Cannabis regulators set final rules

State will open market to public in early October, including to large medical marijuana operations

ALBANY — New York’s cannabis regulators have finalized the rules for the budding industry, authorizing a slew of changes that will allow almost anyone to open a recreational pot business.

But the new regulations have the people in the state’s newest industry worried, concerned that the slow pace of approving their businesses may have put them at a disadvantage.

During a meeting on Tuesday, Sept. 12, the state Cannabis Control Board, which sets policy for the Office of Cannabis Management, finalized cannabis regulation policies. Now, almost anyone who can legally open a business in New York can apply to open a cannabis business, and the types of businesses that can open have expanded. It’s expected to introduce many more applicants to the industry, which has seen only 23 state-licensed dispensaries open despite thousands of applicants.

“The office expects a lot of excitement and interest in these applications, and we are committed to providing as much information as possible regarding an applicant will need to prepare in order to apply,” said Chris Alexander, OCM’s director, during Tuesday’s meeting in Albany.

The industry has been operating strictly under conditional, early-form licenses dedicated to those who had been charged with a cannabis crime under prohibition, or nonprofits that worked with them. The conditional licenses will be phased out by June, and all businesses operating conditionally and in good standing can apply to transition to a full license.

The move comes right as OCM battles in court over its conditional licenses.

A group of service-disabled veterans, who have not yet been permitted to pursue licenses, argued that the program violated the Marijuana Regulation and Taxation Act by not including them in the allowed groups for a conditional license.

A state Supreme Court judge halted the program entirely and ordered OCM to pursue final regulations late last month.

Under the regulations approved last Tuesday, there will be eight different classes of cannabis businesses: plant nurseries, cultivators, processors, cooperatives, distributors, dispensaries, delivery services and microbusinesses.

Microbusinesses will be permitted the latitude to grow, process and sell their own cannabis in small quantities of about 500 pounds per year. Microbusinesses and dispensaries are the only two facilities permitted to apply for on-site consumption permits. The regulations further defining on-site consumption have not yet been developed.

Additionally, antimonopoly rules have been put into place preventing anyone from holding a license for a retail shop alongside a license for a producer.

Investors can have a non-controlling interest in multiple licenses and a controlling stake in once license, but they cannot invest in both retail and production.

Priority status and speedy processing of applications from people impacted by prior prohibition, minority and women-owned businesses, distressed farmers and service-disabled veterans was also codified.

But the new regulations are controversial among the hundreds of people who already hold conditional dispensary, cultivator or processor licenses, and those awaiting action on the licenses they’ve begun the process to get.

The decision to open the program to everyone, which will start on Oct. 4, while hundreds of conditional applicants still await entry, has them concerned. The Farm Bureau, representing cultivators, and the state Cannabis Association representing current businesses, have opposed the new regulations.

Advocates are especially concerned about the decision to allow the nearly decade-old medical marijuana companies, called registered operators or ROs, to apply for recreational licenses.

Companies like Verilife, MedMen and Etain with multi-state operations and millions of dollars in annual revenue are likely to pursue recreational licenses for their medical facilities across the state. Medical growing operations under other, less well known but still significant companies could seek recreational growing licenses.

“For New York to protect locally based small businesses, the following steps must be taken: One, reform the potency tax, as this disproportionately harms small businesses; Two, regulations must be immediately fixed,” Cannabis Association officials said in a statement.

“This includes giving the ROs and small, locally based cultivators and processors equal limits of canopy space. Three, prioritize the enforcement of illegal operators instead of coming down on legal, small businesses with more endless red tape.”

Renee St. Jaques, the associate director of public policy for the Farm Bureau, said during the board’s public comment session Tuesday that ROs are a major issue.“Allowing the ROs to come in is not the answer, it is the issue,” she said. “It’s just going to push the farmers out, just like you’ve seen in other states.

“New York’s cannabis farmers and processors have been united in their criticism of the Cannabis Control Board and the OCM in the last few months.

Thousands of pounds of cannabis products sit in their facilities across the state, accounting for thousands of work hours and billions of potential revenues that cannot be sold because there is no store shelf to sell them. Cannabis grown under state licenses can only be sold at state-licensed dispensaries, not across state lines or even at the tribal-owned and regulated dispensaries on Native American lands across the state.

The state of the industry is so bad, advocates say, that some cannabis growers are talking of self-harm. On Tuesday, Jeanette Miller, the co-founder of the Cannabis Farmers Alliance, wore a handmade noose of rope around her neck to the Cannabis Control Board’s meeting, meant to demonstrate how dire her situation is.

“I’m wearing this around my neck today because I feel like I’m going to hang myself,” she said.

“We’re tired, we’re done, we’re struggling,” she continued.

“We need help, you don’t answer.”


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