Cannabis Business Legal Services FAQs
In New York, the Office of Cannabis Management (“OCM”) and the Cannabis Control Board (“CCB”) regulates and oversees New York’s cannabis industry, including handling the issuance of licenses to operate a cannabis business. It’s important to note that the process for obtaining a license to operate a cannabis business in New York can be complex and time-consuming, and it is recommended that any individual or entity seeking to obtain a cannabis license also seek the advice of a qualified cannabis business lawyer to ensure compliance with all relevant laws and regulations.
How do I obtain a license to operate a cannabis business in New York?
To apply for a license to operate a cannabis business in New York, you will need to complete the following steps:
- Determine The Type Of Cannabis Business You Want To Operate. The OCM issues several types of licenses for different types of cannabis businesses, including cultivation, processing, distribution, retail, and microbusinesses. While OCM has regulations in place covering nurseries, cooperatives, delivery, and consumption lounges, OCM has not begun accepting applications for these specific license types.
- Review The Eligibility Requirements. The OCM has established eligibility requirements for each type of cannabis license. You will need to ensure that you meet each of these requirements before applying for a license.
- Gather The Required Documentation. The OCM requires a variety of documentation to be submitted with your application, including proof of legal authorization for an entity to operate in New York State, formational documents for the relevant entity, labor-peace agreements, etc.
- Submit Your Application And Pay The Application Fee. You will need to submit your completed application and all required documentation to the OCM, along with the appropriate application fee. The standard price for submission of an application is $1,000.00[1], but if the applicant qualifies for Social and Equity Certification (“SEE”), the relevant fees are discounted by 50%. In addition to a discounted application fee, SEE applicants can also receive priority by OCM and be considered for a license prior to non-SEE applicants. If you are unsure whether you qualify for SEE, it is recommended that you consult with a legal professional to determine potential eligibility.
- Submit Your Supplemental Documentation. Applicants must execute and provide several documents prior to submitting their complete application with OCM. For instance, each applicant must execute True Parties of Interest (“TPI”) disclosure forms. TPIs must be completed for both individuals and entities that qualify as TPIs of an applicant. If you are unsure who or what qualifies as a TPI for of an applicant, it is recommended that you consult with a legal professional.
- Wait For A Decision. After you submit your application, the OCM will review it and decide whether to grant you a license. This process can take several months, depending on the volume of applications received[2].
What are the tax obligations for a cannabis business in New York?
As with any business, cannabis businesses in New York are subject to various tax obligations For example, New York cannabis businesses are required to pay a (1) Sales tax; (2) Excise Tax; and (3) Various Business Taxes. Tax obligations for a cannabis business in New York can be complex and may change over time. Most notably, it is important to keep U.S.C. § 280E, which prohibits cannabis businesses from claiming business expenses on their annual tax returns. Due to U.S.C. § 280E, and additional taxation laws and regulations, it is strongly recommended an applicant seek the advice of a qualified tax professional or accountant to ensure compliance with all relevant tax laws and regulations
Can I advertise my cannabis business and products within New York?
The OCM has established regulations governing the advertising of cannabis products and services. Under these regulations, cannabis businesses in New York are generally allowed to advertise their products and services, but there are some restrictions on the content and placement of advertisements.
For example, Cannabis businesses are not allowed to advertise in a manner that is deceptive or misleading, or that targets individuals under the age of 21. They are also not allowed to advertise on television, radio, or print media that is primarily intended for individuals under the age of 21. Additionally, cannabis businesses are not allowed to advertise on billboards or in any other location that is within 500 feet of a school, playground, or youth center.
Regulations surrounding the advertising of cannabis products and services in New York are subject to change, and it’s always a good idea to check with the OCM or a qualified cannabis business lawyer for the most up-to-date information.
Can I obtain financing for my cannabis business in New York?
Obtaining financing for a cannabis business in New York can be challenging, as many traditional financial institutions are hesitant to provide financing to businesses that are operating in a highly regulated industry, such as the cannabis industry. However, there are some options available for cannabis businesses in New York seeking financing. These options may include: (1) Private investors; (2) Venture capital firms; (3) Crowdfunding; (4) Business Loans.
The availability of financing for a cannabis business in New York can vary significantly, and it’s always a good idea to explore all available options and consult with a qualified financial professional to determine the best course of action.
What are the zoning and land use considerations for a cannabis business in New York?
In New York, the Office of Cannabis Management (OCM) has established regulations governing the location of cannabis businesses, including preventing cannabis business from operating within certain distances of schools and churches. Under OCM’s regulations, cannabis businesses in New York are generally required to obtain a special use permit to operate in a particular location. This permit must be obtained from the local zoning board or planning board, and it is subject to a public hearing process. To obtain a special use permit, a cannabis business must demonstrate that the proposed location is suitable for the type of business being proposed and that it meets all relevant zoning and land use regulations. Cannabis businesses in New York are also required to comply with all relevant state and local building codes and regulations.
Zoning and land use considerations for a cannabis business in New York can be complex, and it’s always a good idea to seek the advice of a qualified cannabis business lawyer to ensure compliance with all relevant laws and regulations.
Can my cannabis business be sued or face legal action?
Like any other business, a cannabis business can potentially be sued or face legal action for a variety of reasons. Some of the most common types of legal issues that a cannabis business may face include:
- Breach of contract: A cannabis business may be sued for breach of contract if it fails to fulfill its obligations under a contract with a supplier, customer, or other party.
- Employment disputes: A cannabis business may face legal action from employees or former employees for issues such as wrongful termination, discrimination, or harassment.
- Product liability: A cannabis business may be sued if its products cause injury or harm to consumers.
- Intellectual property disputes: A cannabis business may face legal action if it is accused of infringing on the intellectual property rights of another party.
- Regulatory violations: A cannabis business may be subject to legal action if it is found to violate state or federal laws and regulations.
These are just a few examples of the types of legal issues that a cannabis business may face, and it’s always a good idea to seek the advice of a qualified lawyer to help mitigate the risk of legal action and to handle any legal issues that may arise.
How do I ensure compliance with all relevant laws and regulations?
Ensuring compliance with all relevant laws and regulations is essential for any business, including a cannabis business. Here are a few tips for ensuring compliance with all relevant laws and regulations as a cannabis business:
- Familiarize yourself with the laws and regulations that apply to your business: It’s important to have a thorough understanding of the laws and regulations that apply to your business, including any state or federal laws that may apply.
- Seek the advice of a qualified lawyer or other legal professional: A qualified lawyer or other legal professional can help you navigate the complex legal landscape surrounding the cannabis industry and ensure that you comply with all relevant laws and regulations.
- Keep accurate records: Accurate and complete records can help you demonstrate compliance with relevant laws and regulations and can also help you identify any potential areas of non-compliance.
- Stay up to date on changes to the law: The laws and regulations surrounding the cannabis industry are constantly evolving, and it’s important to stay up to date on any changes that may impact your business.
- Develop internal policies and procedures: Developing internal policies and procedures can help ensure that your business is operating in a consistent and compliant manner.
By following these tips, you can help ensure that your cannabis business is operating in a legal and compliant manner.
[1] Please note that the application fee and licensing fee are two separate payments. Application fees are collected at the time of applying for a license. Licensing fees are collected after the approval of the application for licensure by the Cannabis Control Board. Licensing fees are detailed below by license type and amount.
[2] In the most recent application window, which was open from October 4th, 2023, until December 18, 2023, the OCM received approximately 10,000.00 applications.
