New York Announces Major Changes to Medical Cannabis Program

Following up from its August 10th news release, the New York State Department of Health has published proposed regulations to the New York State Register today that detail some substantial changes ahead for the program (see pages 5-7). The proposed rules are subject to a 30-day public comment period before they can be be adopted.

The state will now permit new forms of products, like capsules, chewable tablets and lozenges.  Additionally, advertising restrictions were reduced, with registered organizations now permitted to use lighting with their signage for dispensaries, which no longer are limited to black and white. Even with the changes, the program, which currently serves 28,077 certified patients, has room for further improvement, according to Jeremy Unruh, General Counsel at PharmaCann.

New York recently added five new registered organizations, bring the total to ten, including Citiva Medical, Columbia Care, Etain, Fiorella Pharmaceuticals, MedMen, NYCANNA, PalliaTech NY, PharmaCann, Valley Agriceuticals and Vireo Health. Publicly-traded iAnthus Capital Holdings (CSE: IAN) (OTC: ITHUF) recently announced a pending acquisition of Citiva. MedMen acquired Bloomfield Industries earlier this year.

Here is the complete text of the proposed rules:

Substance of revised rule (Full text is posted at the following State
Pursuant to the authority vested in the Commissioner of Health by Section
3369-a of the Public Health Law (PHL), Part 1004 of Title 10 (Health) of
the Official Compilation of Codes, Rules and Regulations of the State of
New York, and pursuant to Section 502 of the PHL, Subpart 55-2 of Title
10, are amended, to be effective upon publication of a Notice of Adoption
in the New York State Register, to read as follows:

§ 1004.1 Practitioner registration. Section 1004.1(a) and (b) are
amended to align with the statute, which requires practitioners to complete
a two to four-hour course and register with the department before certifying
patients for medical marihuana.

§ 1004.2 Practitioner issuance of certification. Section 1004.2(a) is
amended to clarify the department’s expectation that practitioners adhere
to new section 1004.2(e) which details the statutory requirement to consult
the Prescription Monitoring Program Registry. Section 1004.2(a) is further
amended to require registered practitioners to indicate on patient
certifications whether a patient is temporarily residing in New York State
for the purpose of receiving care and treatment from the practitioner.

§ 1004.3 Application for registration as a certified patient. Section
1004.3(b) is amended to clarify that New York State residents must show
proof of residency. Section 1004.3(b) is amended to remove the requirement
that applicants include a statement in their application if they are
temporarily residing in New York State for purposes of receiving care and
treatment in in the state, as this requirement will now be documented by
the certifying practitioner.

§ 1004.4 Designated caregiver registration. Section 1004.4(b) is
amended to indicate that acceptable proof of residence for a caregiver
includes a New York State non-driver identification card.
§ 1004.5 Application for initial registration as a registered organization.
Section 1004.5(b) is amended to clarify the requirement to submit a prepared
financial statement upon initial application for designation as a
registered organization.

§ 1004.6 Consideration of registered organization applications. Section
1004.6(a) is amended to allow forms of payment other than a certified
check. Section 1004.6(e) is amended to clarify that a registered organization’s
registration may be amended instead of the application for

§ 1004.10 Registered organizations; general requirements. Section
1004.10(a) is amended to include a process in which the department will
provide a statement of findings to a registered organization, and that the
registered organization must respond and implement a plan of correction
to address any deficiencies identified by the department. Section
1004.10(a) is also amended to allow manufacturing materials to be submitted
to the department upon request and to reduce sample retention duration
from two years to thirty days after the date of expiration. Further, this
section is amended to clarify that registered organizations must notify the
department of adverse events and other incidents within 24 hours and
must inventory and maintain records of medical marihuana products or
by-products which are disposed. Section 1004.10(a) is also amended to
account for records that may need to be maintained for a time period other
than five years and to require registered organizations to post a registration
certificate in a conspicuous location on the premises of each manufacturing
and dispensing facility site. Section 1004.10(b) is amended to clarify
criminal history requirements for registered organization managers or

§ 1004.11 Manufacturing requirements for approved medical marihuana
product(s). Section 1004.11(a)(2) is amended to update the allowable
range of THC and CBD concentration per dose and brand for potency testing
purposes, and is amended to remove the term “extraction” from the
definition of a brand. Section 1004.11(c) is modified to remove the prohibition
on the use of unprocessed whole flower, to coincide with amendments
to section 1004.11(g) and the allowable forms of administration.
Section 1004.11(c) is also amended to clarify reporting requirements for
other cannabinoid components at >0.1%. Section 1004.11(e) is amended
to update the allowable range of THC and CBD concentration per dose
and brand for potency testing purposes and is updated to clarify that the
New York State Department of Environmental Conservation is the authority
which registers acceptable pesticides. In addition, section 1004.11(e) is
modified to add a requirement that registered organizations shall ensure
continual environmental monitoring of harvested plant material awaiting
additional processing. Section 1004.11(g) is modified to allow registered organizations to produce medical marihuana products in new forms of
administration. Section 1004.11(h) is amended to allow registered
organizations to break the seal of an approved medical marihuana product
for internal quality control testing or destruction. Section 1004.11(k) is
amended to clarify labeling requirements related to stability studies. Section
1004.11(m) is amended to clarify stability testing requirements and to
account for initial stability testing limitations. Section 1004.11(n) is
amended to make clear that registered organizations may not use any cannabinoid
preparation not produced by a registered organization in an approved
manufacturing facility.

§ 1004.12 Requirements for dispensing facilities. Section 1004.12(a) is
amended to clarify that medical marihuana products may not be dispensed
or handled unless an individual with an active New York State pharmacist
license is on the premises and supervising. Section 1004.12(a) is further
revised to clarify that dispensing facility pharmacists must complete a four
hour course approved by the commissioner pursuant to section 1004.1(b).
Section 1004.12(b) is amended to allow dispensing facilities to sell additional
items. Section 1004.12(d) is stricken to allow food or beverages to
be consumed on the premises of a dispensing facility. Section 1004.12(f)
is changed to section 1004.12(d) and new section 1004.12(d) is amended
to include a requirement that the Prescription Monitoring Program (PMP)
Registry be consulted prior to dispensing approved medical marihuana
products. Section 1004.12(g) is changed to section 1004.12(e) and new
section 1004.12(e) is amended to clarify dispensing facility access
restrictions. Section 1004.12(h) is changed to section 1004.12(f) and new
section 1004.12(f) is revised to clarify that labels shall include the expiration
date of the product once opened. Section 1004.12(m) is changed to
section 1004.12(k) and new section 1004.12(k) is modified to clarify the
documentation requirements for dispensing facilities that accept returns of
approved medical marihuana products and to ensure secure storage until
returned products can be properly disposed.

§ 1004.13 Security requirements for manufacturing and dispensing
facilities. Section 1004.13(a) is revised to clarify that production and
harvesting are included in the definition of manufacturing and a video
surveillance requirement is also added to the disposal process. Section
1004.13(a)(8) is amended to allow registered organizations to use an
automatic voice dialer, digital dialer or other acceptable industry standard
equivalent. Section 1004.13(c) removes the requirement that a back-up
alarm system needs to be provided by a different company than the primary
alarm. Section 1004.13(g) reduces the frequency of alarm system
testing that must be conducted by the registered organization. Section
1004.13(h) addresses visitors at the manufacturing facility. Section
1004.13(i) is amended to clarify the requirements for storage of marihuana.
Section 1004.13(j) is amended to clarify that registered organizations must
store medical marihuana in such a manner as to protect against physical,
chemical and microbial contamination and deterioration. Sections
1004.13(n)-(p) are modified to remove the requirement that registered
organizations only transport approved medical marihuana products from a
manufacturing facility to dispensing facilities.

§ 1004.14 Laboratory testing requirements for medical marihuana. Section
1004.14(b) is amended to add the requirement that no immediate family
members of a board member, officer, manager, owner, partner, principal
stakeholder or member of a registered organization shall have an interest
or voting rights in the lab performing testing on medical marihuana. Section
1004.14(c) is amended to clarify final product testing sample
requirements. Section 1004.14(d) is modified to clarify that registered
organizations may test final products that have been packaged. Section
1004.14(e) is amended to add the requirement that sampling methodologies
must be approved by the department. Section 1004.14(g) is amended
to clarify the list of contaminants for which testing must occur and to
clarify that pesticides include herbicides and fungicides. Section
1004.14(h) is amended to clarify stability testing requirements for open
and unopened products. Section 1004.14(i) is added to include a disposal
requirement for laboratories. Section 1004.14(j) is added to include a
requirement for laboratories to return medical marihuana products deemed
unsuitable for testing to the registered organization.

§ 1004.16 Medical Marihuana marketing and advertising by registered
organizations. Section 1004.16(a) is amended to remove the requirement
that only a single black and white sign may be allowed on the external
structures of a registered organization. Section 1004.16(a) is also amended
to remove the restriction that external signs not be illuminated. Section
1004.16(m) is amended to clarify that registered organizations may educate
practitioners about medical marihuana brands or devices offered by
the registered organization.

§ 1004.20 Proper disposal of medical marihuana products by patients or
designated caregivers. Section 1004.20 is amended to allow patients and
caregivers to return approved medical marihuana products to the dispensing
facility from which they were purchased or any dispensing facility associated
with the registered organization. Section 1004.20(b) is also
amended to clarify that the New York State Department of Environmental
Conservation provides guidance on proper drug disposal.
§ 1004.21 General prohibitions. Section 1004.21(d) is amended to allow
physicians, nurse practitioners and physician assistants, employed by
registered organizations, to counsel certified patients and designated
caregivers on medical marihuana product use, administration and risks.

§ 1004.24 Registered Organizations disposal of medical marihuana.
Section 1004.24 is added to provide guidance on acceptable processes for
disposing of medical marihuana products and by-products.

§ 55-2.15 Requirements for laboratories performing testing for medical
marihuana. Section 55-2.15(b) is amended to correct the agency name and
to include a disposal requirement for laboratories. Section 55-2.15(c) is
also amended to include a disposal requirement for laboratories.

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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