OCM to Begin Accepting Conditional Adult Use Processor Applications

Foley Hoag LLP - Cannabis and the Law
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Foley Hoag LLP - Cannabis and the Law

The Cannabis Control Board (the “Board”) held a public meeting earlier today during which it advanced several key components of the innovative Seeding Opportunity Initiative, which positions individuals with prior cannabis-related criminal offenses to make the first adult-use cannabis sales with products grown by New York farmers. Here are some key takeaways from the meeting:

New License Application Period for Conditional Adult Use Processor Licenses

During the meeting, the Board voted to establish the application and licensing window for the Adult-Use Conditional Processor license. Pursuant to the legislation signed by Governor Hochul in February, which we wrote about here, processors who hold a Cannabinoid Hemp Processor license from the Office of Cannabis Management (“OCM”) qualify to apply for the adult-use conditional processor license.  To be eligible to apply for a conditional adult-use processor license, a processor must:

  • Have applied for a cannabinoid hemp processor license before January 1, 2022;
  • Hold an active cannabinoid hemp processor license issued by the OCM; and
  • Have an ownership interest of 51 percent or more of the entity that is the licensee.

The Adult-Use Conditional Processor license authorizes the license holder to process and distribute their own cannabis products (over 0.3% THC) for a period of two years or until they transition to a non-conditional processor license. Processors are required to participate in a mentorship program for social equity applicants and an environmental sustainability program.

The application window will open on Tuesday, June 28 and close on Wednesday, August 31. The mock-up of the online application form can be found here.

Other meeting highlights include the approval of an additional 41 conditional adult-use cultivator licenses as well as the appointment of Damian Fagon as Chief Social Equity Officer, discussed further below.

Approval of Additional Conditional Adult-Use Cultivator Licenses

Since opening the Conditional Adult-Use Cultivator application window on March 15th, the CCB and has received over 250 applications for the program and has been reviewing and approving applicants on a rolling basis. Today, the Board voted to approve an additional 41 more applicants, in addition to the 162 already approved. The Board will continue to review applications on an ongoing basis and will be making subsequent recommendations for licensure under the Conditional Cultivator program. The application window for the program closes on June 30, 2022. More information on this program can be found here.

Appointment of Chief Equity Officer

The Board has appointed Damian Fagon as the Chief Equity Officer for the Office of Cannabis Management. As Chief Equity Officer, Mr. Fagon will play a key role in developing the OCM’s social equity program initiatives, including the creation and implementation of the social equity and economic plan as stipulated in the MRTA. Mr. Fagon will also work closely with the recently appointed Advisory Board who will advise the OCM and oversee the community grants investment fund to help communities impacted by the drug war.

Mr. Fagon is an experienced policy professional with a background in industrial hemp, cannabis, economic development and agriculture. He is also a third generation farmer, and has managed international agricultural development initiatives in several countries, including Jamaica, Sierra Leone, and Guatemala. He has also owned several hemp businesses and since 2017, he has worked to scale cannabis and industrial hemp cultivation operations in South Carolina, New York, and the Caribbean.

Social Equity Fund Program Updates

The Board appears to have been making significant progress with respect to another component of the Seeding Opportunity Initiative, the Social Equity Fund Program. As a refresher, the OCM has been granted the authority to create and regulate the Social Equity Fund Program to provide persons harmed by the disproportionate enforcement of the cannabis laws with licenses for the legal sale of cannabis through conditional adult use retail cannabis dispensaries in New York. Applicants selected by the OCM and the Board to receive conditional adult use retail  licenses (“CAURD Licensees”) will be eligible for funding of their dispensaries by the New York Social Equity Cannabis Investment Fund, a private fund formed for the purpose of undertaking the initial build-out and leasing of the dispensaries for operation by the CAURD Licensees. Under the program, the Dormitory Authority of the State of New York (DASNY) will provide support with its leasing and construction services to conditional adult use retail cannabis dispensaries and renovate them to meet health, safety, and security requirements. The Fund will then sublease these sites to the CAURD Licensees who will be responsible for their operation.

During the meeting, Boardmember Reuben McDaniel gave several updates regarding the program, including that DASNY has recently issued an RFP for Design-Build Services for the CAURD dispensaries and has also begun identifying sites and negotiating LOIs with potential landlords. The state is aiming to roll out the CAURD licenses by the end of the year.

We will continue to closely monitor developments in connection with the rollout of New York’s adult use cannabis program. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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