Exciting news for the adult-use cannabis industry in New York State: on February 22, 2022, New York Gov. Kathy Hochul signed legislation creating a conditional cultivation and processing adult-use licensing structure. Sitting on her desk for only four days before being signed into law, the bill represents a significant step forward towards recreational cannabis sales in NY.
To be eligible for a conditional adult-use cultivator license, applicants must (i) have held an industrial hemp grower license issued by the New York State Department of Agriculture and Markets as of December 31, 2021, and be in good standing; (ii) have grown and harvested hemp for at least two of the past four years pursuant to the license; and (iii) have at least a 51% ownership interest in the licensed entity (applies to individual applicants.) Licensed cultivators may cultivate up to 43,560 square feet of flowering canopy outdoors, or 25,000 square feet of flowering canopy in an indoor greenhouse, and can cultivate both in and outdoors provided the greenhouse canopy does not exceed 20,000 square feet, and the total flowering canopy is less than 30,000 square feet. Cultivators can maintain up to 20 artificial lights in an indoor greenhouse, and can only operate in the same county in which they are licensed to grow hemp, and in counties adjacent to it.
Applicants who (i) applied for a cannabinoid hemp processor license before January 1, 2022; (ii) hold an active cannabinoid hemp processor license; and (iii) if an individual applicant, hold more than 51% ownership in the licensed entity, are eligible for a conditional adult-use processor license. Cannabis processing will only be permitted at the location where the processor is licensed to grow hemp, unless otherwise authorized by the Office of Cannabis Management.
Until June 1, 2023, conditional cultivators will be permitted to “minimally” process cannabis flower, and both conditional cultivators and processors will be allowed to distribute their product without an adult-use license.
As a nod to the legislature's focus on social equity concerns, both conditional licensees are required to participate in a social equity mentoring program as a condition of licensure. New York state residents over the age of eighteen who are either (i) women, (ii) individuals from communities disproportionally impacted by cannabis criminalization, (iii) minorities, (iv) distressed farmers or (v) service-disabled veterans are candidates for the program, designed to “train individuals interested in becoming licensed processors . . . with experience in processing techniques and good manufacturing practices.”
The legislation prioritizes those with conditional licenses for full licensure. Pursuant to the legislation, conditional licensees in good standing are eligible to apply for and receive a non-conditional adult use license, which at a minimum, “shall” authorize the flowering canopy size approved under the conditional program. The bill clarifies that licensees may grow hemp and process cannabis on the same premises.
Conditional licenses shall not be issued after December 31, 2022, and the conditional program will sunset on June 30, 2024. The Cannabis Control Board is tasked with reporting on the success of the program by January 1, 2023. Lawmakers and regulators are expected to approve regulatory structures for additional types of licenses later this year.
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