3 ways to cut through the haze of NY’s Cannabis regulations

Posted February 23, 2024 on Long Island Business News

Navigating New York's Adult-Use Cannabis Market: Essential Steps for Prospective Dispensary Owners.

Last year’s application windows for adult-use cannabis in New York were a significant first step in a long-awaited process to open New York’s legal adult-use cannabis market.

However, the regulations governing this burgeoning industry created an uphill battle for prospective retailers hoping to open dispensaries in New York, forcing them to navigate a process that is time-consuming, expensive and confusing.

The process is demanding, however, it isn’t impossible. While it is not easy, prospective dispensary owners must take three essential steps for success.

Apply for an adult-use cannabis dispensary license. Although the initial application windows closed last year, I expect the New York State Office of Cannabis Management to open up additional application periods in the future. Applicants should fully understand the True Party of Interest disclosure requirements, as well as think through what type of corporate structure works best for the applicant and their investors. Further, OCM is prioritizing Social and Economic Equity applicants. Qualifying as a SEE applicant will significantly increase your chances of securing a license.
The real estate dynamic: Real estate is a critical component of any successful dispensary. Finding a location can be a long, competitive and complicated process. The regulations provide measurement requirements from the dispensary to places of worship, community centers, schools and other dispensaries. Be sure to understand these requirements fully, as they are non-negotiable.
The opt-in issue: Although New York State legalized adult-use cannabis, New York gave local municipalities the choice to opt in or out of allowing adult-use cannabis dispensaries in their municipality. Many municipalities throughout New York opted out. It is imperative any potential applicant determine their target municipality opted-in before securing real estate in that area.
Zoning: Taking the opt-in issue one step further, applicants must understand where the municipality that opted in zoned adult-use cannabis locations. For example, many municipalities only allow adult-use cannabis dispensaries in industrial areas. This may or may not impact businesses relying on foot traffic.
Finding a location: Once an applicant fully understands the opt-in and zoning issues, they must find a location. Because some municipalities that opted-in limited the locations where dispensaries can operate, the competition for available space is heated. Complicating this issue further, some mortgage agreements and master lease agreements contain strict provisions prohibiting cannabis a permissible use at a location.
Differentiate yourself: Legal adult-use cannabis is a new, burgeoning industry–and it’s exciting to be a part of it! However, like any business, whether selling widgets or dank kush, you’ll need to develop a plan to differentiate yourself from other legal dispensaries and the gray market. Why should someone patronize your business over the illegal dispensary down the block? A creative social media and marketing strategy will be critical; however, the regulations dictate how you can market your dispensary, so it is important to be aggressive while still playing ball within the legal lines.

Applying for and securing a cannabis license is a team sport. Between over 340 pages of regulations, complicated real estate dynamics and forming a beneficial corporate structure, cannabis entrepreneurs should rely on counsel to help navigate the haze of New York’s adult-use cannabis market.