New York’s Cannabis Control Board – What’s Up?

With all the excitement about the passing of the Marijuana Regulation and Taxation Act (MRTA) in New York, it is often forgotten that legalization was just the first step in obtaining adult cannabis licenses. The most important administrative act is the formation of the main supervisory body, the Cannabis Control Board (CCB).

The CCB will be responsible for many of the requirements for issuing adult licenses. His main responsibilities include creating the actual adult cannabis license application process and new registered organizations (ROs), as well as the rules and regulations of the industry, all of which are enacted under the MRTA.

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The CCB consists of five board members: three appointed by the governor and two by the Senate and the Assembly (one each). The chairman of the CCB is appointed by the governor with the advice and approval of the Senate. CCB members are appointed for a three-year term and must be citizens and residents of New York.

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It is difficult to overestimate the importance of the chairman of the CCB. The chairman will have an immense influence on the direction of the New York cannabis industry. With so much leeway in issuing the rules and regulations of the industry, the chair has the ability to really prioritize applicants for social and economic justice, reduce the early lead of existing ROs, and establish a sustainable licensing process. The chairman is also technically the person who makes the preliminary decision as to whether a particular license should be granted.

Below are some practical examples of the CCB’s ability to steer the industry:

Limitation of the RO’s existing ability to retail the products of other manufacturers

As mentioned earlier, there is some debate about whether the MRTA specifically restricts RO’s ability to sell adult products in their respective adult dispensaries rather than just their own products. It is up to the CCB to regulate clearly whether the apparent ban applies to the retail trade.

Confirmation of whether licensees can retail for local consumption

With separate licenses for retail and on-site consumption, as well as an almost complete ban on owning multiple types of licenses, it is unclear whether an on-site consumption licensee can also sell cannabis in retail stores. Allowing both retail sales and on-site consumption for licensees for on-site consumption is likely the difference between a potentially sustainable business model and a money loser that is unlikely to survive.

Will marijuana legalization be resumed in New York Bungle in 2021?Photo by Alex Azabache from Pexels

Set application fees

Do we need to explain the meaning of this statement? The CCB has the power to charge applicants a non-refundable application fee. How the CCB sets this fee has a direct impact on how many potential licensees will submit applications.

Establishing canopy limits for cultivator licensees

We have been quite loud about the importance of real estate as part of the licensing process. For potential grower licensees, an important consideration when looking for real estate is how much usable square footage is required. The CCB will determine if there is a canopy limit that directly correlates with the needs of applicants for a license to cultivate property.

Definition of a micro enterprise

Since the micro-enterprise license is one of the exceptions to the prohibition on vertical integration, we asked many customers if they would qualify as a micro-enterprise. The CCB will present its definition of a micro-enterprise which may (or may not) open the path to vertical integration for a range of potential applicants.

The importance of the CCB becomes clear if one just looks at a few practical questions. All of this begs the question: what is the status of Governor Cuomo’s appointment of the CCB chairman?

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The New York legislature ended on June 10, 2021. It was expected that Governor Andrew Cuomo would have nominated someone for chair in good time, who should be approved by the end of the legislature. Given the overwhelming support for legalization and the excitement of the upcoming tax revenue, as opposed to the cascading delays in approving proposals that would be caused by the CCB’s chairman and four other board members not being appointed by the end of this legislature, it is hard to understand that the governor would run the risk of not making appointments on time. But here we are, more than in mid-June, and can now wait until January 2022 for the appointment of the CCB chairman.

As for the nomination, some names have been dropped. It now appears that Governor Cuomo intends to nominate Karim Camara, a former MP and adviser to the governor. This is a somewhat surprising development as it was widely expected that the governor would nominate Norman Birnbaum, the cannabis tsar of New York.

In order not to put the carriage in front of the horse, we hold back from going through the bios and thinking about possible dates until an actual nomination has been made. But like the rest of the New York cannabis industry, we’re eagerly awaiting the actual nomination as the first tangible step towards a functioning cannabis industry in New York.

Simon Malinowski is an attorney with Harris Bricken. This story was originally published on the Canna Law Blog and reposted with permission.

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