The Very First CAURD Licenses Have Been Issued in New York…What’s Next?
During the November 21, 2022, Cannabis Control Board meeting, 37 CAURD license applicants were approved, 29 to justice involved businesses and 8 to non-profit organizations. This is the very first issuance of dispensary licenses in the state, completing the supply chain of legal adult-use cannabis in New York. The State’s Office of Cannabis Management (“OCM”) claims the first adult-use dispensaries will be open for business before the end of the year.
Now, these 37 CAURD licensees will undergo a second application process with OCM and will have to disclose all True Parties of Interest (“TPIs”). TPIs are strictly prohibited from holding any direct or indirect interest in another licensing tier, otherwise known as a vertical ownership restriction.
A TPI in a CAURD license that has equal to or greater than 20% ownership or profit distribution percentage may only have an interest in up to three retail dispensary licenses, a form of horizontal ownership restriction. OCM has defined True Parties of Interest as someone who receives a right to, or actual payment of, either 10% of gross revenues, 50% of net profits, or $100,000 from a licensee over the course of a calendar year. TPI disclosures to OCM require the filing of several forms per TPI, including an entity history disclosure, personal history disclosures for all TPIs within the entity, and a NYS Department of Tax and Finance Clearance Form for each individual and entity TPI.
In the meantime, the NYS Dormitory Authority (“DASNY”) has been working diligently through financing and real estate efforts to secure locations for the very first CAURD licensees. DASNY has already begun negotiating leases and terms with landlords for the state’s very first retail dispensaries. Soon, DASNY will engage with each one of the licensees to secure retail locations and assist with banking. Unfortunately, this aid comes from the Social Equity Cannabis Fund, a fund inaccessible to the non-profit licensees. Non-profit licensees are required to provide their own compliant retail storefronts.
Prior to securing retail storefronts, licensees are permitted to commence delivery sales from a location that has been approved by OCM. This delivery allowance is an effort to jumpstart adult-use cannabis sales in the state. Cannabis cultivators and processors are finally able to move product down the supply chain, and now thanks to this delivery allowance, New York may see its very first legal adult-use retail cannabis sales during the holiday season.
If you are a recent licensee, professional guidance and support in these next steps could be a gamechanger in opening your retail business before the new year. If you are aiming for one of the licenses not yet available (nurseries, cultivators, cooperatives, processors, distributors, microbusiness), adequate preparation can help you get a jumpstart on applying for these licenses when the time comes. OCM recently published its proposed guidelines for these adult-use programs and the Long Law Firm PLLC can help you navigate the process.