New York’s Adult Use Cannabis Cultivation Licenses

02 Feb New York’s Adult Use Cannabis Cultivation Licenses

Continuing our series on New York’s cannabis rules and regulations (the Rules), we’re breaking down everything you need to know about the cultivation licenses (check out our other posts in the series here and here). Because there is so much information packed into the regs, we’re doing this FAQ style.

What are cannabis cultivation licensees licensed to do?

• Acquire, possess, cultivate, trim, harvest, dry and cure cannabis at its licensed premises (emphasis added).
• Sell cannabis to a processor, microbusiness, cooperative, ROD (Registered Organization with Dispensing), ROND (Registered Organization Non-Dispensing) or a cannabis research licensee.
• Send cannabis to a processor, but keep ownership of the cannabis.
• If the cultivation licensee has a processor license, purchase cannabis from another cultivator for processing.

There are also a ton of operational requirements in terms of the actual cannabis cultivation process, including labeling and tracking requirements. We’ll dive into those rules in a later post.

What are the cannabis cultivation license tiers?

There are four different license types for cultivation: (i) outdoor; (ii) mixed light; (iii) combination (outdoor with mixed light); and (iv) indoor.

Here are the tiers for indoor, mixed-light, or outdoor cultivation:

Tier I: Up to and including 5,000 sf

Tier II: From 5,001 sf to 12,500 sf

Tier III: From 12,501 to 25,000 sf

Tier IV: From 25,001 to 50,000 sf

Tier V: From 50,001 to 100,000 sf

Here are the tiers for combination outdoor with mixed light licensees:

Tier I: Up to and including 5,000 sf outdoor and 2,500 sf mixed light

Tier II: From 5,001 sf to 12,500 sf outdoor and from 2,501 to 6,250 sf mixed light

Tier III: From 12,501 sf to 25,000 sf outdoor and from 6,251 sf to 12,500 sf mixed light

Tier IV: From 25,001 sf to 50,000 sf outdoor and from 10,001 to 15,000 sf mixed light

Tier V: from 50,001 sf to 100,000 sf outdoor and from 15,01 sf to 30,000 sf mixed light

Can I apply for other licenses?

Yes, a processor license and one distributor license. But any True Party of Interest (TPI) can only be a TPI in one cultivator licensee (this limitation does not apply to passive investors).

The Rules allow for cultivation TPIs to have ownership in other “production side” licenses. As stated in the Rules, “a cultivator or its true party of interest may be a true party of interest in a processor, distributor, cooperative, microbusiness, or ROND license.

Non-ownership interest (i.e. landlords, financiers, or goods and services providers) is permitted for “production side” licenses, but no direct or direct interests are permitted for retail dispensaries, on-site consumption, delivery, ROD, ROS, or cannabis laboratory licensee or permittees.

What are the cannabis cultivation license fees?

It depends on the applicant’s tier. Here is the breakdown:

Outdoor

Outdoor Tier I: $1,000 + $150/500 square feet of cultivation canopy

Outdoor Tier II: $2,500 + $250/500 square feet of cultivation canopy greater than 5,000 square feet

Outdoor Tier III: $6,250 + $350/500 square feet of cultivation canopy over 12,500 square feet

Outdoor Tier IV: $15,000 + $500/500 square feet of cultivation canopy over 25,000 square feet

Outdoor Tier V: $40,000 + $800/500 square feet of cultivation canopy over 50,000 square feet

Mixed Light

Mixed Light Tier I: $1,500 + $290/500 square feet of cultivation canopy

Mixed Light Tier II: $4,380 + $440/500 square feet of cultivation canopy over 5,000 square feet

Mixed Light Tier III: $10,940 + $615/500 square feet of cultivation canopy over 12,500 square feet

Mixed Light Tier IV: $26,250 + $875/500 square feet of cultivation canopy over 25,000 square feet

Mixed Light Tier V: $70,000 + $1,400/500 square feet of cultivation canopy over 50,000 square feet

Indoor

Indoor Tier I: $1,750 + $450/500 square feet of cultivation canopy

Indoor Tier II: $6,250 + $625/500 square feet of cultivation canopy over 5,000 square feet

Indoor Tier III: $15,630 + $880/500 square feet of cultivation canopy over 12,500 square feet

Indoor Tier IV: $37,500 + $1,250/500 square feet of cultivation canopy over 25,000 square feet

Indoor Tier V: $100,000 + $2,000/500 square feet of cultivation canopy over 50,000 square feet

Combination

Combination Tier I: $1,250 + $150/500 square feet of cultivation canopy

Combination Tier II: $3,500 + $235/500 square feet of cultivation canopy over 5,000 square feet

Combination Tier III: $8,750 + $375/500 square feet of cultivation canopy over 12,500 square feet

Combination Tier IV: $21,000 + $585/500 square feet of cultivation canopy over 25,000 square feet

Combination Tier V: $56,000 + $860/500 square feet of cultivation canopy over 50,000 square feet

Anything else I should know?

The cultivation rules apply to conditional cultivator licensees and allow for a seemingly immediate transition to either a Tier 4 outdoor license or a Tier 2 combination license. Notably, conditional cultivators will be given priority by the OCM in review of its application to full licensure.

Licensed cultivators cannot expand or reduce their canopy size without the OCM’s written approval. The Rules include several approval factors:

• The licensee’s cultivation history, including whether the licensee sold more than 85% of cannabis it harvested in preceding 6 months;
• Whether the licensee’s plants or inventory suffered a catastrophic event during the licensing period;
• The licensee’s cannabis transfer and sales history;
• The licensee’s existing inventory and inventory history; and
• The licensee’s track record of compliance with the plans submitted as part of its application.

The Rules also include this interesting wrinkle as part of the license renewal process: at the time of license renewal, the licensee is required to provide inventory and production records as requested by the OCM during the 6 months prior to application for renewal. The CCB is then authorized to reduce the licensee’s maximum canopy to a lower tier if the licensee sold less than 50% of what it harvested in the previous 6 months.

As with all of our summaries of the adult-use rules and regulations, this is only a high level summary. We, as always, strongly advise that anyone who intends to apply for a cannabis license consult with a knowledgeable cannabis attorney.

Stay tuned for the next post in our series on New York’s adult-use cannabis rules and regulations!