New York regulators release guidelines for cannabis retailers

The New York City Bureau of Cannabis Management on Friday released new guidelines for retail spending on adult-use cannabis, just weeks before the state’s new legal marijuana market is expected to launch later this year. New York lawmakers legalized cannabis last year with the passage of the Marijuana Regulation and Taxation Act (MRTA), with regulated sales of recreational marijuana scheduled to begin by the end of 2022.

Regulators began accepting applications for adult cannabis dispensaries this summer with a program that revokes the state’s initial recreational marijuana retailer licenses for those convicted of past cannabis-related crimes. The guidelines, released last week, are designed to help potential marijuana dealers develop their business and operational plans.

“The purpose of this guidance document is to provide the framework that will assist licensees of conditional retail adult use dispensaries to plan the operation of their dispensary before the regulations are formally adopted,” wrote the Office of Cannabis Management (OCM) in the 27-page document released on Friday.

The new rules provide guidance on issues such as cannabis dispensary record keeping, staff training requirements and inventory management. The rules require adult dispensaries to source their products only from regulated retailers and specify what types of goods may be sold. The document also includes guidelines for selling cannabis through in-store, drive-through, and delivery channels.

The rules require pharmacies to be at least 500 feet from schools and at least 200 feet from buildings used exclusively as places of worship. The agency noted that adult-use cannabis retailer guidelines apply until full regulations are approved and posted online, which must happen before recreational marijuana officially opens.

“Compliance with all current and future state rules, regulations and laws is required of all licensees to remain in good standing with the Office,” the OCM wrote in the introduction to the guidelines. “This guidance document provides clarity as to what the Office’s expectations are in relation to these regulations and laws currently in force and the regulations that will be promulgated in the future.”

Guidelines for MSOs in New York

After reviewing New York City’s guidelines for adult-use cannabis dispensaries, Kaelan Castetter, chief executive of consultancy Castetter Cannabis Group, told local media that the OCM’s original rules appear to be relatively standardized for the industry. But he added that a section of the new rules could pose problems for the fledgling industry.

Under the new guidelines, the “real stakeholders” behind dispensaries, including owners, passive investors and service providers, are prohibited from investing in companies licensed to grow, process or distribute cannabis in New York or any other state . The regulation effectively prohibits multistate operators (commonly referred to as MSOs) and other vertically integrated cannabis companies from doing business in the New York market.

“I understand what they’re trying to do, but it’s a very protectionist approach,” Castetter said. “Basically, if you do business in another state — unless you just own a pharmacy in another state — you can’t be part of a retailer here in any way…that’s very anti-MSO.”

Earlier this month, New York Gov. Kathy Hochul confirmed that the first regulated recreational cannabis dispensaries will open this year, with nearly two dozen stores opening by the end of December. In an Oct. 5 interview with the editorial board of Advance Media New York, Hochul said the state’s plan to open 20 retail pharmacies for conditional adult use by the end of 2022 is “still on track” and that “another 20” Retailers would open about every month thereafter.

Hochul pointed out that New York’s plan to regulate recreational cannabis includes social justice provisions designed to ensure those harmed by decades of cannabis prohibition have a path to ownership in the regulated marijuana industry. Under state regulations, the first 100 cannabis dealer licenses to use cannabis will be awarded to applicants with a history of marijuana-related offenses.

“We will ensure that this is a model for the rest of the nation – particularly with our desire to ensure that people who have been adversely affected by the criminal justice system … have the opportunity to work in this area,” Hochul said.