NYS Cannabis Delivery Could Be the Pinnacle of Jumpstarting Adult-Use Retail Sales
New York is likely going to see the start of adult-use cannabis retail sales via courier delivery prior to CAURD dispensaries opening their storefront doors.
The Office of Cannabis Management (“OCM”) announced the new retail delivery system during the November 21st Cannabis Control Board meeting. In a statement made to THE CITY, Aaron Ghitelman, a spokesperson for the OCM explained: “We are allowing adult-use retail dispensary non-storefront delivery as a means of jumpstarting adult-use cannabis product sales.”[1]
OCM’s delivery guidelines now permit[2]:
· Retail licenses to secure a warehouse from which to fulfill delivery orders while building permanent dispensary locations for up to one year;
· Customers to place orders online and by phone only – no in-person sales or pick-up from warehouse options available;
· Customers must pre-pay – no cash payments from the cannabis consumer to the delivery employee are permitted;
· Deliveries can be made by bicycles, scooters, or motor vehicles;
· Consumers must be at least 21 years old with valid identification upon sale and delivery;
· Businesses can have up to 25 full-time delivery staff per business, or the hourly equivalent.
See Conditional Adult-Use Retail Dispensary (CAURD) Delivery Guidelines, Office of Cannabis Management, last updated December 9, 2022.[3]
The new delivery guidance loosens the previous rule that required CAURD licensees to receive their storefronts from the State prior to beginning sales. Licensees are now able to acquire their own locations, provided that the location is approved by the State. Guidelines for the way in which these locations will be approved by the State has yet to be released. The very first businesses among the 36 licensed for CAURD dispensaries are expected to begin delivery sales in the coming weeks, as some licensees have already begun lease negotiations for the warehouse needed to make this delivery system a reality.
Some have opined that OCM’s move towards non-storefront delivery is in response to the Dormitory Authority’s struggle to provide license holders with access to real estate and financing.[4] New York State has yet to fulfill the promise of turnkey storefronts and millions of dollars in start-up loans to CAURD license holders. In fact, it has been reported that the State has only contributed $20 million of its $50 million promised to the Social Equity Fund. An additional $150 million is supposed to come from private investors by way of fund-raising steered by the Dormitory Authority in partnership with Social Equity Impact Ventures, a private investment firm. It remains unclear how much money the Social Equity Fund has raised or how many locations the Dormitory Authority has currently leased.
The Dormitory Authority’s struggle may be the “behind the curtain” reason that OCM has chosen to take a step back from their insistence that CAURD licensees receive their fully built retail storefront locations from the Dormitory Authority through the Social Equity Fund. The provisions regarding delivery not only allow licensees to deliver from warehouses, but it allows them the ability to build their own storefront in their own vision, given that the location complies with the coming regulations. In turn, this grant of independence may lessen the financial burden on the Dormitory Authority when they have less licensees needing State-provided retail storefronts.
Licensees embarking on the warehouse delivery grant of independence are facing new obstacles in their hunt for warehouses; few municipalities have yet to tackle the issue of cannabis zoning.[5] Some licensees have been siting warehouses in commercial districts, but commercial districts are insufficient for retail dispensary storefront locations. Not many municipalities have addressed the issue of where these canna-businesses will be housed in the grand scheme of their community, and many municipalities are looking for guidance on the issue. As zoning is left up to the Towns and Villages who opted into dispensaries and/or on-site consumption lounges, counties and the State have been hesitant to direct these smaller municipalities on how to solve the current zoning issues.
Whether the hurdle is completing the application process to receive the final go-ahead from OCM, negotiating a lease for a commercial warehouse to begin your CAURD retail delivery sales, or figuring out how to secure and build your own retail storefront in compliance with the State’s not yet released regulations (as well as your municipalities zoning regulations), professional advice would be of benefit to you. Having an experienced attorney in your corner can provide your business with the knowledge necessary to advance your head start in the legal cannabis industry. Call our office today for help along your canna-business journey!
[1] NYC Legal Weed Delivery Likely Approved Soon by Cannabis Regulator - THE CITY
[2] Marijuana delivery is now permitted in New York: Here’s what you need to know - silive.com
[3] https://cannabis.ny.gov/system/files/documents/2022/12/caurd-delivery-guidance.pdf
[4] New York Loosens Rules on Locations for Weed Dispensaries - The New York Times (nytimes.com)
[5] ‘A way to expedite’: New regulations in NYS to jumpstart retail cannabis | RochesterFirst