New York Cannabis Licensing: The Basics*

New York Medical Marijuana ApplicationHere in New York, it feels like we are (finally) off to the races. The New York State Department of Health recently posted the application for medical marijuana manufacturers and dispensaries, with two very important deadlines. The first is a May 5 at 4:00pm EST deadline to submit any questions to the Department regarding the application. The Department will respond to questions by May 14 by listing all questions and answers online. The second and most important deadline is May 29 at 4:00pm EST. That is the deadline by which the Department of Health must to receive any application.

If you are planning to apply for one of the up to five licenses being issued here are some of the things you will need:

  • Money: There is a $10,000 non-refundable application fee, plus a $200,000 registration fee, which will be refunded if you are not selected.
  • Ability: To be considered, you must demonstrate your ability to manufacture approved medical marijuana products consistently and in sufficient quantities. There are a number of specifics with which you will need to comply, many of which are outlined in 10 NYCRR 1004.11.
  • Security: What is your plan for maintaining the security of your premises and controlling against diversion of your products? At minimum you will likely need a good fence, a perimeter alarm, motion detectors, constantly recording video cameras at all points of entry and exit and on your safes and on anywhere you have product, a panic alarm,  and all of the other things necessary to meet the requirements outlined in 10 NYCRR 1004.13.
  • Knowledge: Be sure you are aware of all of the applicable rules and regulations, including everything listed in 10 NYCRR 1004.
  • Property: Do you have sufficient real estate and equipment to perform all of the activities you will list in your operating plan? Your four proposed dispensing facilities should be geographically distributed throughout New York. Having all of your operations in New York City, for example, will likely not be deemed enough to serve the needs of New York State as a whole and could well lead to your application winding up in the rejection pile. The Department of Health will review your proposed manufacturing and dispensing facilities not only for their location, but for their architectural and engineering designs as well. Note that if you do not have all of your equipment and locations locked in, you can post a $2,000,000 bond instead.
  • Public Interest: Your application should explain why it is in the public interest for the Department of Health to approve your application.
  • No Criminals: You, your board members, managers, partners, directors, and the like should all be of good moral character and be competent to manage the business you outline in your application.
  • Labor Agreement: The Department of Health will review whether you have entered into a labor peace agreement as outlined in PHL 3360(14) which will represent or attempt to represent your employees. A Labor Peace Agreement means “An agreement between an entity and a labor organization that, at a minimum, protects the state’s proprietary interests in prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the registered organization’s business.”

In addition to the above requirements for the application itself, you will also need to include a number of attachments to your application, perhaps the most important of which is your Operating Plan. This is where you will need to outline your entire planned operation to the Department of Health. Among other things, you will in this attachment be expected to outline your plans for: (i) manufacturing; (ii) transportation and distribution; (iii) dispensing and sales; (iv) security and control of the product; (v) quality assurance; and (vi) record-keeping.

All of your board members, officers, managers, owners, partners, principal stakeholders, directors or members must also complete Appendix A and you are also required to provide an organizational chart outlining the structure of your organization. In Appendix B, you will need to outline your architectural program, with details of each site where you plan to operate. There are a number of rules and regulations with which you will be required to comply should you be granted your application. We strongly suggest that you familiarize yourself with all of those now and be sure that you will indeed be willing to follow them. If you determine that you are not willing to follow those rules and regulations, then you should not bother spending the immense time and money required to complete and submit an application.

If despite all that you see above you still wish to move forward with an application, we strongly urge you to start now both on the application and in garnering the legal and accounting and any other assistance you think you will need to complete it. This sort of application will take a long time and the people best equipped to assist you on it will be snared early in the process and so likely will not even be available towards the end of it.

Now for just a bit of good news: the Department of Health is expected to rule on the licenses in July, which is a exceedingly fast turnaround for something like this.

* This post is by Ryan Malkin. We asked Ryan to write this post because he is one of the country’s preeminent regulated substance lawyers and because we have worked with him on a number of East Coast cannabis licensing matters already. Ryan is licensed in New York, New Jersey and Florida, where he represents alcohol distillers, brewers, suppliers, distributors and retailers and where he is finding himself more and more often called on to handle cannabis business law and regulatory matters, including licensing applications.