On March 31, 2021, New York became the 15th state to legalize recreational cannabis with passage of the Marijuana Regulation and Taxation Act (MRTA). As we wrote in 2020, it appeared New York was close to giving recreational cannabis the green light in 2019, but efforts failed in the waning days of that year’s legislative session. It took another year to get there. The MRTA created a new Office of Cannabis Management (OCM) governed by a Cannabis Control Board (CCB) to comprehensively regulate adult-use, medical and hemp cannabis. There are a number of adult-use license types and ownership limitations.
It is currently legal for adults 21 years of age or older to possess and use cannabis in accordance with the MRTA, although there are currently no stores open to purchase adult-use cannabis. While possessing up to 5 pounds of cannabis at a personal residence is allowed, growing cannabis at home for personal use is not permitted until the CCB adopts regulations outlining the rules.
In February, Gov. Kathy Hochul signed legislation creating the Cannabis Conditional Cultivator Licenses, which allows hemp farms to start growing cannabis this season so that a crop will be ready for when legal recreational marijuana sales begin, which is expected by the end of the year. As of June 1st, the CBB approved 162 conditional cultivator licenses for hemp farmers as part of the state’s seeding opportunity initiative. The now 162 approved licenses are from a pool of more than 200 that have been submitted to the Office of Cannabis Management. The application window for the Adult-Use Conditional Cultivator License approved by the CCB ends June 30.
Upon opening the web-based application portal in March, New York’s Gov. Hochul stated, “New York is moving full speed ahead to create the most inclusive adult-use cannabis industry in the nation through our Seeding Opportunity Initiative. This initiative will create meaningful opportunities for economic empowerment for New York farmers and impacted communities.”
The board also advanced to public comment regulations for Conditional Adult-Use Retail Dispensaries. This subset of dispensaries must be owned by equity-entrepreneurs with a prior cannabis-related criminal offense who also have a background owning and operating a small business. They will be the first to open and make sales in New York State, establishing equity-owned businesses at the front-end of New York’s adult-use market. The first licenses are expected to be distributed by late summer or early fall. Retail sales are expected to begin by early fall. According to Chris Alexander, OCM Executive Director, general licensed businesses probably will not go online until the end of the year or early 2023.
On June 1st, the Cannabis Control Board voted to advance regulations for packaging, labeling, marketing, advertising and laboratory testing of adult-use cannabis for public comment, which will open on June 15.
Medical Cannabis Market
New York has ten registered medical cannabis operators, nine of which are publicly held:
- Citiva Medical, LLC, which was purchased in February 2018 by publicly traded iAnthus Capital Holdings (CSE: IAN) (OTC: ITHUF). DBA Be.
- Columbia Care NY, LLC (CSE: CCHW) (OTCQX: CCHWF). In March, Cresco Labs (CSE: CL) (OTCQX: CRLBF) announced plans to acquire Columbia Care.
- Curaleaf NY, LLC , whose parent company is Curaleaf (CSE: CURA) (OTC: CURLF).
- Etain, LLC. It was announced on April 22 that RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) had acquired the non-regulated portion of the Etain companies for approximately US$198 million.
- Fiorello Pharmaceuticals, Inc., which was acquired in August 2019 by Green Thumb Industries (CSE: GTII) (OTC: GTBIF). DBA FP Wellness or Rise.
- MedMen, Inc. (CSE: MMEN) (OTC: MMNFF). In May, Ascend Wellness settled a lawsuit which allowed it to buy MedMen NY, Inc. from Medmen.
- NYCANNA, LLC DBA the Botanist or Acreage NY, whose parent company is Acreage Holdings (CSE: ACRG) (OTC: ACRGF).
- PharmaCann of New York, LLC, DBA Verilife is the one privately held company in the mix. Cronos Group (NASDAQ: CRON) has a strategic investment in PharmaCann after paying $110.4 million for the option to acquire 10.5 percent of the company.
- Valley Agriceuticals, LLC, DBA Remedy-NY or Sunnyside, whose parent company Gloucester Street Capital LLC, merged with Cresco Labs (CSE: CL) (OTC: CRLBF) in October 2019.
- Vireo Health of New York, LLC, whose parent company is Vireo Health (CSE: VREO) (OTC: VREOF).
These organizations can grow, manufacture, distribute and dispense medical marijuana to patients who have an approved medical condition.
As of June 1, there were 124,352 registered patients in the medical cannabis program and 3,739 certifying practitioners. Any healthcare provider who can prescribe controlled substances in New York State, is qualified to treat the patient’s serious condition, and completes a two to four-hour course on medical cannabis, can certify patients. Patients certified by their healthcare provider can register with the Medical Cannabis Program. There is no patient registration fee and patients can designate caregivers. The patient will receive a registry ID card that lets them buy medical cannabis from a dispensary in New York State.
According to FY 2023 Executive Budget, the New York State projects to generate $1.25 billion in cannabis tax revenue over the next 6 years: $56 million (includes $40 million in license fees) in FY 2023, $95 million in FY 2024, $158 million in FY 2025, $245 million in FY 2026, $339 million for FY 2027 and $363 in FY 2028. All State cannabis revenue will be deposited in the Cannabis Revenue Fund in which 40% would be directed to education, 40% to the Community Grants Reinvestment Fund and 20% to the Drug Treatment and Public Education Fund. For the local tax, 25% is directed to the county and 75% is directed to the city, town or village within the county.
By some estimates, the Empire State’s regulated cannabis market could reach $4.2 billion by 2027, supporting over $10 billion in total economic impact and 76,000 jobs. Many industry observers believe that New York will become the nation’s cannabis capital in the coming years.