NY Cannabis Regulators Unveil Social Equity Plans

New York state cannabis regulators and Gov. Kathy Hochul on Thursday released new proposed regulations designed to give business owners with prior cannabis convictions a first crack at the Empire State's incoming adult-use market.

The state's so-called Seeding Opportunity Initiative is a multipronged effort to fulfill one of the promises of New York's adult-use legalization law, the Marijuana Regulation and Taxation Act, or MRTA, to ensure participation opportunities for those most affected by prohibition.

"New York State is making history, launching a first-of-its-kind approach to the cannabis industry that takes a major step forward in righting the wrongs of the past," Hochul said in a statement. "The regulations advanced by the Cannabis Control Board today will prioritize local farmers and entrepreneurs, creating jobs and opportunity for communities that have been left out and left behind."

At its monthly public meeting Thursday, the CCB announced the release of draft regulations that would allow those with a pre-legalization cannabis-related offense, or a family member or spouse of someone with such an offense, to apply for a conditional retailer license. Applicants must also have had a 10% interest in a New York-based business that had a net profit for two years, according to the draft rules, which will undergo a period of public comment.

The agency said that it aims to begin processing applications for this first round of licenses this summer and distribute them by autumn, with an eye to beginning the first regulated adult-use marijuana sales by the end of the year.

New York state Sen. Liz Krueger, D-Manhattan, a sponsor of the MRTA said Thursday that her bill "was designed not only to end the failed war on drugs in New York, but specifically to take positive action to help rebuild those communities that were most harmed by prohibition."

"Offering the first retail licenses to people who have been convicted of marijuana-related offenses is a big step in the right direction, and will set the marketplace on a path where social equity applicants can compete successfully," she added.

The board also announced that it would begin receiving applications on March 15 from licensed New York hemp farmers to begin growing cannabis to ensure that product will be ready for stores to sell. The application portal for farmers will remain open until the end of June.

Chris Alexander, the executive director of the New York Office of Cannabis Management, said in a statement, "With the Seeding Opportunity Initiative, we are now on the path to doing what no state has done before: Put our farmers and equity entrepreneurs, not big, out-of-state businesses, at the forefront of the launch of our adult-use cannabis market."

Under the MRTA, New York is aiming for half its adult-use cannabis businesses to be owned by minorities, women and others disproportionately affected by prohibition. Hochul pledged as part of her State of the State proposal to commit $200 million in public and private funds to support social equity applicants seeking to build their recreational pot businesses.

The fund will be administered in partnership with the Dormitory Authority of the State of New York, a public benefit corporation that helps build out not-for-profit entities in the state. The Office of Cannabis Management said in January it expects $50 million of the money to come from fees and taxes and the remaining $150 million from private investors

Reuben McDaniel III, a member of the Cannabis Control Board and president and CEO of the Dormitory Authority, said in a statement that the agencies would continue to work with the state legislature to "develop the funding mechanism" that will support the fund.

"Our work to create the new cannabis industry in New York is structured to develop successful entrepreneurs in black and brown communities across New York, expand access to capital for those who have been denied, and establish a cannabis industry that leads the nation in health and safety, and in equity, as well," he said.