Cannabis License Applications

Many jurisdictions require applicants to be residents of the state or country for a certain number of years before applying. This is to ensure local control and benefits from the cannabis industry. The exact duration can vary, but often it’s between 1-3 years.

Convictions related to controlled substances, especially those concerning the distribution to minors, might be disqualifying.

Other serious felonies, such as violent crimes or financial crimes, might also be considered.

Most jurisdictions, however, are reviewing past cannabis convictions in light of new legalization measures and do not hold low-level cannabis offenses against applicants. Instead, these applicants are given a priority under social equiry programs.

Each region will have its criteria.

The Newly Announced Timeline for Cannabis Control Board Receiving Applications in New York is September 2023, with an October Review of Submissions

On December 14th, 2022, the New York State Cannabis Control Board released proposed regulations for the implementation of the Marijuana Regulation and Taxation Act of New York in the state register. The comment period for the proposed reguations ended on February 13th, 2023 at 11:59 pm New York Time (EDT).

The Cannabis Control Board (CCB) received 903 applications for the Conditional Adult-Use Retail Dispensary in the summer of 2022, and awarding 66 total licenses in late into 2022 and early 2023. This has allowed the first cannabis retail store (or dispensary) to open before the end of 2022, which was selling New York first regulated and tested cannabis products. New York’s implementation of conditional cannabis licenses will assist the state in catching up with its neighbors in the Tri-state area, New Jersey and Connecticut, and has allowed recreational cannabis (non-medical or adult-use cannabis).

There are only a few existing medical dispensary licenses in the state and applications are currently not being accepted for medical or adult-use dispensaries. Further, existing medical cannabis dispensary license holders are not prioritized for conditional licenses.

The New York Office of Cannabis Management (OCM) is the state’s cannabis regulatory agency. The OCM is responsible for issuing Conditional Adult-Use Retail Dispensary (CAURD) licenses and overseeing the operations of licensed cannabis businesses.

The lawsuit was filed by four military veterans who have served more than two decades in various branches of the U.S. military. They challenge the regulations pertaining to the issuance of CAURD licenses. 

The veterans argue that restricting retail licenses to those with cannabis convictions violates the state Constitution. They contend that this restriction was not approved by the legislature when it legalized adult-use cannabis.

The 2021 Marijuana Regulation and Taxation Act legalized recreational marijuana in New York and set a goal of awarding at least half of the state’s recreational marijuana dispensaries to social and economic equity applicants. This includes those most impacted by cannabis prohibition or organizations supporting the formerly incarcerated.

A new hearing is scheduled for August 25, 2023. Justice Bryant has also set a deadline for revised arguments from litigants, and he could potentially make a ruling based on these filings. However, it’s more probable that the decision will come at the upcoming hearing.

The OCM has issued 463 CAURD licenses to date. However, less than two dozen dispensaries have officially opened statewide.

The first step in the application process is typically assessing the location you intend to operate from. It’s crucial to ensure the chosen location adheres to local zoning laws and is an appropriate distance from sensitive areas, like schools.

Once you have a viable location in mind, the next step is usually to create a comprehensive business plan and financial forecast. This not only ensures the prospective success of the business but also helps in attracting investors.

You’ll need to provide a detailed business plan, financial forecast, and documentation proving the chosen location complies with local regulations.

Additional documents may include background checks, residency proofs, and organizational charts, among others. Each jurisdiction might have a specific checklist of required documents.

The duration of the application process can vary considerably depending on the state. It generally takes anywhere from 4-5 months to a year. Timelines might extend if the state or local municipality receives a large number of applications or if there are regulatory changes.

Yes, some jurisdictions limit the number of licenses they issue to control the market size and ensure adequate oversight.

Alternatively, certain municipalities may set a cap on the number of dispensaries allowed within their borders. This is to prevent market saturation and manage the impact on the local community.

Applications are seldom outright rejected unless there’s evidence of forging documents or not meeting the required criteria.

More commonly, applications might be delayed or put on hold if the submitted documents are incorrect or incomplete. If there are issues with your application, it’s generally advisable to correct the problems and provide the necessary clarifications as soon as possible. Some jurisdictions might have a waiting period or additional fees for resubmission.

Various types of cannabis licenses cater to different segments of the industry. These include:

• Retail (Dispensary): Allows businesses to sell cannabis products directly to consumers.
• Cultivation: Permits the growth of cannabis plants.
• Processing/Manufacturing: Licenses entities to refine cannabis plants into consumable products, such as edibles, oils, or tinctures.
• Distribution: Authorizes the transportation of cannabis products between licensed entities.
• Consumption Lounge: Provides a space for consumers to use cannabis products on-site, akin to a bar for alcohol.
• Lab Testing: Enables labs to test cannabis products for potency, contaminants, and overall quality.
• Microbusiness: A unique license type that allows businesses to handle multiple aspects of the cannabis industry, like cultivation, manufacturing, and selling, but in smaller capacities than typical licenses.

In many states, there’s a restriction that prevents an individual or company from holding or being involved in multiple licenses. This is to prevent monopolistic behaviors and ensure market competition.

However, the microbusiness license is an exception that allows limited multi-faceted operations.

In states where only medical cannabis is legalized, a medical cannabis license permits businesses to sell cannabis products solely to patients with valid medical prescriptions.

Once a state legalizes recreational cannabis, many medical retailers choose to pivot to recreational sales to serve a broader audience.

It’s worth noting that, in most states that have legalized recreational cannabis, dispensaries can cater to both medical and recreational customers.

Medical patients might have different purchasing limits or tax rates than recreational users.

The cost to start a cannabis dispensary can vary significantly based on a myriad of factors. While the initial outlay can be as low as $150,000 in certain situations, the final cost can fluctuate based on factors such as the state’s regulations, chosen location, size and scope of the business, design, security infrastructure, inventory, and more.

Licenses typically need to be renewed on an annual basis. The renewal fee can differ from the initial licensing fee, and it’s often contingent on the state’s regulatory structure and the specific license type.

Moreover, there might be additional costs associated with regular compliance checks and updates to meet evolving industry standards.

Prospective dispensary owners are often required to provide financial documentation for at least the last year. This can include bank statements, profit and loss statements, balance sheets, and tax returns.

The documentation serves as proof of financial stability and ensures the business has the necessary funds to operate responsibly.

Some states have made considerable efforts to ensure fair access to the cannabis industry.

For instance, New York has partnered with DASNY (Dormitory Authority of the State of New York) to assist social equity applicants. This partnership aims to provide eligible applicants with loans and help in securing suitable locations for their businesses. Such programs are designed to rectify past injustices related to cannabis enforcement by aiding communities that have been disproportionately affected.