Key Issues for New York Regulators to Keep in Mind
By Andrew DeWeese, Ramsey Chamie, and Kevin Jacoby
This content was originally shared via the New York Cannabis Growers and Processors Association's newsletter. Subscribe at the bottom of the homepage.
Treat marijuana businesses as legitimate businesses, not criminals.
Regulatory focus should be on helping licensees be successful, not searching for a “gotcha” violation or having the attitude that licensees are criminals until proven otherwise. Regulators should be partners, not adversaries, and have clear enforcement priorities in place to clarify that the regulatory mission is to help honest businesses succeed, rather than simply to catch licensees who find themselves in regulatory traps. A victimless regulatory violation is better addressed through education and training.
Similarly, marijuana use among regulatory staff must not be prohibited, and should be normalized to the extent possible under current law. Prohibiting regulatory staff from using the substance they are regulating creates an “us vs. them” mentality that can drive a wedge between regulators and industry stakeholders.
Do not cripple marijuana businesses by forcing them to pay business costs for a long period of time while waiting for licensure.
If cannabis businesses have to pay rent and utilities for 12-24 months while waiting for final licensure inspection, with no revenue coming in, it will destroy many fledgling small businesses, as it did in Oregon. In some cases, cannabis businesses wasted money on infrastructure that turned out not to be required after rules changed in the interim, in addition to the substantial carrying costs of a non-operating business, which was usually paying premium cannabis rent for their land or qualifying business address. Instead, require applicants to certify compliance upon submission of their application materials, and to notify the regulatory agencies that they have begun operating and are ready for final inspection. This has been working fine in Oregon since it was implemented recently.
Do not assume the existence of a regulated market automatically signals the demise of the traditional market.
Traditional market participants are those individuals who kept marijuana alive and accessible through prohibition. The best state-legal marijuana regulatory systems attempt to bring traditional market participants into the legal system; the worst assume setting up a regulated market will automatically mean the elimination of the traditional market. Similarly, if compliance burdens are too great (i.e., regulations are too complex for laypeople to intuitively understand, or penalties for noncompliance are draconian, not to mention the federal and state tax burdens), former traditional market participants will fall out of the regulated market and re-enter the traditional market. The bottom line is cost.
Punish dishonesty; reward transparency.
Licensees should be held to a high standard of honesty and integrity. Knowingly making false statements, particularly in the context of misleading consumers or regulators, should be punished appropriately. At the same time, regulators should incentivize good business practices. Honest actors should have nothing to fear from their regulatory agency, and thus should be encouraged to self-report any violations by the offer of reduced or eliminated penalties and a collaborative cure process.
You can contact Andrew DeWeese, Ramsey Chamie, and Kevin Jacoby at info@gl-lg.com or 503-488-5424.
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This news article is intended for educational purposes only and is not intended to give legal advice. If you are seeking legal advice on the subject please consult one of our New York licensed attorneys: Perry Salzhauer, Ramsey Chamie, or Brittany Adikes.
