New York May Soon Let Hemp Licensees Grow Cannabis

20 Feb New York May Soon Let Hemp Licensees Grow Cannabis

This week the New York legislature passed Senate Bill S8084A, which would unable existing licensed hemp growers and processors to cultivate and process cannabis under one of two types of temporary licenses:

• a temporary conditional cultivator license to process and distribute cannabis flower products without holding an adult-use processor or distributor license, and
• a temporary conditional adult-use processor license to process and distribute cannabis products.

So today we take a closer look at this piece of legislation and how it would shape New York’s cannabis market if enacted.

Why New York wants to let hemp licensees cultivate and process cannabis

New York wants to quickly establish an adult-use cannabis market to help avoid significant supply issues that would stem from the current lack of cannabis regulations.

Although the state legislature legalized adult-use cannabis by enacting the Marihuana Regulation & Taxation Act (MRTA) in March 2021, state regulators have yet to release and adopt cannabis regulations. This means future cannabis growers won’t be able to start operating until 2023, at the earliest, which will force adult-use dispensary licensees to wait even longer to fill their shelves. Therefore, allowing already-licensed hemp farmers and processors to transition into cannabis production may prevent these problems, provided regulators quickly promulgate regulations and efficiently handle the corresponding licensing process and that hemp farmers promptly learn how to cultivate cannabis and navigate the complexities of operating a cannabis business.

The bill would also strengthen the MRTA’s social equity program, which aims to award half of all licenses to social equity applicants, by pairing interested social equity cultivators and processors with mentors who are well-versed in agriculture business management, sustainable cannabis cultivation and best practices. Social applicants include (1) individuals from communities disproportionately impacted by the enforcement of cannabis laws, (2) minority-owned businesses, (3) women-owned businesses, (4) distressed farmers, and (5) service-disabled veterans, who must be at least eighteen years of age and New York State residents. You can read more on this issue here and here.

The following is a quick overview of the requirements that would be imposed for each new license type.

New York hemp licensees can cultivate, process, and distribute with the cultivator license

This conditional license would permit already-licensed hemp growers that have grown and harvested hemp for at least two of the last four years to temporarily cultivate adult-use cannabis outdoors or in a greenhouse.

Licensees would be temporarily allowed to minimally process and distribute cannabis products without needing a separate processor or distributor license, so long as these products are in the form of cannabis flower until June 1, 2023. As of June 2, 2023, any conditional adult-use cultivator seeking to process and distribute cannabis products would be required to apply for and receive a processor and/or distributor license to continue these operations.

Conditional cannabis cultivation would only be permitted within the same or in an adjacent county in which the conditional adult-use cultivator licensee had previously been authorized to grow hemp.

Conditional adult-use processor license

This conditional license would permit licensees to temporarily manufacture or process cannabis products until June 30, 2024.

Eligible applicants would need to have applied for a cannabinoid hemp processor license as of December 31, 2021, and hold this license when applying.

Licensees would only be allowed to produce extracts if already permitted to do so under their existing hemp processor license.

The conditional processing of cannabis would only be permitted at the same location in which the conditional adult-use processor licensee is authorized to process hemp, unless expressly authorized by the Office of Cannabis Management.

Conditional processor licensees would have the authority to distribute cannabis products without holding an adult-use distributor until June 1, 2023, at which point any conditional processor seeking to distribute cannabis products would be required to apply for and receive a distributor license.

The bill is now on the governor’s desk. If signed into law, S8084A would take effect immediately. The fact that New York may soon let hemp licensees grow cannabis is a huge step towards its adult-use market. Hopefully the bill will become law and give the industry the leg up it needs to compete with all other regulated markets . For more updates on New York cannabis law, stay tuned to the Canna Law Blog.