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Breaking: New York’s First Retail Cannabis Licenses Coming Soon

By: Duncan Delano and Brittany Tovar

Applications for Conditional Adult-Use Retail Dispensary Licenses to Open Next Week

The New York Office of Cannabis Management (“OCM”) announced it will begin accepting applications for Conditional Adult-Use Retail Dispensary (“CAURD”) licenses beginning next Thursday, August 25, 2022. CAURD licensees are scheduled to make the first legal adult-use cannabis sales before the end of 2022.

Atonement for the War on Drugs

Applicants can apply under the qualifying business track or qualifying nonprofit track. The business track requires that one or more owners of at least 51% of the business be (a) “justice involved” and (b) have “qualifying business experience”, and one such owner must hold at least 30% of the company’s equity and exercise sole control over the company.

  • “Justice Involved” means that the person or one of the person’s parents/guardians or children/dependents was convicted of a marijuana offense in New York prior to March 31, 2021.
  • “Qualifying Business Experience” means that the Justice Involved person has owned at least 10% of a business (anywhere, not just New York) that was profitable for at least 2 years.

New York State to Site and Construct Dispensaries

New York’s Cannabis Social Equity Investment Fund (the “Fund”) has been established to position qualifying social equity entrepreneurs to succeed in New York’s adult-use cannabis industry. The Fund is a public-private limited partnership charged with financing and equipping up to 150 CAURDs in New York.

The Fund, operating through the Dormitory Authority of the State of New York (“DASNY”) will help approved CAURD license applicants cover certain initial operating costs, including locating, designing, and constructing retail sites. Financing for the Fund’s will include up to $50 million in licensing fees and revenue from the adult-use cannabis industry and up to $150 million in private sector funds.

Once locations are located and built out, the Fund will then sublease the “turn-key” dispensaries to CAURD licensees.  The state intends to locate CAURDs in 14 geographical regions, and CAURD license applicants will be able to select their top 5 regions when applying.  As of the end of last week, the state had not yet acquired any sites for the CAURD program (CAURD applicants may not find and acquire their own property).

Earlier this year DASNY chose a minority-led investment team to run the Fund: Social Equity Impact Ventures, LLC (“Impact Ventures”). Impact Ventures is a joint venture partially run by NBA Hall of Famer Chris Webber.

Application Process and Guidance

The CAURD license application will consist of two parts and must be submitted to OCM.  Applicants must first submit evidence of eligibility.  Once deemed eligible, applicants must then submit a full application.  Applications must be submitted by September 26, 2022.  If you or someone you know might qualify for these first-to-market cannabis retail licenses, please reach out to us.

See OCM’s FAQ and an application mockup.  Additional information can be found through the following links:

https://www.governor.ny.gov/news/governor-hochul-announces-major-progress-toward-advancing-equity-cannabis

https://www.dasny.org/opportunities/rfps-bids/2022/design-build-services-retail-cannabis-dispensaries

https://www.dasny.org/sites/default/files/rfp-documents/2022-05/Design-Build%20Services%20for%20Select%20Retail%20Cannabis%20Dispensaries%20RFP%20%237586.pdf

https://www.dasny.org/sites/default/files/rfp-documents/2022-06/Design-Build%20Services%20for%20Retail%20Cannabis%20Dispensaries%20-%20Q%26A%20Tracker_0.pdf

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Empire State of Cannabis Licensing: An overview of New York’s first adult-use cannabis licenses

New York’s Seeding Opportunity Initiative

This spring, Governor Hochul and the NY Office of Cannabis Management (“OCM”) began to roll out the regulated adult-use cannabis market in the Empire State.  Under the state’s Farmers First Program, existing CBD hemp cultivators and processors may cultivate and process cannabis (marijuana) as the first licensed cannabis cultivators and processors in the adult-use market.  Under the State’s Equity Owners Lead Program, business owners with certain New York marijuana convictions will have the first opportunity to apply for retail dispensary licenses and enjoy significant first-to-market advantage.

So, while we wait to learn more about when and how the other license types will become available pending further regulation, we now have an idea of how the early adult-use cannabis market will unfold in New York.  Let’s take a quick look.

Farmers First Program

Under this initiative, New York hemp cultivators and processors who have grown or processed hemp for two of the last four years are eligible to apply for conditional cultivator or conditional processor adult-use cannabis licenses, respectively.  As of May 19, 2022, OCM has issued 146 conditional cannabis cultivator licenses, so seeds are already in the ground.

To qualify, the hemp licensee must maintain at least 51% ownership in the cannabis license applicant and cannabis licensee for two years, and the cannabis licensee must comply with the State’s environmental and sustainability program, and participate in a state-run cannabis industry mentor program.

Equity Owners Lead Program

Under this program, which is still being finalized, applicants that are majority owned by one or more individuals affected by past marijuana convictions may be eligible to apply for the first dispensary licenses in New York.  Among other requirements, the applicants must be at least 51% owned by “justice involved” individuals who have also been part owners of a profitable business.

A justice involved person is someone who has been convicted of, or who has a parent, guardian, child, spouse, or dependent who has been convicted of, a cannabis-related offense in New York before March 31, 2021.  Furthermore, the justice involved individual must have owned at least 10% of a business that was profitable for at least two years.  Finally, one justice involved individual with the applicable business ownership experience must maintain at least 30% ownership interest in, and sole control over, the retailer license applicant for the first four years.

The regulations for the Equity Owners Lead Program are still being finalized.  The public comment period for the draft rules ended on May 30th, 2022, and OCM intends to finalize the rules and open applications this summer.

For much more detail on this early cannabis market in New York and the specific license requirements, please check our YouTube page where a recording of the webinar will be posted within the next week.

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New York’s “Dream Team” Cannabis Control Board Holds First Public Meeting

New York State’s newly completed Cannabis Control Board (“CCB”) had its first public meeting Tuesday, pledging to move forward in filling out the Office of Cannabis Management (“OCM”) and drafting rules and regulations. Chairwoman Tremaine Wright noted that it would be a priority of CCB and OCM to make up for lost time following the delay from the gubernatorial transition from Andrew Cuomo to Kathy Hochul.

Late last month, Governor Hochul appointed the final two members to the CCB, Reuben R. McDaniel, III and Jessica Garcia. We discussed the previous CCB appointments in my previous blog, NEW YORK FILLS 2ND AND 3RD SEATS ON 5-MEMBER CANNABIS CONTROL BOARD. Mr. McDaniel is the president and CEO of the Dormitory Authority of the State of New York, the State’s public finance and construction authority, and has over 30 years of experience in investment banking and financial services. Ms. Garcia is a social worker by training with years of involvement in the immigrant rights community, and she is currently a union leader from the Retail, Wholesale Department Store Union, UFCW, which represents food workers and non-food retail.

At the Business of Cannabis conference in Manhattan last Wednesday, New York State Senator Liz Krueger, one of the primary sponsors of the Marijuana Regulation and Taxation Act (“MRTA”), called the new CCB and OCM leadership the “dream team,” as it’s clear that Governor Hochul gave great deference to the recommendations of Senator Krueger and Assemblywoman Crystal Peoples-Stokes, the other primary MRTA sponsor.  Another industry leader speaking at the conference, Kristin Jordan of Park Jordan, lauded the CCB appointments as a clear signal that New York’s adult-use cannabis rollout is putting “New Yorkers first and small businesses first.” Numerous conference speakers also voiced strong approval of Axel Bernabe staying on as a key OCM staff member.

The CCB’s first meeting consisted mostly of confirming appointments, including the appointment of the OCM’s Chief Equity Officer to oversee the program’s social and economic equity efforts, as well as the expansion of the existing medical cannabis program to allow prescription of whole flower by any practitioner licensed to prescribe controlled substances. The CCB also announced the kick-off of a public education campaign, but they did not provide further detail on developing the adult-use regulatory scheme.

So, how will New York’s cannabis leadership work together to implement the MRTA and when will draft regulations come out?  We do not yet know, but we do know that Governor Hochul’s office has assembled a team that is diverse both in its racial and ethnic makeup and its areas of experience and expertise, has the backing of the local and regional cannabis community, and is committed to working quickly to open the new market in an equitable way. A full transcript of the CCB’s meeting, as well as announcements of future meetings, can be found here.

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New York Fills 2nd and 3rd Seats on 5-Member Cannabis Control Board

Governor Kathy Hochul kicked things off last Wednesday, appointing former Assemblywoman Tremaine Wright to chair the Cannabis Control Board (“CCB”) and former Drug Policy Alliance staffer, Chris Alexander, to be executive director of the Office of Cannabis Management (“OCM”).  By nominating these two leaders, Governor Hochul put the rollout of New York’s cannabis legalization back on track, as the program had languished in the final months of former Governor Cuomo’s scandal-plagued governorship.  Assembly Speaker Carl Heastie continued the momentum this past Wednesday, announcing his appointment of Adam W. Perry to the CCB, and yesterday Senate Majority Leader Andrea Stewart-Cousins followed suit, tapping former State Senator Jen Metzger, an Ulster County Democrat, as the third CCB member to be selected.

Governor Hochul’s two appointments during an “Extraordinary Session” of the New York State Legislature signal her commitment to moving forward with the State’s cannabis legalization, and her choices reinforce New York’s focus on prioritizing racial and economic justice.  Ms. Wright and Mr. Alexander, both black, have worked hard in advocating for equity in the new cannabis market.

Ms. Wright, an attorney, represented New York State’s 56th District in Brooklyn from 2017 to 2020 and was chair of the New York State Black, Puerto Rican, Hispanic and Asian Legislative Caucus.  She has also practiced as a public defender at Brooklyn Law Services.  As Chairwoman of the CCB, Ms. Wright will lead the five-member board as they draft the State’s cannabis regulations, develop the cannabis license application process, and otherwise implement the Marijuana Regulation and Taxation Act (“MRTA”), which Governor Cuomo signed into law in March.

Mr. Alexander was previously the policy coordinator at Drug Policy Alliance, an organization dedicated to reversing the harmful effects of the “War on Drugs” that have disproportionately affected communities of color, and he was later an associate counsel to the New York Senate, where he led the drafting of the MRTA to ensure it included a strong social and economic equity program.  As Executive Director of OCM, Mr. Alexander will oversee the implementation of the State’s cannabis regulatory scheme and administer the program going forward.

As for Mr. Perry, he is an attorney who focuses on employment litigation, with broad experience representing municipal governments and agencies, and he is very involved in the Buffalo community, where he serves as chair of the Citizen Planning Council.  His local government perspective will be particularly useful in developing the State’s cannabis program, where the state and local governments must work together.  Mr. Perry received a ringing endorsement from Majority Leader Crystal Peoples-Stokes, the lead sponsor of the MRTA, stating that Mr. Perry will be committed to upholding the principles of fairness and justice in helping to shape the new industry.

Ms. Metzger is another long-time public servant, serving as town board member in Rosendale and one term as a state senator representing the Hudson Valley’s 42nd Senate District, during which she was the chair of the Senate Agriculture Committee.  Following the announcement of her pick, Ms. Metzger released a statement declaring that she will work hard to ensure the New York cannabis market is environmentally sustainable, equitable, and accountable.  Many believe that she will be a strong advocate for small farms and rural areas.

Governor Hochul must still appoint two more members to the CCB before it is officially seated and can begin the hard task of drafting rules and regulations.  Labor Day is behind us, and there is much work to be done before the adult-use cannabis market opens in the Empire State, but at least now we have four capable leaders to help get us there.

https://www.governor.ny.gov/news/governor-hochul-announces-confirmations-tremaine-wright-and-christopher-alexander-lead

https://nyassembly.gov/Press/?sec=story&story=99037

https://www.timesunion.com/state/article/Senate-Leader-makes-pick-for-Cannabis-Control-16446173.php

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FRANCHISE LAW

Franchisors

Franchise law is a heavily regulated area of law.  We help clients expand their businesses through franchising and other distribution methods. We have experience in many industries including, restaurants, health, and beauty, alcohol, and cannabis among others. Our representative services include the following:

Franchisees

We also help potential franchisees interested in buying a franchise. We are able to assist with evaluation of franchise opportunities with respect to:

Alternative Structures

However, not all businesses are suited to franchise. We are also experienced with helping clients structure alternative distribution methods to prevent classification as a franchise.

MERGERS AND ACQUISITIONS

Our M&A attorneys are highly experienced in counseling clients who are considering acquisitions or exit strategies.  We have many years of experience handling deals of various types and sizes, ranging from sales of small closely-held business, private companies, and publicly-traded corporations.  We have represented business owners, private equity firms and investment banks in a wide range of industries. 

We have a deep business bench, and Emerge attorneys have handled transactions of all shapes and sizes.  Whether your deal is valued at $100,000 or $100,000,000, our experienced attorneys will guide you through the deal process.

We understand the intensity, technical skill and judgment needed to get deals done, and we provide our clients with timely, practical and cost-effective legal advice.  We are highly capable in all aspects of M&A, including the following:

CANNABIS INDUSTRY

Emerge Law Group is highly experienced in the cannabis industry.  We have helped many clients obtain state licenses and local permits to operate cannabis businesses throughout California, Oregon, and Washington.

Emerge attorneys were instrumental in the drafting and passage of Oregon Measure 91, legalizing marijuana in the State of Oregon, and have represented cannabis businesses well before many law firms were willing to enter the cannabis industry. As a firm that has provided legal services in the cannabis space for many years, we are familiar with the unique and complex issues businesses and individuals face in an emerging and highly regulated industry.

We regularly help clients with:

Cannabis laws and rules are also regularly changing.  Members of our team are dedicated to attending legislative hearings, state agency and local city and county meetings to stay up-to-date on any new changes and how to adjust to any new changes.

See our Cannabis Industry page for more information.

PSYCHEDELICS

There is tremendous excitement about the potential for psychedelic drugs to benefit a wide variety of populations, including terminally ill patients suffering with anxiety and depression. Until recently, psychedelic substances have been accessible only in the illicit market and are illegal under federal and state to manufacture, distribute, or possess. These substances have, since 1970, been treated as having no legitimate medical use, and no commercial application. As such, no one invested in this area or required legal services, outside of the criminal context.

Today, researchers in a multitude of clinical studies are proving the medical safety and efficacy of these medicines, with the objective of changing the treatment of these substances under the Controlled Substances Act. Companies are now actively raising money to develop intellectual property and seize market opportunities associated with psychedelic drugs.

In addition, advocates at the state and local levels are not waiting for the rescheduling of these substances and are active in undertaking efforts to decriminalize these substances and/or make them affirmatively legal under state and/or municipal law. Decriminalization already has occurred in cities including Denver, Oakland, Santa Cruz, and Ann Arbor. Oregon is poised to be the first state to make psilocybin therapy affirmatively legal. Emerge Law Group is working with a wide array of clients pushing forward in this emerging area.

See our Psychedelics Practice Group page for more information.

TAXATION

CORPORATE AND PARTNERSHIP TAX

Businesses of all kinds benefit from a customized but systematic approach to structuring legal relationships. Emerge Law Group helps businesses and business owners with a variety of tax planning matters.

Representative client services include:

ESTATE PLANNING

Estate planning encompasses everything from a will and power of attorney to combined estate and business succession planning. In almost all cases, the purpose of the plan is to help the client protect those they care about most in the event they can no longer be there for them.

Emerge Law Group has experience with a wide range of tools used in estate planning, including wills, trusts, and family business entity planning.

TAX CONTROVERSIES

Emerge Law Group can assist with the resolution of difficult tax controversies. Our areas of emphasis and experience include:

REAL ESTATE TRANSACTIONS

Emerge Law Group assists clients with a wide range of real estate transactional matters.  We regularly help clients with:

LAND USE

Emerge Law Group also assists clients with all aspects of local government land use and development processes, ranging from preliminary property analyses and building permit issues to complex land use reviews and hearings. Our attorneys are experienced in obtaining land use entitlements and development permits for a wide range of uses.

We regularly help clients with:

Above all, we understand the value of working with cities and counties to enhance communities while developing the land to its potential. We strive to create solutions to land use issues that serve to better our clients and the communities in which they live and work.

LITIGATION AND ALTERNATIVE DISPUTE RESOLUTION

The attorneys in Emerge Law Group’s Litigation and Alternative Dispute Resolution practice group litigate commercial, intellectual property, and public interest matters in state and federal courts, as well as private mediation and arbitration proceedings.  Our lawyers have represented national and regional financial institutions, major media, entertainment and technology companies, and other Fortune 500 companies in a broad array of high-stakes disputes.  Our team of litigators has handled leading cases that have shaped the law in cutting-edge business, technology, free speech, and public interest impact lawsuits in trial and the courts of appeal.

We have particular expertise in handling civil litigation and regulatory enforcement matters in the cannabis and psychedelic industries.  While many firms claim expertise in the these industries, few have our depth of experience successfully litigating contract, trademark, partnership, shareholder, land use, and real estate disputes in court and arbitration.  Even fewer firms have our level of experience handling writ of mandate proceedings against the government regulators.

Our litigators practice in California, Oregon, and Washington, but have appeared in state and federal courts nationwide.  Our knowledge of our clients’ businesses, goals and concerns, and our experience litigating at the highest levels, give us unique insight into possible outcomes and pitfalls as we continuously confront issues of new impression.

No matter what the industry, we pride ourselves in achieving our clients’ objectives through efficient and creative solutions primarily designed to avoid disputes in the first place—which is always the best litigation strategy.  Many times, our clients obtain excellent outcomes before or at the earliest stages of litigation because our adversaries quickly recognize the challenges they will face in litigating against us.  When litigation is unavoidable, however, we work hard to provide our clients with both cost-efficient and “big firm” quality representation.

 

INTELLECTUAL PROPERTY

Your intellectual property (or “IP”) strategy can harness your most valuable information and intangible assets including your name, your brand, your designs, your content, your services, and your products — what makes your business stand apart in a competitive world.  We can help you evaluate and build your IP portfolio, then secure it, monetize it, and protect it.

IP encompasses multiple areas of law and different types of information or material.

Our Intellectual Property practice focuses on:

TRADEMARK

Trademarks include names, signs, logos, designs, phrases, slogans, expressions, and sometimes even colors, sounds, or smells that identify or distinguish one business compared to others.  Trademark protection is fundamental in securing your “brand.”

COPYRIGHT

Copyright covers original works of creative authorship fixed in a tangible medium of expression.  This includes literary, dramatic, musical, and artistic works, such as poetry, novels, designs, movies, songs, computer software, and architecture. Copyright does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed.  Depending upon the type of work, “moral rights” (such as the right of attribution) may be implicated as well.

TRADE SECRET

Trade secret laws can vary somewhat between states, but generally trade secrets cover information, including drawings, cost data, customer lists, formulas, recipes, patterns, compilations, programs, devices, methods, techniques or processes that derive economic value from not being generally known and are the subject of efforts that are “reasonable under the circumstances” to maintain secrecy.

PRIVACY

Depending upon where you live or operate, there is a special patchwork of laws and regulations that protect and regulate personal information.  If you are handling or giving out personal or potentially sensitive information, you may be implicating privacy laws.

PUBLICITY

Publicity rights address the commercial use of an individual’s face, name, image, or likeness.  These rights vary state-to-state.  Marilyn Monroe, for example, lived in multiple states which created complex questions about her publicity rights.

Our Intellectual Property services include:

FINANCIAL INSTITUTIONS

In states where new cannabis banking opportunities exist, Emerge Law Group has the proven expertise in creating canna-banking programs to efficiently capitalize on those opportunities. Our Banking Practice Group specializes in working with banks and credit unions to develop regulatory compliant programs and operational best practices. We also train banking staff to become experts in canna-banking so they can effective understand and manage the risk affiliated with canna-banking.

We regularly help clients with:

EMPLOYMENT LAW

At Emerge Law Group, we recognize that employees are the heart and soul of any successful business.  Our Employment Law Practice Group works with employers to help them effectively manage their workforce, navigate the complex web of federal, state and local employment laws and, if necessary, defend against claims before administrative agencies and in court.

We regularly help clients with:

CORPORATE FINANCE AND SECURITIES

Our corporate finance and securities lawyers are experienced attorneys who have practiced at large law firms, worked as in-house counsel for public companies and investment banks, and owned and operated start-up companies. We work with clients to help achieve their financing goals while safely navigating the highly technical securities law landscape. 

In addition to representing issuers, we also routinely represent institutional and individual investors, including in connection with fund formation and investments.

Our expertise includes:

We have a deep understanding of the financing options available to businesses, including simple unsecured loans, asset-backed financing, convertible debt, common and preferred equity, crowdfunding and various other structures.  We work closely with our clients to understand their business and financing needs, ensure they are prepared to approach investors and choose the right partners, structure and negotiate terms, navigate the due diligence process and successfully close the deal.

COMPLIANCE AND LICENSING

ALCOHOL AND BEVERAGE INDUSTRY

Emerge attorneys have represented businesses in the alcohol and beverage industry, including wineries, breweries, distilleries, restaurants, bars, movie theaters, golf courses, and gas stations.  We can help you vet new locations, acquire existing locations, and apply for the appropriate liquor license.  We also provide training to comply with applicable rules and regulations, prepare operating procedures, submit renewals, and keep clients protected in the event of any potential violations or administrative hearings.

CANNABIS INDUSTRY

Emerge Law Group is highly experienced in the cannabis industry.  We have helped many clients obtain state licenses and local permits to operate cannabis businesses throughout California, Oregon, and Washington.  We regularly help clients with:

Cannabis laws and rules are also regularly changing.  Members of our team are dedicated to attending legislative hearings, state agency and local city and county meetings to stay up-to-date on any new changes and how to adjust to any new changes.

See our Cannabis Industry page for more information.

PSYCHEDELICS INDUSTRY

Emerge Law Group is a leader in the psychedelics industry.  There is tremendous excitement about the potential for psychedelic drugs to benefit a wide variety of populations, including veterans struggling with PTSD and terminally ill patients suffering with anxiety and depression.  Until recently, psychedelic substances have been accessible only in the underground; they are illegal under state and federal law to manufacture, distribute, or possess.  These substances have, since 1970, been treated as having no legitimate medical use, and no commercial application.  As such, businesses have not invested in this area or required legal services, outside of the criminal context.

Today, psychedelics are proceeding toward legalization on multiple paths.  Researchers in a multitude of clinical studies are proving the medical safety and efficacy of these medicines, with the objective of changing the treatment of these substances under the federal Controlled Substances Act, opening legal access to them.  Private and public companies are now actively raising money to develop intellectual property and capitalize on the market opportunities associated with psychedelic drugs.  Opportunities to be early actors in this new arena are tremendous.

See our Psychedelics Practice Group page for more information.

BUSINESS AND CORPORATE

Our business transactions team is made up of highly experienced transactional attorneys who have practiced at large law and accounting firms, worked as in-house counsel for public companies and investment banks, and owned and operated start-up companies. We understand complex legal matters and provide high quality legal services in a cost-effective manner.  Our clients value our experience, knowledge and judgment.

ENTITY FORMATION

Our team routinely advises clients regarding:

CORPORATE GOVERNANCE

Emerge attorneys also advise on-going concerns with: