Can Conditional Adult-Use Retail Dispensary Licensees Use Sites Not Designated by the OCM?

By: Andrew P. Cooper, Esq., LL.M. and Terran Cooper

Following conflicting guidance by the Office of Cannabis Management (OCM), it appears that CAURD licensees may be required to accept a dispensary location identified by the New York Social Equity Cannabis Investment Fund (Fund) or OCM.

By way of background, a Resolution by the OCM on July 14th finalized the Conditional Adult-Use Retail Dispensary Regulations to be filed. Section 116.7(c)(6) of these regulations state that “the licensee shall enter into and comply with all terms and conditions of any agreement with any fund, …including, but not limited to, accepting a dispensary location identified by the fund or office, …any lease or sublease agreement with the State of New York or its agents…” Confusion on the topic came after the OCM released a 46-page file addressing many of the public comments previously received regarding the CAURD Licenses. One comment asked if applicants would be required to accept a dispensary location from the state, or if they could potentially use their own site. The OCM initially responded that “The proposed regulations do not insist upon applicants to use the New York Social Equity Cannabis Investment Fund locations and provide for the allowance of an applicant to provide their own location that complies with the proposed regulations.” (Racino, 2022)

Further confusion ensued when the OCM replaced the 46 page file with an updated version, which only states “The Office is working with the Fund to ensure that the location assignments and support services are a benefit to all applicants to ensure their success.” However, the Notice of Adoption filed in the New York State Register by the OCM repeated the rescinded language regarding the permissibility of non-Fund-designated sites. Despite this statement in the New York State Register, we believe that the OCM may likely require CAURD licensees to accept a dispensary location identified by the Fund or OCM, as per the regulations. NY Cannabis Insider sought clarity regarding such, to which an OCM spokesperson stated that the answer was contained in the CAURD regulations (Racino, 2022). When we contacted the OCM on whether a CAURD licensee may be required to accept a provided dispensary location, an OCM spokesperson stated “that is the intention behind the regulations.” The OCM did not comment on the presumed error in the NYS Register.

Further, question 33 of the OCM’s CAURD FAQ directly states that you will not be able to choose the specific street address or neighborhood for the dispensary and that the CAURD license may not be the right fit for those who wish to select their own dispensary site. An OCM document on the CAURD scoring criteria and selection process also states that “Location leases will be provided through the New York Social Equity Cannabis Investment Fund.” While applicants may still indicate their top 5 preferred regions for a dispensary site, the total site control by the OCM and lack of significant site input is problematic to many. There is currently no transparency as to the process by which the OCM and Fund may identify dispensary site locations. While the Dormitory Authority of the State of New York (DASNY) has a Request for Proposal (RFP) on design-build services for CAURD sites, there is no such process by which a third-party property owner may submit a site for CAURD use. This disallowance of public input on the CAURD locations and leases comes less than a month following the OCM refusing to make any changes to the CAURD regulations following over 600 public comments. We hope that the OCM listens to the input from New Yorkers and the incredibly collaborative cannabis industry so that New York may fulfill its potential in being the most equitable and successful adult-use cannabis market to date.

Disclaimer: This summary is not legal advice and does not create any attorney-client relationship.  This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm.  Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law and certain proposed law at the time of publication.

Possessing, using, distributing and/or selling cannabis remains illegal under federal laws of the United States and nothing contained in this brief, on this website, nor in any of the services provided by FRB are intended to assist in any way with violation of applicable local, state, or federal laws.

Works Cited

Racino, B. (2022, August 4). Finally, NY Office of Cannabis Management answers million-dollar CAURD question. Retrieved from New York Upstate: https://www.newyorkupstate.com/cannabis-insider/2022/08/finally-ny-office-of-cannabis-management-answers-million-dollar-caurd-question.html

DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.