or African Americans
* Native Hawaiians or other Pacific Islanders
APPLICANTS THROUGH THE INCUBATOR PROGRAM
Incubators work with companies to not only develop their ideas and concepts to production to distribution cycle. They essentially help cannapreneurs commercialize their business plan.
Please feel free to contact our team if you are a cannapreneur and want to discuss a new business opportunity in the cannabusiness space.