The New York State Legislature has passed final regulation legislation regarding medical and adult-use cannabis. However, the law went into effect 90 days later — leaving a lot of confusion about what the new laws mean for patients, growers, and consumers.

The New York State Department of Health has announced that they will be regulating the state’s medical marijuana program. The Board of Health, which is the licensing authority for the Medical Marijuana Program, will oversee the program and is composed of six members appointed by Governor Andrew Cuomo.

The effective appointment of the Chair of the Cannabis Control Board is the first tangible step towards a functioning cannabis industry in New York State.

With the passage of the Marijuana Regulation and Taxation Act (MRTA) in New York City, it is often forgotten that legalization was only the first step in allowing adult use of cannabis. The most important administrative measure is the creation of the main regulatory body, the Cannabis Control Board (CCB).

The BAC will be responsible for many of the adult licensing requirements. Key responsibilities include creating the application process for adult-use cannabis licenses and new registered businesses (RABs), as well as industry rules and regulations, all of which are promulgated under the MRTA.

Photo: gradyreese/Getty Images

The BAC will consist of five members: three appointed by the Governor and two appointed by the Senate and Assembly (one each). The president of the BCC is appointed by the governor with the advice and consent of the Senate. ARB members are appointed for a three-year term and must be citizens and residents of New York City.

The importance of the BAC presidency cannot be overstated. The presidency will have a major impact on the direction of the cannabis industry in New York. With such discretion in promulgating rules and regulations for the industry, the President has the opportunity to truly prioritize applicants who claim social and economic justice, reduce the early advantage that existing ROs may have, and create a sustainable permitting process. The chairman is also technically the person who makes the preliminary decision on whether or not to grant a particular permit.

Here are some concrete examples of how the BCC can guide the industry:

Restriction of the ability of existing ROs to sell products from other manufacturers

As noted above, there is debate as to whether the MRTA prohibits ROs from selling all adult products, not just their own, in their respective adult dispensaries. It is for the BAC to clearly regulate whether the apparent prohibition extends to retail.

Confirmation that consumer licences can be sold on the spot

Given the existence of separate retail and local consumption permits and the virtual prohibition of multiple permits, it is not clear whether a holder of a local consumption permit may also retail cannabis. Allowing both retail and consumption in licensed premises for licensees is probably the difference between a potentially sustainable business model and a failure that has little chance of survival.

Photo by Alex Azabache of Pexels

Setting of fees

Shall I explain the meaning of this? The ECC has the right to charge applicants non-refundable application fees. The way the BAC sets these fees will directly determine the number of potential applicants for the licence.

Determination of crown limits for holders of cultivation permits

We have made it very clear how important property is to the permitting process. For prospective growers, the most important factor in finding land is the amount of usable space needed. The BAC must determine if there is an acreage restriction directly related to the applicant’s need to obtain a permit to grow on the parcel.

Definition of micro-enterprises

As the authorisation of micro enterprises is one of the exceptions to the prohibition of vertical integration, many clients ask us whether they can be considered a micro enterprise. The BAC will present its definition of micro-enterprise, which may (or may not) open the door to vertical integration for a number of potential applicants.

The importance of SPC becomes clear when considering some practical issues. This begs the question: What is the status of Governor Cuomo’s appointment of the BAC chair?

The legislative session in New York ended on the 10th. June 2021. Governor Andrew Cuomo was expected to nominate a candidate for president before the end of the legislative session. Given the overwhelming support for legalization, the excitement over the threat of tax revenue, and the accumulation of delays in applications due to the fact that the chairman and the other four members of the panel will not be appointed until after this legislative session, it is hard to see how the governor would risk a late appointment. And here we are, more than halfway through June, and we may have to wait until January 2022 for the appointment of the BCC chairman.

As for the possible appointment, several names have been mentioned. It has now emerged that Governor Cuomo intends to appoint Karim Kamara, a former Member of Parliament and advisor to the Governor. This is a somewhat unexpected development, as many expected the governor to appoint Norman Birnbaum, the cannabis czar of New York.

In order not to put the cart before the horse, we will not discuss biographies and our thoughts on possible appointments until the actual appointments have been made. But like the entire cannabis industry in New York, we look forward to the actual designation as a tangible first step toward a functional cannabis industry in New York City.

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