When it comes to opening a licensed recreational marijuana dispensary in New York, being first comes with definite perks.
Beyond the initial customer traffic and early hype, the first batch of licensed businesses will get help finding a retail space and be eligible for financial assistance from the state to lease it, build it out and even purchase software and furniture.
The New York Office of Cannabis Management spelled out these advantages Tuesday afternoon during an online informational session for potential applicants. The perks could be particularly valuable to cannabis entrepreneurs in New York City’s pricey real estate market.
But state officials reiterated that they will give dibs to people who have a past marijuana conviction or a relative with a past marijuana conviction, in addition to meeting other criteria. Advocates have praised this approach as innovative, but some said there are aspects of the proposed rules and regulations that may be too restrictive.
“That licensee licensed by the Cannabis Control Board will receive access to a turn key operation,” said Chris Alexander, executive director of the state Office of Cannabis Management
Those interested in applying for the first batch of Conditional Adult Use Retail Dispensary licenses must meet a set of strict requirements — and with applications coming out soon, Alexander advised people to start gathering the necessary documentation to prove their eligibility now.
State cannabis officials proposed regulations in March that would reserve the first 100 to 200 retail licenses for New Yorkers who have a past marijuana conviction or their family members. But they must also demonstrate a track record as a successful business owner.
The regulations are still subject to change before they are finalized and are open to public comment until May 31st. Cannabis regulators have said they aim to get the first dispensaries up and running by the end of 2022.
Per the proposed rules, applicants must have owned at least 10% of a business that was profitable for at least two years and have the financial records and tax documents to prove it. And Alexander emphasized that only marijuana convictions received before March 31st, 2021, while living in New York — not arrests — will satisfy the criminal justice component.
The applicant who meets all these criteria must have at least a 51% stake in the cannabis business they’re looking to start. Applicants will also have to submit a business plan, their fingerprints and a $2,000 non-refundable fee, according to Tuesday’s presentation.
Jeffrey Hoffman, a local attorney representing people who are interested in getting New York cannabis licenses, said there are aspects of the regulations that are tripping up some clients who have sold marijuana illegally in New York and are now looking to go above board.
“My legacy clients who were smart enough not to get arrested are unbelievably pissed off,” he said. “Because it's like, ‘We were the cannabis industry for the whole time before, and now we're not getting the first bite at the apple.’”
He added that many low level offenders arrested on cannabis charges before it was legalized in New York received an “adjournment in contemplation of dismissal,” rather than a conviction.
But Alexander said the goal of limiting licenses to those who were convicted is to give a leg up to the people most impacted by previous cannabis laws.
“The charge of the Marijuana Regulation and Taxation Act is to undo some of the harms caused by marijuana prohibition,” he explained at Tuesday’s session.
Hoffman said there are other aspiring dispensary owners who served time for a cannabis conviction and “have then been a model employee at a company,” who are also frustrated that they’re not eligible in the first round.
It’s still unclear to what extent regulators will consider an applicant’s experience running an illegal cannabis operation and whether it will weigh in their favor. But Hoffman said there will likely be acceptable ways to disclose that on the application.
Alexander noted that those who don’t receive a retail license in this round will still have another chance to participate. He said additional licenses will likely become available in early 2023.
And social equity applicants — a category broader than just those with past convictions — may still be able to get financial support later on. The state has set aside $50 million to start a $200 million seed fund with private and public dollars. Some of the tax revenue generated by legal cannabis businesses can also later be used to support social equity applicants, including women- and minority- owned businesses, distressed farmers, disabled veterans, and those from communities disproportionately affected by the War on Drugs.
Alexander also encouraged people to consider other types of licenses or find ways to use their skills to get jobs in the cannabis industry rather than becoming a business owner.
“If you do marketing now, you can do marketing for cannabis companies,” he said. “If you do payroll services now, you can do that for cannabis companies.”
Those who want to submit feedback on the regulations can email email@example.com.