As they are being so proactive with their marketing, something we like to see, especially when it actually supported by some useful content we though we should let you know what they are thinking
Our team is still buzzing from its recent announcement
of the opening of its New York office. Earlier this month, we had hundreds of conversations with members of the industry at the CWCB Expo cannabis convention in New York City and have much to report. In no particular order, here goes:
The Legacy market ponders their next steps
Those who have been participating in the marketplace pre-legalization, also known as the “Legacy” market, are split on their next steps. Many are keeping a low profile, when doing business while others have opened brick and mortar dispensaries and are openly advertising their products. All are cautiously looking toward the coming regulations and license application process in an attempt to establish themselves as legitimate and approved cannabis businesses, especially because the Office of Cannabis Management (OCM) issued cease and desist letters to unlicensed operators earlier this year. Some Legacy operators aren’t sure what their next steps should be given that the Marihuana Regulation and Taxation Act (MRTA) was enacted over a year ago and yet only minimal licensing has begun. Prince Lobel continues to advise Legacy clients on how to navigate the transition to legal.
Hemp farmers will now be cannabis producers
On February 22, 2022, Governor Hochul signed into law an amendment to the MRTA, creating a new Adult-Use Conditional Cultivator license, which authorizes eligible hemp growers to apply for a license to grow cannabis containing over 0.3% THC for the upcoming adult-use market. So far, approximately 150 of these licenses have been awarded. This will allow the nascent marketplace to have product to sell when the Conditional Adult-Use Retail Dispensary (CAURD) Licenses are awarded later this year.
What to do while you wait for the regulations
The rest of the industry are waiting for regulations to be promulgated by the OCM. Are there things you should be doing to prepare for your business to open while you wait? Absolutely. For starters, make sure you have a valid entity formed, with an eye toward the most favorable tax consequence, and that you have an operating or shareholders agreement that fully and fairly sets forth with particularity the rights and obligations of all members, directors, officers and/or shareholders of that entity. If you are onboarding investors, make sure an attorney reviews your plan to outreach – the rules here are quite specific and you do not want to get this wrong. We can help you prepare all necessary documents to get you started. And when it comes to finding property, now is the time to start looking (see below).
Securing property to open your cannabis business
Whether you are upstate, in the Hudson Valley, or in Brooklyn, you are going to need a place to operate. Now is the time to start talking to property owners, city/town officials and community members to secure a location that works for you and will most likely be approved both by the city/town and the state. Obviously, you will want to avoid communities that have opted out if you are seeking to obtain a dispensary or on-site consumption license. If you are in NYC, you will want to begin conversations with your local Community Boards and community leaders. Out of the city, try connecting with planning and/or zoning boards to see if there are any preliminary zoning maps created for cannabis – some municipalities have this in place. Prince Lobel can help you get a jump start.
There’s more to come – including some additional announcements of new attorneys who will be joining our New York office. Please stay tuned, and please let us know if we can help you in any way.
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