Describing New York’s implementation of the 2021 Marijuana Regulation and Taxation Act as “bumpy,” State Sen. Jeremy Cooney has proposed legislation to address “urgent issues” facing the state’s adult use and medical cannabis programs.

Cooney said he teamed with a “diverse coalition of industry and community stakeholder groups” – many of whom have criticized the state’s slow rollout of its adult-use cannabis program — to draft the Cannabis Adult-Use Transition Act “CAUTA” (S.7045), a measure he expects to stabilize and bolster the cannabis industry. In a press release, Cooney said the legislation addresses issues that could become “threats,” including:

  • limited processing capacity
  • limited retail outlets
  • lack of capital and other resources for licensees and applicants
  • a shrinking medical cannabis market
  • the illicit market competing with legal cannabis operations

“It is no secret that New York has faced bumps in the road to a fully-functioning adult use and medical cannabis sectors,” Cooney said. “From a thriving illicit market, limited processing capacity, to a lack of capital access for social equity retailers—the entire supply chain is struggling. CAUTA takes much needed steps to stabilize the legal market, create pathways for licensees and applicants, while also building a framework to protect consumers and patients alike.”

Cooney said his legislation will address these issues by:

  • Expanding the Cannabis Advisory Board to 17, with new seats for key stakeholders like retailers, patients, and representatives of the supply chain.
  • Confirming and clarifying the transition for registered organizations to enter the adult-use market, to garner funding for the Social and Economic Equity programs and stabilize the diminishing medical cannabis market.
  • Extending the conditional cultivators and processors program for one year.
  • Codifying the CAURD licenses and equipping them with capital and administrative support.
  • Creating a competitive adult-use market that attracts consumers of the illicit market and increases revenue for reinvestment into communities disproportionately impacted by cannabis criminalization.

This is the latest attempt to address a program roll out plagued with lawsuits and other delays. To date, two years after the MRTA was approved, only 12 adult-use retail establishments are in operation. Just last month, State Assemblywoman Donna Lupardo introduced legislation to allow cannabis cultivators to sell their product directly at retail, due to a massive supply chain surplus.

The state plans to issue up to 300 conditional adult-use retail dispensary licenses, but pending lawsuits have slowed that process down. New York intends to prioritize licensure for those convicted of the state’s strict cannabis-related laws, referred to as “justice involved” applicants. But the state’s been sued twice over the residency requirements. In addition to a lawsuit from an out-of-state applicant, which alleged violation of the Dormant Commerce Clause that prohibits states from passing legislation discriminating against interstate commerce, a New York-based coalition accused the state’s Office of Cannabis Management and Cannabis Control Board of “unconstitutional overreach” in its management of the program.

The lawsuit, filed in the Supreme Court of the State Court of New York, Albany County, claims the state’s Conditional Adult-Use Retail Dispensary (CAURD) licensing process contradicts the intent of the 2021 law by creating a new license class, violating the law’s provision the application period be open to “all applicants at the same time,” the group contends.

Meanwhile, a “gray” marijuana market thrives as dispensary openings are delayed.

Harris Beach’s Cannabis Industry Team continues to monitor developments in the fast-moving New York cannabis industry. For more information on this subject or related matters, please contact attorney Meaghan T. Feenan at (518) 701-2742 and, or the Harris Beach attorney with whom you most frequently work.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.

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