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Published: Oct 2, 2022

Written by: CannaBuff

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Legislative Update: New York Opens its Conditional Adult-Use Retail Dispensary

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In our last article, we covered the proposed Conditional Adult-Use Retail Dispensary (“CAURD”) regulations. During the public comment period, the Cannabis Control Board received more than 600 public comments. After addressing commenters’ concerns, the Board approved the final regulations. On August 3, 2022, the Office of Cannabis Management (“OCM”) adopted the CAURD regulations by filing them with the state registrar.

On August 25, 2022, New York opened its online application for CAURD licenses. This launch means that those who have been directly impacted by a cannabis-related conviction (either themselves, or by way of a qualifying family member’s conviction) are now able to submit applications for the first round of retail dispensary licenses in the state. New York regulators have been promoting the launch of the application portal for weeks via Twitter and other platforms. In the regulators’ eyes, this application launch represents a vital step toward equity as the state prepares to open its adult-use market. Notably, those who receive CAURD licenses will be able to access a $200 million Social Equity Cannabis Fund.

Shortly after the application launch, the OCM announced a regional breakdown detailing the initial distribution of CAURD licences in regions across the state. Through the CAURD application process, OCM will award up to 150 licenses across the state’s 14 regions. Not surprisingly, the most concentrated regions will be the New York City boroughs and Long Island. The initial regional distribution of CAURD licenses will be as follows:

Region Population Dist. Max. CAURD Licenses
Brooklyn 12.3% 19
Capital Region 5.0% 7
Central NY 4.7% 7
Finger Lakes 6.0% 9
Long Island 13.4% 20
Manhattan 14.6% 22
Mid-Hudson 11.3% 17
Mohawk Valley 1.2% 2
North County 2.5% 4
Queens 10.9% 16
Southern Tier 2.1% 3
Staten Island 2.2% 3
The Bronx 6.8% 10
Western New York 7.0% 11
Who is eligible?

Eligibility for a CAURD license is a somewhat complicated analysis. Under the adopted regulations, a CAURD applicant can choose to apply under either (1) the Qualifying Business Criteria, or (2) the Qualifying Nonprofit Criteria.

To be eligible under the Qualifying Business Criteria, an applicant must show that the majority of its owners are “justice involved.”  That means at least 51% ownership by a person or persons meeting the following criteria:

  • Justice involved: Conviction for a “marijuana-related offense” in New York State before March 31, 2021, on either themselves or a parent, legal guardian, child, spouse, or dependent (this definition was expanded to include people who were arrested for marijuana but convicted for a lesser offense);
  • Qualifying business experience: At least 10% ownership, for at least two years, in a business that had positive net profits during the individual’s ownership; and
  • Sole control over the applicant, as defined by having the power to order or direct the policies, management, and managers of the business.

In addition, if the applicant is owned by multiple justice involved individuals, at least one of those individuals must own at least 30% and have sole control over the applicant. The individuals comprising the remainder of the majority of the ownership of the applicant are required to be justice-involved individuals, but need not meet the qualifying business experience criteria.

To be eligible under the Qualifying Nonprofit Criteria, an applicant must show that at least 30% of the applicant is owned by one qualifying nonprofit organization that has:

  • A history of creating vocational opportunities for current or formerly incarcerated individuals, including justice involved individuals;
  • A history of intentionally serving current or formerly incarcerated individuals, including justice-involved individuals;
  • At least one justice involved board member, officer, governing committee member, or advising committee member;
  • At least five full time employees;
  • Been recognized as an entity pursuant to section 501(c)(3) of the Internal Revenue Code;
  • Operated a social enterprise that had net assets or profit for at least two years, defined as a business serving customers, operated by a nonprofit or fiscally sponsored by a nonprofit, which both fulfills the parent organization’s mission and generates revenue; and
  • Sole control over the applicant, as defined by having the power to order or direct the policies, management, and managers of the business.

In addition, the applicant must show that at least 51% of the applicant is owned by a qualifying nonprofit organization, or by multiple qualifying nonprofit organizations and/or justice-involved people. If multiple organizations or individuals make up the 51% minimum, at least 30% must be owned by one nonprofit organization that qualifies under the nonprofit eligibility criteria, who must also have sole control of the applicant.

Application Review

On August 29, 2022, OCM tweeted that applications will not be reviewed in the order they are received or on any “first come, first served” basis. The OCM’s tweet went on to state: “To put it bluntly, you have 30 days; take the time to ensure your application is accurate and complete.”

In each region, OCM will rank applicants by scores based in part on certain “scoring criteria.” For Qualifying Business Criteria applicants, applications will be scored based on specific factors relating to the justice involved individual with sole control of the applicant and the qualifying business ownership. OCM advised that certain factors will be weighed more heavily than others. For example, one factor that will be given more weight is “[i]f the conviction associated with the marijuana-related offense was on the justice involved individual with sole control of the applicant themselves or a parent, legal guardian, child, spouse, or dependent of that justice-involved individual with sole control of the applicant.” OCM will also consider whether the arrest and conviction occurred in areas subject to over-policing and incarceration, or in an area with a historically low median income.

There is no doubt that the launch of the CAURD application portal demonstrates that New York is serious about its goal to open the adult-use retail market by year’s end. But applicants for the CUARD license need to act fast before the application deadline on September 26, 2022.

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