How to Apply for a New York Cannabis License

For those of you whose summer beach reading list does not include New York’s Marijuana Regulation and Taxation Act (MRTA), Green Light Law Group has some advice.

Here are some FAQs about the process for obtaining a recreational cannabis license in the Empire State. Future FAQs will examine specific adult-use license types and rules concerning equity applicants.

(Editor’s Note: Parentheticals cite to the relevant MRTA sections (§ = section).)

Q. Can I apply for an adult-use (recreational) marijuana license in NY?

As of the date of this posting . . . not yet!

By the way, the types of adult-use licenses, listed in this June 16, 2021 posting by the Office of Cannabis Management, will be the subject of a later blog post. Note the disclaimer in the posting:

Please be aware, before the OCM can issue adult-use cannabis licenses several foundational tasks will need to be completed, including appointing the Cannabis Control Board, issuing and adopting regulations, hiring and training OCM staff, and creating [a] process for issuing, accepting and awarding licenses.

Q. When will I be able to apply?

The timeline is not yet clear. Unfortunately, further details are not yet available as key regulatory positions have not yet been filled.

Q. How do I apply for an adult-use marijuana license in NY?

By submitting a written application to the Cannabis Control Board containing “such information as the board shall require.” (§ 61) Helpful, right? The Office of Cannabis Management website is a courteous “check back later” sign. So, for now, we will be textualists and look exclusively to the MRTA statute for answers.

Q. How much does an adult-use marijuana license in NY cost?

We do not know yet. (As a frame of reference, NY Medical Marijuana applicants are required to submit a $10,000 non-refundable fee and a refundable registration fee in the amount of $20,000. Hemp retail and distributor permit fees are much cheaper.)

Here is what we do know:

• There will be an application fee, and it will probably be non-refundable (§§ 61.1, 62.4, and 63.1)
• Fee amounts may be based on the type of license sought, volume of product, or other factors (§ 63.1)
• There will also be a biennial (every other year) license fee (§ 63.2)
• Fees will be waived or reduced for equity applicants (§ 63.3)

Q. What type of business entity should I use for my NY cannabis application?

This is a key business decision with no one-size-fits-all answer: we recommend that you consult with a cannabis attorney. MRTA contemplates that an applicant may be an individual, sole proprietorship, partnership, LLC, or corporation.

Q. What information is required for my license?

The statute offers the following non-exclusive list:

• Racial and ethnic information
• Ownership and investment information (including corporate structure)
• Evidence of good moral character (including fingerprinting)
• Information about the premises to be licensed
• Financial statements

(§ 62.2)

Applicants will be required to affirm that their application is true under penalty of perjury (§ 62.3).

Q. How does the Board decide who gets a license?

The statute once again offers a non-exclusive list of selection criteria that the Board will consider. This includes whether the applicant is an equity applicant or has set forth a plan for benefiting communities and people disproportionally impacted by enforcement of cannabis laws). (§§ 64.1.a, f and j)

Other notable criteria include:

• the number and types of other licenses nearby (§ 64.1.g.ii)
• the effect it would have on foot and car traffic (§ 64.1.g.iv)
• noise levels (§ 64.1.g.v)
• environmental impact (e.g., water and energy usage, carbon emissions, waste, pollutants, and single-use plastics) (§ 64.1.g.vi; § 64.1.k)
• the applicant’s history of violations and compliance with labor law, safety and tax laws (§ 64.1.g.ix) and with the laws of other jurisdictions’ cannabis laws (§ 64.1.g.viii)
• the applicant’s moral character (§ 64.1.h)
• whether the applicant has entered into a labor peace agreement (LPA) with a bona -fide labor organization that represents or is attempting to represent the applicant’s employees (for more on this criterion, see here) (§ 64.1.i)
• an applicant’s track record as a medical marijuana business in NY (§ 64.1.m)

­Q. Will I need to disclose investors and finances in my NY cannabis application?

Yes, you can expect that applicants will be required to provide financing statements (§ 62.2)

The Board will implement “rules and regulations that are designed to . . . establish application, licensing, and permitting processes which ensure all material owners and interest holders are disclosed . . .” (emphasis added) (§ 13.3.h)

And sprinkled throughout MRTA are restrictions on having “direct or indirect financial or controlling interest” in multiple licenses and in multiple types of licenses. For example, section 69.5: “No adult-use cannabis processor shall have a direct or indirect interest, including by stock ownership, interlocking directors, mortgage or lien, personal or real property, management agreement, share parent companies or affiliated organizations or any other means, in any premises licensed as an adult-use cannabis retail dispensary or in any business licensed as an adult-use cannabis retail dispensary . . .”).

Q. Can I transfer or sell my NY recreational cannabis license?

Yes, subject to future rules and regulations.

Generally:

• The board pursuant to regulation, may wholly prohibit and/or prescribe specific criteria under which it will consider and allow limited transfers or changes of ownership, interest, or control during the registration or license application period and/or up to two years after an approved applicant commences licensed activities. (§ 62.8)

Specifically, section 67 addresses transfers of 51% or more in ownership and organizational structure:

• A license shall become void by a change in ownership, substantial corporate change or location without prior written approval of the board. The board may promulgate regulations allowing for certain types of changes in ownership without the need for prior written approval. (§ 67.3)

Other sections in MRTA address the transferability of equity licenses (§ 87.7) and hemp licenses (§ 100), but details are still lacking.

Q. If I have a NY hemp license will I have priority getting a cannabis license?

No.

Q. If I have a NY medical marijuana license, will I have priority getting a cannabis license?

No. The statute authorizes the Board “to grant some or all [medical marijuana companies] the ability to obtain adult-use cannabis licenses” (§ 39).

However, according to this Office of Cannabis Management publication, a registered organization (i.e. medical marijuana company) may not have an interest in or own any other adult-use license type. Instead, medical marijuana company can get adult-use license privileges through a “registered organization adult-use cultivator processor distributor retail dispensary license” or a “registered organization adult-use cultivator processor distributor license.” The timing and manner of a registered organization’s participation in the adult-use market will be determined by the Cannabis Control Board.

Q. Do I need to be a NY resident to get a cannabis license?

Individual applicants must have “a significant presence” in New York. Corporations and other legal entities must:

1. Have a principal corporate location in New York,
2. Be incorporated (or otherwise organized) under the laws of New York, or
3. Have a majority of its ownership be residents of New York.

(§ 3.1)