If you are applying for an adult-use cannabis license in New York, please please please hire a New York cannabis attorney.
It doesn’t have to be be us, but it should be someone who is actually familiar with the licensing rules and regulations beyond just reading media headlines. We’ve written about it before (here, here and here). Unfortunately, we’ll likely write about it again. Picking the wrong attorney and following inaccurate advice can lead to the loss of time, money and the opportunity to obtain a license in New York’s cannabis industry (or any other state’s cannabis industry for that matter).
Licensing rules and regulations are dense. There are technicalities that make the difference between a license working for a potential applicant and being waste of time and money. The particular rule that makes a difference for an applicant may not be on the first page or the second page of a set of rules and regulations, or even something that’s referenced in official statements. That’s why really, really knowing each specific set of rules and regulations, and having a strong feel for administrative policies and behaviors, is critical to submitting a successful application.
The most recent trigger for our soapbox: the location options for New York’s Conditional Adult-Use Retail Dispensary (CAURD) license. For the last few weeks, we have received too many calls from prospective applicants, many of whom have already identified real estate for a non-conditional retail dispensary license, asking to submit a CAURD application. When asked about the CAURD’s apparent mandate that licensees accept a state-selected dispensary location, we are told that the prospective applicant has “heard” or “read”–or even “been advised”–that CAURD applicants can select their own dispensary locations.
We are confident that CAURD applicants cannot select their own dispensary locations, and any definitive guidance that they can is questionable, at best. Section 116.7(b)(6) of the CAURD regulations makes it a condition of licensure that the licensee “[accept] a dispensary location identified by the fund or office[.]”
The Office of Cannabis Management also published a very useful FAQ that all prospective applicants should read (and which we will write about), which provided as follows (emphasis added):
31. Can I choose where my CAURD licensed retail dispensary will be located?
Applicants who are selected will be assigned a retail dispensary location in one of the fourteen (14) geographic regions of NYS. When applying you will be asked to indicate which region(s) of the State you would prefer to be assigned a license in. You will be able to rank your top five (5) preferred regions. You will not be able to choose the specific street address or neighborhood for this dispensary. Provisional licensees will be able to share their preferences among the available locations in the region for which they have been selected.
If you would like to select your own site for a retail dispensary, the CAURD license may not be the right fit for you. Future adult-use retail dispensary licenses (and those for on-site consumption sites) will have more flexibility in allowing licensees to choose their own location.”
Which is not to say there is 100% certainty, because the OCM also published comments and responses for the CAURD regulations, and included this contradictory tidbit (emphasis added):
“COMMENT: Commenters requested clarification from the Office on the nature of agreements which applicants would be required to enter into as described in section 116.7(c)(6) of the proposed rules. Commenters requested clarification on what support would be offered by the New York Social Equity Cannabis Investment Fund and the specifics of that support, such as disbursement schedule, repayment rate, acceptable expenses, and tax repercussions of accepting support. Commenters noted that “financing with favorable terms” is difficult for cannabis businesses to secure and expressed a desire to obtain support from the Fund for costs beyond build-out of the dispensary. Commenters stated it was unclear what level of control the state would have over their business as a result of accepting this support. Commenters were concerned that the terms of agreements with the Fund would be unfavorable and that licensees would be trapped in predatory arrangements. Commenters expressed a desire to apply for licensure without receiving location assistance from the Fund. Commenters suggested that, before approving any agreements between licensees and the fund, the Board consult with the Chief Equity Officer and Cannabis Advisory Board to ensure the terms and conditions of the agreements promote equity.
RESPONSE: The proposed rules only require licensees to enter into agreements which have been approved by the Board and been made available by the Office. The proposed regulations do not insist upon applicants to use New York Social Equity Cannabis Investment Fund locations and provide for the allowance of an applicant to provide their own location that complies with the proposed regulations. The Office is working with the Fund to ensure that the location assignments are a benefit to all applicants to ensure their success. No changes have been made to the proposed regulations as a result of this comment.”
We expect to get some clarity from the OCM regarding the contradictory guidance, and will update this post as soon as we do. With that said, the disconnect between media reports (which do not and should not get into the gritty details of licensure) and the actual application process should not be a problem because prospective applicants should get legal advice on the actual rules and regulations before deciding to apply. That there is still so much misinformation given the prevalence of New York “cannabis” attorneys is disconcerting.
We’ve said it before and we’ll say it again: if you are planning on applying for a cannabis license, you don’t have to hire us, but you should hire a local, New York cannabis attorney who has more than passing knowledge of the applicable rules and regulations.
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