New York Cannabis Licensing, Part 1: MRTA Adult Use License Types

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New York Cannabis Licensing, Part 1: MRTA Adult Use License Types

Next, our series of posts on the New York Marijuana Revenue and Taxation Act (MRTA) provides an in-depth look at adult licensing terms. There is a lot to unpack here and a wealth of information about the license types and the licensing process. So much so that we’re going to split our adult MRTA license terms summary into three parts.

Part 1 provides details of the license types approved by the MRTA and the restrictions for each license type. Part 2 describes the provisions of the MRTA for the license application process in detail. Part 3 is about New York’s social and economic justice program and everything else applicants need to know about licenses for adult use.

Before we begin, the standard caveat: The MRTA only provides the framework for the adult licensing process. The rules and regulations for the application process and the cannabis industry in New York are developed and implemented by the Cannabis Control Board (CCB). Our summary is based on the text of the MRTA only, and the actual rules and regulations may vary once the CCB starts creating rules.

Let’s get into that now. The MRTA authorizes several different license types, each of which enables licensees to provide a defined list of services. The initial licenses expire 2 years after they have been issued. There are explicit restrictions on holding multiple licenses, which generally results in vertically integrated cannabis companies being banned. The license types:

Cultivator licenses

Which activities are authorized? In short, growing and selling cannabis to any processor licensed by the CCB. “Growing” encompasses all parts of the agricultural process, including planting, growing, cloning, harvesting, drying, sorting and trimming cannabis.

What are the license restrictions? Licensees may also acquire a processor license and a distribution license, but only for the processing and distribution of the licensed cultivator’s own products.

What else do I have to know?

  • The CCB can create rules that allow a limited amount of processing without a processor’s license.
  • The CCB can authorize cultivator licensees to work in more than one location (but not to have more than one license).

Registered Organization Adult-Use Cultivator Processor Distributor Retail Dispensary License

Which activities are authorized? Basically the same activities as vertically integrated registered organizations, but with adult retail sales only allowed in 3 of the registered organization’s medical pharmacies and limited to the registered organization’s own products.

What are the license restrictions? Licensees cannot own other adult licenses.

What else do I have to know?

  • The registered organization must maintain its medical cannabis license and continue to sell medical cannabis (the level of continued sales of medical cannabis is determined by the CCB).

Registered Organization Adult-Use Cultivator Processor Distributor License

Which activities are authorized? The same activities as cultivators, processors, and adult distribution licensees.

What are the license restrictions? Licensees cannot own any other adult license.

What else do I have to know?

  • A registered organization that is licensed to cultivate, process and distribute for adults can only sell its own products.

Processor license

Which activities are authorized? Buying cannabis from licensed breeders, processing the cannabis (mixing, extracting, infusing, packaging, labeling, marking and otherwise making or preparing cannabis products) and selling cannabis products to licensed dealers.

What are the license restrictions? Licensees receive a distribution license to distribute their own products, but no other licenses.

What else do I have to know?

  • A processor cannot perform other activities in the licensed location.
  • The CCB may authorize processor licensees to operate in more than one location.
  • The CCB will establish minimum operating requirements for processor licensees.

Cooperative license

Which activities are authorized? Basically, the cooperative license enables vertically integrated operations: acquisition, ownership, cultivation, processing, distribution and sale of the licensed premises.

What are the license restrictions? To qualify as a cooperative, the licensee must:

  • Consist of New Yorkers;
  • Registered as an LLC, LLP, or other CCB authorized business structure;
  • Subordinated capital, both in terms of control over the cooperative and ownership of the financial interests arising from the cooperative’s operations;
  • Be democratically controlled by the cooperative members with one vote per member;
  • Transfer and allocation of all increases resulting from their cooperative, with priority to and among the cooperative members in proportion to the respective active participation of the members; and
  • Must work according to the 7 Cooperative Principles published by the International Cooperative Alliance in 1995.

What else do I have to know?

  • Cooperative members cannot be members of more than one cooperative.
  • Cooperatives and cooperative members cannot have any interest in other licensees.
  • The CCB will enact regulations on cooperatives, including canopy restrictions on the size and scope of cooperative licenses, with the aim of incentivizing the use of cooperatives.

Dealer license

Which activities are authorized? Buying cannabis and cannabis products from authorized licensees and selling cannabis and cannabis products to retail pharmacies and local consumption points.

What are the license restrictions? Distribution licensees can only participate in one breeder and processing licensee, but then only sell cannabis that is grown and processed by that licensee.

What else do I have to know?

  • Distribution licensees may charge a reasonable fee (as approved by the CCB) for the distribution of cannabis, also based on the amount of cannabis distributed.
  • The CCB will issue minimum operating requirements for dealers.

Retail dispensary license

Which activities are authorized? Sale and delivery of cannabis and cannabis products in licensed premises.

What are the license restrictions? No person can have an interest in more than 3 retail pharmacies. If a person or organization has a retail license, the licensee cannot obtain another license under the MRTA.

What else do I have to know?

  • Applicants for a retail license must provide evidence of ownership or possession of the premises to be licensed within 30 days of the final approval of a license through a lease, administrative agreement, or other arrangement, with a rental period at least as long as the license period.
  • Retail pharmacies must be on a storefront with the main entrance accessible from the street and on a public thoroughfare.
  • The licensed premises must be commercial and at least 500 feet from a school or 200 feet from a place of worship.

Microbusiness license

Which activities are authorized? Small business limited cultivation, processing, distribution, supply and sale of cannabis and cannabis products.

What are the license restrictions? Micro-businesses cannot be interested in another license and only sell their own cannabis and cannabis products to retail pharmacies.

What else do I have to know?

  • The size, scope and eligibility of micro-enterprises are determined by the CCB.
  • Microbusiness licenses are issued in a way that promotes applicants for social and economic justice.

Delivery license

Which activities are authorized? Delivery of cannabis and cannabis products independent of any other adult cannabis license.

What are the license restrictions? Delivery licensees cannot have more than 25 people offering full-time paid delivery services per week. Delivery licensees cannot be interested in more than one delivery license.

What else do I have to know?

  • The criteria and scope of permitted activities for delivery licensees are determined by the CCB.
  • Delivery licenses are issued in a way that encourages applicants for social and economic justice.

Kindergarten license

Which activities are authorized? Manufacture, distribution and sale of clones, immature plants, seeds and other agricultural products that are used to grow, propagate and grow cannabis.

What are the license restrictions? Cultivating licensees can obtain a nursery license to sell directly to other cultivators, cooperatives, micro-businesses, and registered organizations.

What else do I have to know?

  • The Office of Cannabis Management gives recommendations for the application process, the licensing criteria and the scope of the licensed activities.
  • Kindergarten licenses are issued in a way that promotes applicants for social and economic justice.

On-site consumption license

Which activities are authorized? Selling and consuming cannabis and cannabis products, including smoking and vaping, within the licensed premises.

What are the license restrictions? Owning a stake in up to 3 on-site consumption licenses is permitted, but a licensee cannot be interested in any other license approved by the MRTA.

What else do I have to know?

  • Applicants for an on-site consumption license must provide evidence of ownership or possession of the premises to be licensed within 30 days of the final approval of a license through a lease, administrative agreement, or other arrangement, with a rental period of at least as long as the license Period.
  • The licensed premises must be commercial and at least 500 feet from a school or 200 feet from a place of worship.
  • Nobody under the age of 21 is allowed to enter on-site consumption facilities.

This covers all license types. The biggest advantage is that vertical integration is generally prohibited. Potential applicants have to think a lot about the specific license they are applying for. Once a license has been granted, the licensee is currently limited to activities in a defined segment of the New York cannabis industry. Visit the law Law Blog for Part 2 of the MRTA’s licensing terms.