STATE OF NEW YORK
________________________________________________________________________
7045--A
2023-2024 Regular Sessions
IN SENATE
May 17, 2023
___________
Introduced by Sens. COONEY, CLEARE -- read twice and ordered printed,
and when printed to be committed to the Committee on Investigations
and Government Operations -- committee discharged, bill amended,
ordered reprinted as amended and recommitted to said committee
AN ACT to amend the cannabis law and the state finance law, in relation
to enacting the "cannabis adult-use transition act"
The People of the State of New York, represented in Senate and Assem-
bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "cannabis adult-use transition act".
3 § 2. Legislative findings and intent. Chapter 92 of the laws of 2021,
4 known as the Marijuana Regulation and Taxation Act, legalized and regu-
5 lated cannabis for adult-use; expanded and improved the medical cannabis
6 program and the hemp program; established the Cannabis Control Board and
7 the Office of Cannabis Management, and codified historical social and
8 economic equity policies. Chapter 18 of the laws of 2022 created the
9 conditional adult-use cultivator and processor licenses to jump start
10 New York's adult-use cannabis market with small New York farmers.
11 The legislature recognizes that due to a variety of circumstances
12 beyond the control of New York's cannabis licensees and applicants,
13 there have been delays and unforeseen challenges with the implementation
14 of various components of the state's cannabis markets. Conditional
15 cultivators cannot afford to process their cannabis or sell their
16 finished products; conditional processors are struggling with limited
17 retail outlets; conditional adult-use retail dispensary licensees and
18 applicants do not have access to capital, locations, or the resources
19 they need to become operational; and the state's medical registered
20 organizations and patients are facing a diminishing medical cannabis
21 market. As a result, the state's cannabis industries are losing value
22 and jobs, patients are being left behind, and the illicit market is
23 growing.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11444-03-3
S. 7045--A 2
1 § 3. Subdivisions 2 and 3 of section 14 of the cannabis law are
2 amended to read as follows:
3 2. The state cannabis advisory board shall consist of [thirteen]
4 seventeen voting appointed members, along with a representative from the
5 department of environmental conservation, the department of agriculture
6 and markets, the office of children and family services, the department
7 of labor, the department of health, the division of housing and communi-
8 ty renewal, the office of addiction services and supports, and the
9 department of education, serving as non-voting ex-officio members. The
10 governor shall have [seven] eleven appointments, the temporary president
11 of the senate and the speaker of the assembly shall each have three
12 appointments to the board. The members shall be appointed to each serve
13 three year terms and in the event of a vacancy, the vacancy shall be
14 filled in the manner of the original appointment for the remainder of
15 the term. The appointed members and representatives shall receive no
16 compensation for their services but shall be allowed their actual and
17 necessary expenses incurred in the performance of their duties as board
18 members.
19 3. Advisory board members shall have statewide geographic represen-
20 tation that is balanced and diverse in its composition. Appointed
21 members shall have an expertise in public and behavioral health,
22 substance use disorder treatment, effective rehabilitative treatment for
23 adults and juveniles, homelessness and housing, economic development,
24 environmental conservation, job training and placement, criminal
25 justice, and drug policy. Further, the advisory board shall include
26 residents, one retailer, one certified patient, one service disabled
27 veteran, and one supply tier licensee from communities most impacted by
28 cannabis prohibition, people with prior drug convictions, the formerly
29 incarcerated, and representatives from the farming industry, cannabis
30 industry, and organizations serving communities impacted by past federal
31 and state drug policies.
32 § 4. Paragraph (c) of subdivision 3 of section 99-ii of the state
33 finance law, as added by chapter 92 of the laws of 2021, is amended to
34 read as follows:
35 (c) Actual and necessary costs incurred by the office of cannabis
36 management and the cannabis control board, and the urban development
37 corporation, related to the administration of incubators and other
38 assistance to qualified social and economic equity applicants including
39 the administration, capitalization, and provision of low and zero inter-
40 est loans to such applicants [pursuant to], including the conditional
41 adult-use retail dispensary licensees. The office of cannabis management
42 shall administer theses resources in accordance with the social equity
43 and economic plan mandated pursuant to article four of the cannabis law
44 and in accordance with section sixteen-ee of the urban development
45 corporation act. Such costs shall be paid out of revenues received,
46 including, but not limited to, from special one-time fees paid by regis-
47 tered organizations pursuant to section sixty-three of the cannabis law.
48 § 5. Section 39 of the cannabis law is amended to read as follows:
49 § 39. Registered organizations and adult-use cannabis. The board shall
50 [have the authority to] grant [some or all of the] registered organiza-
51 tions [registered with the department of health and] currently regis-
52 tered and in good standing with the office, the ability to obtain
53 adult-use cannabis licenses pursuant to article four of this chapter and
54 subject to any [fees, rules or conditions] regulation prescribed by the
55 board [in regulation].
S. 7045--A 3
1 § 6. Subdivision 1-a of section 63 of the cannabis law is amended to
2 read as follows:
3 1-a. The [board shall also have the authority to assess a registered
4 organization with a] one-time special licensing fee for a registered
5 organization adult-use cultivator processor, distributor retail dispen-
6 sary [license. Such fee shall be assessed at an amount to adequately]
7 licensed pursuant to section sixty-eight-a of this article, shall be
8 twenty million dollars, an amount to be used exclusively to fund social
9 and economic equity and incubator assistance pursuant to this article
10 and paragraph (c) of subdivision three of section ninety-nine-ii of the
11 state finance law. Such fee shall be payable in five million dollar
12 installments, the first of which upon licensure, and thereafter within
13 thirty days of each one hundred million dollars in revenue generated by
14 such licensee until paid in full, or such obligation expires on December
15 thirty-first, two thousand thirty, whichever occurs first. At least
16 fifty percent of the total fees collected shall be administered by the
17 office as grants or zero or low interest loans to the conditional
18 adult-use retail dispensary licensees. Conditional adult-use retail
19 dispensary licensees who accept zero or low interest loans shall be
20 allowed to prepay such loans without penalty. Provided, however, that
21 the board shall not allow registered organizations to dispense adult-use
22 cannabis from more than three of their medical cannabis dispensing
23 locations. [The timing and manner in which registered organizations may
24 be granted such authority shall be determined by the board in regu-
25 lation.] An eligible registered organization shall be authorized as a
26 registered organization adult-use cultivator processor distributor
27 retail dispensary pursuant to section sixty-eight-a of this article upon
28 approval of an application to the office that must be available to such
29 registered organizations no later than August first, two thousand twen-
30 ty-three and remain available thereafter. The office must approve or
31 deny such application within thirty days of its submission or it shall
32 be deemed approved. A registered organization adult-use cultivator
33 processor distributor retail dispensary licensee shall be authorized to
34 cultivate, process, and distribute in the adult-use cannabis market,
35 provided however, that each licensee's first co-located dispensary shall
36 not offer adult-use cannabis for retail sale until or after December
37 twenty-ninth, two thousand twenty-three; the second co-located dispen-
38 sary shall not offer adult-use cannabis for retail sale until or after
39 January first, two thousand twenty-four; and the third co-located
40 dispensary shall not offer adult-use cannabis for retail sale until or
41 after April first, two thousand twenty-four. These licensees must submit
42 a plan to the office demonstrating their commitment to diversifying the
43 co-located dispensary shelf space for adult-use with cannabis products
44 from adult-use cultivators and processors licensed pursuant to sections
45 sixty-eight, sixty-eight-b, sixty-eight-c, sixty-nine, sixty-nine-a,
46 seventy, and seventy-three of this article.
47 § 7. Subdivision 3 of section 68-c of the cannabis law, as added by
48 chapter 18 of the laws of 2022, is amended and two new subdivisions 16
49 and 17 are added to read as follows:
50 3. A conditional adult-use cultivator license shall authorize the
51 cultivation of cannabis outdoors or in a greenhouse or aquaponics facil-
52 ity with no more than twenty artificial lights unless otherwise author-
53 ized by the office. A conditional adult-use cultivator licensee may
54 cultivate up to forty-three thousand five hundred sixty square feet of
55 flowering canopy outdoors or twenty-five thousand square feet of flower-
56 ing canopy in a greenhouse or aquaponics facility. A cultivator may
S. 7045--A 4
1 cultivate both outdoors and in a greenhouse or aquaponics facility
2 provided the flowering canopy in a greenhouse or aquaponics facility is
3 less than twenty-thousand square feet and the total flowering canopy is
4 equal to or less than thirty-thousand square feet.
5 16. Notwithstanding any other provision of this chapter, a conditional
6 adult-use cultivator or processor licensee shall be authorized to sell
7 tested, packaged, and sealed cannabis products to registered organiza-
8 tions for retail sale at up to three of such registered organizations'
9 existing medical cannabis dispensing facilities until June first, two
10 thousand twenty-four, provided however that the conditional cultivator
11 or processor licensees shall prioritize wholesaling to conditional
12 adult-use retail dispensaries. A registered organization selling condi-
13 tionally grown and processed cannabis products at any of its cannabis
14 dispensing facilities shall pay three percent of any such sales through
15 June first, two thousand twenty-six, to the state, with two-thirds of
16 such funds used toward grants authorized pursuant to paragraphs (c) and
17 (d) of subdivision three of section ninety-nine-ii of the state finance
18 law to offset tax obligations of the conditional adult-use retail
19 dispensary licensees and the remaining one-third of such funds used at
20 the discretion of the office in implementing social and economic equity
21 programs. Such payments by the registered organizations shall account to
22 the special one time licensing fee assessed pursuant to section sixty-
23 three of this article.
24 17. The office is authorized to create a loan program for conditional
25 adult-use cultivators for the purpose of having any cannabis grown under
26 a conditional adult-use cultivator license in two thousand twenty-two
27 processed into shelf stable formats. The end-product of such processing
28 shall be returned to the licensee for future use.
29 § 8. Subdivision 6 of section 72 of the cannabis law is amended to
30 read as follows:
31 6. No cannabis retail licensee shall locate a storefront within five
32 hundred feet of a school grounds as such term is defined in the educa-
33 tion law or within two hundred feet of a house of worship. The board
34 and/or office shall not establish additional setback requirements.
35 § 9. The cannabis law is amended by adding a new section 72-a to read
36 as follows:
37 § 72-a. Conditional adult-use retail dispensary license. 1. The
38 following minimum requirements must be met to become an eligible appli-
39 cant for this license:
40 (a) an applicant must demonstrate:
41 (i) a significant presence in New York state, either individually or
42 by having a principal corporate location in the state;
43 (ii) it is incorporated or otherwise organized under the laws of New
44 York state; or
45 (iii) a majority of the ownership of the applicant are residents of
46 New York state by being physically present in the state no less than one
47 hundred eighty calendar days during the current year or five hundred
48 forty calendar days over the course of three years;
49 (b) if the applicant is an individual, or an entity with one or more
50 individuals, at least one individual must:
51 (i) be justice involved, which means an individual that:
52 (A) was convicted of a marihuana-related offense in New York state
53 prior to March thirty-first, two thousand twenty-one;
54 (B) had a parent, legal guardian, child, spouse, or dependent who was
55 convicted of a marihuana-related offense in New York state prior to
56 March thirty-first, two thousand twenty-one; or
S. 7045--A 5
1 (C) was a dependent of an individual who was convicted of a marihua-
2 na-related offense in New York state prior to March thirty-first, two
3 thousand twenty-one; and
4 (ii) provide evidence of the primary residence of the justice involved
5 individual at the time of such individual's arrest or conviction; and
6 (iii) hold or have held, for a minimum of two years, at least ten
7 percent ownership interest in, and control of, a qualifying business,
8 which means a business that had net profit for at least two of the years
9 the business was in operation; or
10 (c) if the applicant is a nonprofit organization, or wholly owned and
11 controlled by one, the nonprofit organization must:
12 (i) be recognized as an entity pursuant to section 501(c)(3) of the
13 Internal Revenue Code;
14 (ii) intentionally serve justice involved individuals and communities
15 with historically high rates of arrest, conviction, incarceration or
16 other indicators of law enforcement activity for marihuana-related
17 offenses;
18 (iii) operate and manage a social enterprise that had at least two
19 years of positive net assets or profit as evidenced in the organiza-
20 tion's tax returns;
21 (iv) have a history of creating vocational opportunity for justice
22 involved individuals;
23 (v) have a justice involved individual or individuals on its board or
24 as officers; and
25 (vi) have at least five full-time employees.
26 2. At least fifty-one percent or more of the applicant shall be owned,
27 in the aggregate, by:
28 (a) at least one individual that satisfies the requirements for an
29 eligible applicant as set forth in paragraphs (a) and (b) of subdivision
30 one of this section or an entity that satisfies the requirements for an
31 eligible applicant as set forth in paragraphs (a) and (c) of subdivi-
32 sion one of this section; and
33 (b) any other additional individuals, if any, who are justice
34 involved; and
35 (c) at least one individual that satisfies the requirements for an
36 eligible applicant as set forth in paragraphs (a) and (b) of subdivi-
37 sion one of this section or an entity that satisfies the requirements
38 for an eligible applicant as set forth in paragraphs (a) and (c) of
39 subdivision one of this section shall own at least thirty percent of the
40 applicant and such individual or entity shall have sole control of the
41 applicant or licensee.
42 3. An eligible applicant shall be evaluated based on any of the
43 following criteria which shall be weighted as determined by the
44 office:
45 (a) if the applicant is an individual, or an entity with one or more
46 individuals, whether the justice involved individual was themselves
47 convicted of a marihuana-related offense as set forth in regulation;
48 (b) the justice involved individual's primary residence at the time of
49 such individual's arrest or conviction:
50 (i) relative to areas with historically high rates of arrest,
51 conviction, or incarceration for marihuana-related offenses;
52 (ii) relative to areas with historically low median income; or
53 (iii) was provided by a public housing authority in New York state or
54 New York city; and
55 (c) the qualifying business based on:
56 (i) the number of employees employed by the business;
S. 7045--A 6
1 (ii) the number of years the business has been in operation;
2 (iii) the profitability of the business;
3 (iv) type of business and whether the business was a retail business,
4 or sold products or services directly to the end-consumer;
5 (v) whether the business had a physical location; or
6 (vi) whether the business received or resolved any violations, fines
7 or fees assessed against the business by state or federal regulatory
8 authorities; and
9 (d) any other factors as determined by the office.
10 4. The office may create regional geographic zones for the scoring of
11 applicants. Applicants may be asked to rank a number of preferences of
12 regional geographic zones to be considered for a license. For regional
13 geographical zones where there are more applicants than available
14 licenses, the office may select from eligible applicants who indicated
15 first preference for the given region based on weighted scoring of the
16 evaluation criteria set out above. In the event there is a tie between
17 two or more candidates or there are more applicants than available
18 licenses after the evaluation criteria has been applied, the office is
19 authorized to use a random selection process to identify the final
20 applicants to recommend to the board for licensure.
21 5. The office shall approve, deny, or request additional information
22 in regards to a conditional adult-use retail dispensary licensee's
23 submission for location approvals within thirty days of receipt or the
24 location request shall be automatically approved so long as it complies
25 with the setback requirements of this chapter.
26 6. The office and dormitory authority shall make the list of addresses
27 for any executed lease agreements entered into and potentially available
28 to eligible conditional adult-use retail dispensary licensees publicly
29 available on their websites, and upon request. Such list shall be
30 updated each week to maximize the transparency for retail dispensary
31 licensees securing store locations and shall not include or block any
32 locations without an executed lease.
33 7. The office shall promulgate any rules and regulations to fully
34 implement this section and any rules and regulations adopted prior to
35 the enactment of this section shall not be invalidated.
36 § 10. This act shall take effect immediately; provided, however, that
37 the amendments to section 68-c of the cannabis law made by section seven
38 of this act shall not affect the repeal of such section and shall be
39 deemed repealed therewith.