New York Cannabis Laws

New York’s First Cannabis Farmers Market Wrapped Up

On January 1, 2024, New York wrapped up its Cannabis Grower’s Showcase (CGS) program that started earlier last year.

Originally rolled out in August 2023, CGSs were primarily meant to help licensed cannabis farmers sell their harvested crops that sat unsold due to the delays in approving dispensary licenses. The CGSs allowed growers and processors to promote and sell their products directly to consumers. By the end of the year, $4.8 million in sales was reported across over 40 cities and towns in New York.

New York Supreme Court Lifts Marijuana Licensing Blockade

On November 27, 2023, the New York Supreme Court officially lifted an injunction that barred state marijuana regulators from processing hundreds of new retailer licenses since August. This injunction was placed after two lawsuits were filed against the OCM, both of which have now been settled.

The court decision means that the OCM can now finally begin approving licenses, clearing a long backlog.

Tax Relief for Cannabis Businesses Under 280E

On November 18, 2023, New York’s governor signed legislation to provide tax relief to New York City marijuana businesses that were previously blocked from making federal deductions under Internal Revenue Service (IRS) 280E – joining a growing number of states that have decoupled from section 280E in their state tax codes

Section 280E prevented cannabis businesses from deducting business expenses when computing taxable income under the city’s unincorporated business tax, the general corporation tax, and the business corporation tax. This change is also retroactive to tax years beginning in January 2022, providing relief for past tax liabilities as well.

New York State Regulators Significantly Expand Cannabis Market

On September 12, 2023, New York approved adult-use cannabis regulations, finalizing the official process for applicants who didn’t qualify or weren’t able to procure a CAURD license

Subsequently, on October 4, 2023, the state opened General Cannabis Licensing, enabling businesses to apply for various adult-use licenses, including cultivators, processors, distributors, retailers, and microbusinesses.

By December 2023, 6,934 applications were received with more application rounds anticipated for the future. Overall, 212 provisional retailer licenses were approved, bringing the total to 463 licensees preparing to serve the adult market, with store openings expected within six months to a year.

New York Cannabis Laws: Quick Overview of Recreational and Medical Use:

Stay informed about the latest cannabis laws in New York and understand the adult-use retail dispensary regulations set by the Office of Cannabis Management (OCM) here.

• Price tags in a cannabis dispensary must show the total cost, including taxes
• Dispensary employees must complete the required training.
• Dispensaries cannot be within 500 feet of a school.
• Licensees must implement robust security measures to prevent theft, diversion, and unauthorized access.
• BioTrack is New York’s official cannabis track and trace system.

• Minimum Age: The minimum age to possess and consume cannabis in New York is 21 years or older.
• Possession Limits: Adults can possess up to 3 ounces of dried cannabis or 24 grams of concentrated cannabis for personal use.
• Medical Use: Medical cannabis has been legally available to New Yorkers through the State's medical marijuana program since 2014. Patients are also automatically registered with the Medical Cannabis Program after their MMJ doctor certifies them.
• Recreational Use: Recreational cannabis can legally be bought and sold in New York only through state-approved dispensaries.
• Consumption Areas: Cannabis can be consumed in areas where smoking is allowed, except for motor vehicles and outdoor dining areas at restaurants.
• Regulatory Organization: The Office of Cannabis Management (OCM) is responsible for licensing and regulation of cannabis in New York. The Cannabis Control Board is charged with the creation and implementation of a social and economic equity plan to promote diversity in NY cannabis
• Growing Regulations: After the first 18 months of the first retail dispensary operations, individuals over 21 years old will be able to grow up to 6 plants (3 mature plants and 3 immature plants). Each household can have a maximum of twelve plants (6 mature plants and 6 immature plants).

The Marijuana Regulation and Taxation Act (MRTA) allows adults 21 years of age or older to buy and possess up to 3 ounces (85 grams) of cannabis flower and 24 grams of cannabis concentrate (oils, tincture, edibles, vapes, etc.) at a given time.

Registered medical patients may hold up to a 60-day supply of approved cannabis products at a time.

Medical marijuana patients must be New York residents or temporarily residing in the state for medical treatment. Patients are also automatically registered with the Medical Cannabis Program after their MMJ doctor certifies them.

Patients with the following conditions can qualify:

• Alzheimer's disease
• Amyotrophic lateral sclerosis (ALS), or Lou Gehrig's disease
• Autism
• Cancer
• Dystonia
• Epilepsy
• HIV/AIDS
• Huntington's disease
• Multiple sclerosis
• Muscular dystrophy
• Parkinson's disease
• Pain that degrades health and functional capability
• Post-traumatic stress disorder (PTSD)
• Spinal cord injury with spasticity
• Substance-use disorder
• Any other condition certified by the medical practitioner

Editor’s Note: Patients and designated caregivers must have their medical marijuana registry ID card on hand at all times when possessing medical cannabis.

The OCM is expected to expand this list and add more qualifying medical conditions. Please check the New York State Department of Health Medical Marijuana website for more information about the medical marijuana program.

Adult New Yorkers can grow up to six plants in their home for personal use (3 mature plants and 3 immature plants) and a maximum of twelve plants per household (6 mature plants and 6 immature plants), even if there are three or more adults above the age of 21 in the residence.

Please be aware the home cultivation of cannabis plants is not allowed immediately. Under the MRTA, it may only be permitted after the Office of Cannabis Management issues regulations governing home cultivation of cannabis, which must be no later than 18 months after the first adult-use retail sale.

• Cannabis plants must be kept in a secure place and not accessible to any person under 21.
• Home-cultivated cannabis cannot be sold to anyone and is only intended for personal use.

Adults may smoke or vape cannabis wherever smoking tobacco is allowed under the smoke-free air laws, like a private home or backyard. That said, landlords can ban smoking (both tobacco and cannabis) in apartment buildings – check your lease to know if this applies to you.

Cannabis cannot be consumed in motor vehicles, hookah/cigar bars, businesses, restaurants (including patios), federal property (including public housing), and most public and state parks as well as beaches. Smoking or vaping cannabis in prohibited areas may result in a civil summons and fine.

Employers may not discriminate or act against employees for legal cannabis use outside of the workplace – but are allowed to have policies related to drug testing and cannabis use inside the workplace. Ask your employer for their specific cannabis policies.

It is legal to share (or give away) cannabis within the possession limits to someone 21 or older. But it is illegal to trade, barter, or “gift” cannabis to someone in exchange for something else. This includes “gifting” cannabis while selling something else (like a t-shirt or a sticker).

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What state agency is in charge of cannabis licensing in New York?

The Office of Cannabis Management (OCM) is in charge of issuing licenses for businesses to participate in the adult-use and medical cannabis industries.

Up until September 2023, New York had been operating solely with CAURD licenses or Conditional Adult-Use Retail Dispensary License. Applications for CAURD have since been closed and replaced with the Adult-Use Retail Dispensary License.

You can find more information about the application process including requirements and submit your application through the New York Business Express (NYBE) application form.

As of March 2024, New Yorkers can choose from five different licenses covering different aspects of recreational cannabis use.

• Adult-Use Cultivator: The adult-use cultivator license authorizes the cultivation and selling of cannabis from the licensed premises of the adult-use cultivator to one of the following:

• duly licensed processor
• microbusiness authorized to process cannabis
• cooperative or collective
• Registered Organization with Dispensing (ROD)
• Registered Organization Non-Dispensing (ROND)
• a cannabis research licensee in New York State

• Adult-Use Processor: The adult-use processor license authorizes the acquisition, possession, extraction, blending, infusion, packaging, and labeling of cannabis products based on the activities authorized for the processor.

Licensed processors produce adult-use cannabis products for sale to licensed distributors.

• Adult-Use Distributor: Adult-use distributor licenses authorize the distribution of wholesale cannabis products to adult-use retail dispensaries, Registered Organizations with Dispensing (ROD), and on-site consumption licensees.

• Adult-Use Microbusiness: The adult-use microbusiness license authorizes the cultivation, processing, distribution, retail sale and delivery of the licensee’s own cannabis products. An adult-use microbusiness must engage in cannabis cultivation and at least one additional licensed activity including processing, distribution, or retail sale.

• Adult-Use Retail Dispensary: Adult-Use retail dispensaries are the principal license to conduct retail sales of adult-use cannabis products to consumers over 21 years old. Retail dispensaries are allowed to acquire, possess, sell, and deliver adult-use cannabis products from their own licensed premises.

Age Requirement: Applicants must be at least 21 years old.

Eligibility under Cannabis Law and Regulations: Individuals should not be prohibited from holding a license under the Cannabis Law or regulations. This includes:

• Prior Non-Cannabis Convictions: Applicants must not have convictions for certain felonies within the past three years, as outlined in Section 137 of the New York State cannabis adult-use regulations.
• True Parties of Interest (TPI) Prohibitions: Individuals who qualify as true parties of interest must not be prohibited under any regulations related to their involvement in the cannabis industry.

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Depending on the proof of control over a property at the time of initial application, you can apply for a provisional or full license.

Meeting these requirements only ensures that applicants are eligible to apply for a license to operate an adult-use dispensary in New York State. Following the application phase, New Yorkers are required to prepare and present a variety of documents, business plans, and legal and financial disclosures, among others.

The MRTA incentivizes participation in the new industry for individuals disproportionately impacted by cannabis prohibition, automatically expunges an individual’s past marijuana convictions, and invests 40% of the adult use cannabis tax revenue toward rebuilding communities harmed by the War on Drugs.

The MRTA and OCM have thus established a goal of awarding fifty percent (50%) of all adult-use licenses to distinct SEE groups including:

• a minority-owned business
• a women-owned business
• distressed farmers
• service-disabled veterans
• individual or individuals from a community disproportionately impacted by cannabis prohibition

Applicants that meet these criteria are called SEE applicants.

Also Read: New York's Social Equity Rules for Cannabis Businesses.

Notably, at the start of 2023, there were approximately 20 Black-owned dispensaries across the entire country. According to the Office of Cannabis Management’s Annual Report, New York alone opened 12 more over the year.

A single company won’t be allowed to handle all parts of recreational cannabis — cultivation, processing,

distributing, and dispensing — except micro-businesses. A cultivator or processor will be barred from having any financial interest in a marijuana retail business.

Medical marijuana dispensaries can obtain a license to distribute, cultivate, and process cannabis, but they will only be allowed to:

• distribute their own products
• sell adult-use cannabis at only three of a medical operator’s dispensaries.

No person may own more than three retail dispensary licenses. Retail licensees may not own or have any interest in a licensee in the cultivation, processing, or distribution tier.

The True-party Interest (TPI) is a legal framework that establishes procedures for monitoring and enforcing vertical and horizontal ownership. In essence, this framework helps identify the “true” owners of a Cannabis business, including anyone with a financial interest in the business.

You can read more about this framework and how it affects your Cannabis dispensary license here.

Brick-and-mortar retail dispensaries, where people can purchase cannabis products, will have to adhere to zoning laws established by local municipalities. Zoning rules include (but are not limited to):

• A dispensary cannot be on the same road and within 500 feet of school grounds, as defined in Section 409(2) of the New York State Education Law, or a community facility.
• A dispensary cannot be on the same street or avenue and within 200 feet of a building occupied exclusively as a house of worship.
• In a town, city, or village with a population under 20,000, a retail dispensary cannot be within 2,000 ft of another retail dispensary, microbusiness retail location, or ROD retail co-location.
• In a town, city, or village with a population over 20,000, a retail dispensary cannot be within 1,000 ft of another retail dispensary, microbusiness retail location, or ROD retail co-location.

Consumption at dispensaries will be limited to businesses with on-site consumption licenses, but social cannabis lounges in New York are definitely on the horizon.

Entrepreneurs will eventually be able to apply to the state for licenses to open consumption lounges, bakeries, restaurants, yoga studios, hotels, and wellness centers, as long as they don’t sell alcohol on the premises.

Licensed adult-use marijuana retailers may sell cannabis to adults aged 21 and older, with a valid government-issued identification card, and employees must check purchasers’ IDs before making the sale.

Valid identification to determine a customer’s age includes:

• a valid federal, state, or local government identification, including IDNYC, stating the customer’s age and a photograph of the individual’s face;
• a valid driver's license or non-driver identification card issued by the Department of Motor Vehicles, the federal government, any United States territory, commonwealth or possession, the District of Columbia, a state government within the United States, or a provincial government of the dominion of Canada;
• a valid passport issued by the United States government or any other country; or
• an identification card issued by the armed forces of the United States.

Retail dispensaries may sell cannabis, cannabis resin, cannabis products, and cannabis extracts. Licensees may only offer for sale:

• cannabis products obtained from a distributor;
• cannabinoid hemp products (if licensed to do so);
• cannabis paraphernalia;
• stationary, gifts, and other minor incidentals4;
• branded merchandise and apparel containing the licensee’s brand, including jewelry and accessories (in adult sizes only); and
• other items as approved by the OCM.

Yes, medical dispensaries can sell recreational cannabis, at a maximum of 3 locations.

The MRTA has established three taxes on adult-use cannabis. There is a tax imposed at the distributor tier based on the milligrams (mg) of total THC in the cannabis product which as of March 2024 is as follows:

• Edibles (e.g. food and beverages) are taxed at $0.03 per mg of total THC
• Concentrates (e.g. vaporization oil and resin) are taxed at $0.008 per mg of total THC
• Cannabis flower (e.g. loose flower or pre-rolls) are taxed at $0.005 per mg total THC

For retail sales of adult-use cannabis products, there are two taxes (not applicable to medical cannabis):

• 9% state excise tax
• 4% local excise tax

Yes, delivery of cannabis products ordered and paid for by consumers from licensed retail dispensaries will be allowed but a separate license will be issued to cannabis delivery businesses, and localities cannot block it.

A delivery license authorizes the delivery of cannabis and cannabis products by licensees, independent of another adult-use cannabis license, to cannabis consumers. Delivery licenses may not have a total of more than twenty-five individuals, or the equivalent thereof, providing full-time paid delivery services to cannabis consumers per week under one license. No person may own more than one delivery license.

Delivery licensees can deliver cannabis products ordered and paid for by consumers from licensed retail dispensaries to residential properties and private businesses within New York State. However, deliveries cannot be made to public spaces, schools, day-care centers, or houses of worship, among other restrictions outlined in the regulations.

Additionally, the licensee must own (including possession through a lease) any motorized or unmotorized vehicle it uses for any transport of cannabis products. Unless another method is approved by the Office, only ground transport (such as a car, van, bike, foot, etc.) can be used for delivery.

Like most states, New York requires dispensaries and cannabis stores to track and trace all of their cannabis products for regulatory and compliance reporting.

Examples of records that are required to be maintained include (but are not limited to):

• name of the ingredient
• the source of each ingredient (including the date of receipt of the ingredient)
• vendor’s name and address
• the vendor’s batch number
• lot number of the product,
• control number used to identify all components in the marijuana product(s)
• grade and quantity (mentioned in inventory reports)

As per the OCM, licensees must use an inventory tracking system capable of compiling the dispensary’s cannabis product inventory, transaction data, and tax liability. That system must be compatible and capable of reporting real-time data to the Office.

The Cova Dispensary POS is an example of such a system – it synchronizes directly with Quickbooks® (or export into other file formats) and also automatically syncs with METRC and other regulatory systems. Cova also meets several industry compliance regulations including Type 1 HIPAA and SOC 2 Type II.

New York's Office of Cannabis Management has chosen BioTrack as its track and trace system for monitoring the entire lifecycle of cannabis products.

BioTrack enables real-time inventory tracking, prevents illegal diversion, and ensures compliance in both the adult-use and medical cannabis markets. Licensed cannabis businesses in New York will integrate their inventory and sales tracking systems with BioTrack's platform to log the movement of cannabis from seed to sale.

Cova's Cannabis Dispensary POS is fully compliant with New York’s cannabis retail reporting requirements as set by the OCM. It is the industry standard for a cannabis POS inventory management system and is loved by dispensaries across North America including New York.

Cova can be integrated with all tracking and monitoring systems, including Biotrack, and comes with all the features needed to keep cannabis retailers compliant, right out of the box including:

• ID scanner for age and card verification
• Integrated inventory and sales tracking and reporting
• Built-in product equivalency conversions and purchase limit enforcement.
• Simplified seamless reporting with Biotrack

Dive deeper into everything related to cannabis retail in and around New York with these curated resources.

• How to Open a Dispensary in New York: Step-by-Step Guide
• How Much Does it Cost to Open a Cannabis Dispensary in New York?
• Cannabis Social Equity Rules in New York

Many would argue that OCM’s progress has been painfully slow and they won’t be all wrong. New York has been slow to establish the legal machinery, regulatory frameworks, and taxation policies required for a booming cannabis industry. But there is no denying that the industry is growing and will potentially be the second-largest Cannabis retail market (after California).

To put this growth into perspective, there were only 40 dispensaries operating in New York till the end of 2023. This number nearly doubled by March 2024, with 78 adult-use cannabis dispensaries operating across New York State.

All of this together means that retail storefront sales rose month over month in 2023, from $2.2 million in January to $18.8 million in November, totaling over $137 million in retail sales for the year.

The bottom line is, the process for setting up regulation and taxation of cannabis sales, and licensing guidelines for growers, producers, distributors, retailers, and delivery is underway. Needless to say, this sets up 2024 to be an exciting year for all Cannabis enthusiasts in New York.