New York Conditional License Bill Proposed

On January 25, 2022, New York State Senator Michelle Hinchey introduced Senate Bill 8084 (S8084), a proposed law that would provide conditional adult-use cultivator and processor licenses in the state of New York. Conditional licenses in this context means licenses that would allow qualified cultivators and processors to grow and process adult-use cannabis while the rest of the adult-use market begins to take shape. In other words, cannabis can go in the ground while New York’s cannabis regulators figure out how to issue all adult-use licenses and prepares regulations to govern the industry.

The proposed S8084 would allow the New York Department of Agriculture (NYDA) to work with the Office of Cannabis Management (the Office) to establish a conditional adult-use cannabis cultivator and processors license to previously authorized hemp growers and processors. These licenses would expire in June 2023, once regular cultivator and processor licenses are likely to become available. Both conditional cultivator and processor licensees would be subject to the same authorizations and restrictions applied for regular cultivator and processor licenses. The applicant pool would be limited to applicants who have previously acquired a hemp authorization.

Conditional Cultivator License

Qualifications

In order to be eligible under S8084, a conditional cultivator applicant must:

1. have held a valid hemp grower authorization as of December 31, 2021, which allowed for the growing of cannabinoid hemp and be in good standing with the NYDA;
2. have grown and harvested hemp for the last two years of the past four years and be able to prove the amount of hemp planted; and
3. as an individual applicant have an ownership interest of fifty-one percent or more, or as any other applicant have an ownership interest of fifty-one percent or more of the entity applying for the license.

Limitations

Under the proposed S8084 a conditional cultivator licensee could only grow cannabis outdoors or in a greenhouse without the use of artificial lighting. Artificial lighting would only be permissible to maintain immature or vegetative mother plants. A conditional cultivator licensee would be permitted to cultivate up to 43,560 square feet outdoors and 25,000 square feet in greenhouses.

A conditional cultivator license could only operate in the same or adjacent county in which the applicant had previously been authorized to grow hemp. A conditional cultivator licensee could manufacture and distribute cannabis flower until June 1st, 2023. After that date, in order to manufacture and distribute cannabis, the licensee would need a processor and distributor license. During the conditional period, there would be restriction on any ownership or organizational structure changes.

The conditional cultivator license would be issued for a two year period. No later than 90 days before the expiration of the conditional cultivation license, the Office of Cannabis Management (Office) must determine whether the licensee is in good standing. If they are, they could be issued a regular cultivator license. A conditional licensee cannot apply for a regular cultivation license while holding the conditional license.

Conditional Processor License

Qualifications

In order to be eligible under S8084, a conditional cultivator applicant must:

1. have applied for a cannabinoid hemp processor license before January 1, 2022;
2. hold an active cannabinoid hemp processor license issued by the Office; and
3. as an individual applicant have an ownership interest of fifty-one percent or more, or as any other applicant have an ownership interest of fifty-one percent or more of the entity applying for the license.

Limitations

Processing of cannabis is only allowed where the conditional processor license applicant processed hemp. A conditional processor could only perform extraction activities if authorized under the hemp processor license and all extraction methods are subject to Office approval.

A conditional processor license can distribute cannabis products until June 1, 2023. After that date a conditional processor licensee could only distribute cannabis with a distributor license. A processor licensee could not make any changes to its ownership or organizational structure during the conditional period.

Like the conditional cultivator license, a conditional processor license must be in good standing at the end of the two-year license window in order to obtain a regular processor license, once the conditional period ended. A conditional processor could only process cannabis at the same location where the licensee is authorized to process hemp, unless expressly authorized otherwise.

Bottom Line

With many New Yorkers concerned about how long it will take for the adult-use market to open, S8084 should come as a welcome piece of proposed legislation. By opening up the ability to issue conditional cultivator and processor licenses, once dispensaries and cultivation lounges go live, there will be cannabis to fill the shelves. Green Light Law Blog will continue to monitor legislative activity in New York and will be ready to assist hemp cultivators and processors obtain conditional licenses if and when S8084 becomes law.

For more New York coverage, check out our New York blog posts:

• How To Apply for a New York Cannabis License

• New York Adult-Use Cannabis License
• New York Cannabinoid Hemp (CBD) Processor and Retailer Licenses
• New York Cannabis Control Board to Allow Medical Home Cultivation
• New York Published Proposed Emergency Rules on Hemp Cultivation Licensing: What’s Going On?
• The New Destination for Cannabis Tourism: New York, Where You Can Legally Consume in Public

• Vertical Integration In Marijuana Legislation – Looking Ahead to New York
• Key Issues for New York Regulators to Keep in Mind
• What is the Timeline for Adult-use Cannabis Sales in New York?
• How To Apply for an On-Site Consumption License in New York
• New York’s Marijuana Regulation and Tax Act: Equity Plan and Social & Economic Equity Applicants