A Complete Breakdown of New York’s Latest Cannabis Guidance

By: Andrew P. Cooper, Esq., LL.M., Dana Walsh Sivak, Esq., and Michael A. Curatola, Esq. with contributions from Terran Cooper

At the end of last week, the Office of Cannabis Management (“OCM”) released new guidance for their upcoming Adult-Use Retail Dispensaries. This guidance reiterates some policies previously laid out in the original Conditional Adult-Use Retail Dispensary (CAURD) and the draft rules on packaging, labeling, marketing and advertising. Additionally, this new guidance clarifies and expands on previous guidance by specifying certain recordkeeping and employee requirements, allowing for drive-thru windows, allowing for delivery to customers, allowing certain licensees to select their own sites, and disallowing interest across the supply chain. 

New Guidance 

Recordkeeping and Employee Requirements: The Guidance for Adult-Use Retail Dispensaries establishes several recordkeeping and employee requirements. Employees must undergo a compensated training curriculum, which is to include dispensary protocol, compliance procedures, safe use of cannabis, relevant regulations, the history of cannabis, and more. Licensees will also be required to maintain a written training manual to be made available to employees. (For a complete overview of the training manual and training requirements, please see below.) 

Inventory Tracking System: The guidance also calls for an “Inventory Tracking System” which will be used to compile exhaustive records of the dispensaries’ inventory, transaction data, tax liability, and more. If the licensee loses access to the Inventory Tracking System at any point, they will be required to track all relevant data manually, and they will be unable to receive or transfer products to another licensed entity during this time (does not include customer sales). This system will be integral to dispensary operation, and its thoughtful integration could reduce the recordkeeping burden, as well as potential liability for licensees. (For more details of the recordkeeping requirements, please see below.)  

Drive-Thru and Pick-Up: Two new traffic control options are offered by the guidance: pick-up lanes and drive-thru windows. Pick-up lanes utilizing a pre-order system have long been employed by medicinal dispensaries to reduce in-store traffic. These pre-order pickup lanes can be utilized as dedicated in-store lanes or via drive-thru. A welcome new addition found in this guidance are drive-thru windows, similar to those used in the fast-food industry. A drive-thru lane allows customers to consult with dispensary workers and complete transactions without entering the store, using any form of transportation (provided there is adequate customer safety). Dispensaries must have written approval for any drive-thru service window or drive-thru pre-order pickup lanes. 

Delivery: This guidance clarifies that the initial dispensary licensees may provide delivery services (as long as the training manual includes written procedures for these services). Upon delivery, the employee must verify the identity and age of the customer (pursuant to the age verification section below). Licensees must own the vehicle used for delivery (or own via lease), and only ground transportation is permitted (such as a car, van, bike, foot, etc.). This guidance contains the first mention of non-motorized vehicles being permissible in the delivery of cannabis products, and this allowance will be critical to the success of delivery in densely populated areas of New York. (Additional delivery and delivery record requirements are listed below.) 

Disallowed Interest: The guidance also confers strict limitations on vertical integration by investors, expanding upon the prohibition against those interested in dispensaries from holding any interest in any business that cultivates, processes, or distributes cannabis. While we knew this to be the case for any True Party of Interest, this guidance specifies that the same limitation applies to passive investors, “no matter how small that interest is.” Notably, this limitation stretches to include interests held in cannabis businesses in other states as well, meaning that any person who has an ownership interest in an out-of-state cannabis business will be precluded from holding a license for a cannabis business of a different tier in New York. Further, other licensees (such as cultivators, processors, or distributors) are prohibited from giving anything of value to dispensaries to induce the dispensary to buy something from said licensee. This includes any gifts, discounts, loyalty programs, loans, premiums, rebates, free product (other than permitted by regulation), treats, services, or property.  

Site Selection: A welcome change offered by the guidance is the potential ability of dispensary licensees to select their own sites. The guidance states that certain licensees may be permitted to select the location of the licensed premises with approval by the Office (as part of the site plan), as long as it complies with local ordinances. While there has been significant back-and-forth on this issue, with the Office seemingly disallowing site selection back in August, this new guidance seems to allow some room for potential site selection, possibly as a result of the difficulty in securing and building out sites across New York. (For more info on permissible locations, please see below.) 

Hours of Operation: According to the guidance, dispensaries may not operate between 12 a.m. and 8 a.m. without express authorization from the relevant municipality. Despite this, municipalities shall not restrict operations to less than 70 permissible hours per week (although a licensee may still opt to operate less than 70 hours per week). 

Other: The guidance also details allowed inventory (which includes hemp-derived products, if licensed to do so), security measures, location requirements, site plans, distributor transactions, receipts, price displays, transactions, storage, sanitizing, exterior signage, recalls, disposal, inspection/audits, service refusal, prohibited claims, undue influence, availing, branding, and more. 

Adult-Use Dispensary Guidance Overview 

Recordkeeping Requirements 

An inventory tracking system must be used to compile and track product inventory, transaction data, and tax liability. Licensees must: 

1. accurately record all inventory in the inventory tracking system;
2. maintain, real-time, at a minimum, the following information, in the inventory tracking system:
   • batch and/or lot unique identifiers for cannabis products that will track each cannabis product sold by the dispensary back to the source of cultivation and processing in the event of a recall;
   • a complete cannabis product inventory, as well as inventory adjustments from sale, disposal, product return, or any other activity;
   • any other information as determined by the Office of Cannabis Management (the “Office”); 
3. utilize an inventory tracking system that is capable of integrating with the Office’s seed-to-sale tracking system of record in a form and manner determined by the Office;
4. utilize a standard of measurement, as defined by the Office, that is supported by the inventory tracking system to track all cannabis product;
5. track, at a minimum, the following data elements for each activity (transaction, quarantine, disposal, etc.) performed with cannabis products;
   • type of cannabis products;
   • weight, volume, or count of the cannabis products;
   • date of activity;
   • lot unique identifier assigned to the cannabis products;
   • identification of the worker performing the action in the inventory tracking system;
   • type of activity being performed;
   • and any other information as determined by the Office;
6. review the licensee’s authorized users on a regular basis, and remove any users who are no longer authorized to enter information into the inventory tracking system. 

Loss of Access 

In the event that a licensee loses access to its inventory tracking system, the licensee must maintain comprehensive records detailing all activities during the period of loss of access, including customer transactions. Licensees cannot initiate transport, receive, or deliver any cannabis products to a licensee’s entity until access is restored. Customer sales may continue if the licensee has a method to provide receipts. 

Customer transactions must result in an inventory tracking system entry that includes: 

1. Each item sold, and each item’s:
   • Price;
   • Amount of tax due, including a separate delineation for each tax imposed on adult-use cannabis pursuant to Article 20-C of Tax Law (if a cannabis product);
   • Quantity sold in that transaction; and
   • Form of the product (if a cannabis product);
2. Worker completing the transaction;  
3. Device used to complete the transaction;
4. Transaction’s unique identifier; and
5. Date and time of the transaction.

Distributor to Retailer Transactions 

A shipping manifest must be maintained and transmitted to the OCM and transport recipient (via inventory tracking system) before each transport. If multiple deliveries are made in a single transport, the shipping manifest must be split to reflect such, and only the relevant portion shall be sent to the appropriate transport recipient. The shipping manifest must include: 

1. the name, physical address, and license or permit number of the originating Licensee;
2. the name, physical address, and license number, if applicable, of the receiving party; 
3. the unique identification numbers for all cannabis products being transported; 
4. the cannabis product name, item category and weight or count of cannabis products associated with each package tag; 
5. the estimated date and time of departure from the licensed premises; 
6. the estimated date and time of arrival at each licensed premises or the consumer’s address;
7. the driver’s license number of the worker transporting the cannabis products, if motorized transportation is being conducted by the licensee producing the shipping manifest; 
8. the make, model, and license plate number of the transportation, if motorized transportation is being conducted by the licensee producing the shipping manifest; and  
9. any other information as determined by the Office. 

Receipts 

Customers must be offered a receipt after transactions, which must include: 

1. Name, address, and license number of the dispensary;  
2. Date and time of sale;  
3. Form and quantity of cannabis products and any other items sold;  
4. Worker completing the transaction; and  
5. Amount of tax due, including a separate delineation for each tax imposed on adult-use cannabis products pursuant to Article 20-C of Tax Law. 

Licensees cannot retain a customer’s personal information for marketing purposes unless the customer consents to such. 

Employee Requirements 

Licensees must designate an “Employee in Charge” of managing the day-to-day functions of the dispensary. This Employee in Charge: 

1. Must be over 21; and 
2. Must maintain dispensary’s staffing plan (and update current staffing plan to include the name, contact information, and age of all employees). 

Training Manual 

Licensees must maintain a written training manual to be available to employees that includes: 

1. Worker guidelines and security, operating, and safety procedures, including, but not limited to: 
   • daily opening and closing procedures; 
   • security, customer admittance, and customer traffic-control procedures;  
   • ordering and point of sale procedures;  
   • delivery service procedures (if the licensee delivers to customers);  
   • product inventory intake procedures;  
   • product return and disposal procedures; 
   • emergency procedures; and  
   • an explanation of how workers will monitor for and prevent sales to customers where there is a risk to health or safety, underage or illegal sales of cannabis products, or any other criminal activity within the licensed premises; 
2. Information about all types of cannabis products the dispensary sells or plans to sell, including, but not limited to:
   • Product types;  
   • Serving size;  
   • Onset and duration of effects, if applicable;
   • Method of administration;  
   • Warnings for use; and  
   • Tips for secure storage and proper disposal;
3. Customer privacy and confidentiality requirements; and
4. Alcohol-free, drug-free, and smoke-free workplace policies.

Training Requirements 

Licensees are required to provide adequate training and education to their employees in order to fulfill their roles according to the OCM’s guidelines and must provide adequate supervision of staff. The following training must be included (as a minimum): 

1. History of cannabis use, prohibition, and legalization;  
2. Ensuring safe use of cannabis, including, but not limited to: 
   • cannabis’ physical effects on the human body;  
   • Appropriate responses in the event of overconsumption;
   • Safer storage of cannabis products;
   • Explanation of required text on cannabis product labeling;
   • Risks of cannabis use and over-use, including cannabis use disorder dependency;  
   • Risks of operating any vehicle (including watercraft) under the influence of cannabis;  
   • Explanation of consumer education materials; and  
   • Overview of marketing and advertising prohibitions;  
3. Prevention of sales to individuals under twenty-one, including, but not limited to:
   • How to check customer photo identification; 
   • Spotting fraudulent identification; and  
   • Provisions for safely confiscating fraudulent identification;  
4. Security and surveillance of licensed premises;  
5. Emergency procedures;  
6. Compliance with, and operation of, inventory tracking systems;
7. Relevant state and federal laws or regulations;
8. Permitted investigations or inspections of the premises;
9. License suspension, revocation and renewal;
10. Civil and criminal penalties;
11. Cannabis product waste disposal; and
12. Practices for maintaining customer privacy and confidentiality. 

Site Requirements 

Licensees must ensure access to hand-washing and toilet facilities on premises, maintain their cleanliness, and maintain records of their cleaning and sanitization. All personnel shall handle cannabis products in a sanitary manner and sanitize hands before work, after each restroom visit, after eating, and after handling any contaminated material. 

Storage 

Customers cannot have direct access to cannabis products unless inspecting samples with authorized staff. Products may be displayed only if they are in a locked fixture. Non-display items should not be visible to customers. Any areas containing cannabis products, including counters, safes, cases, or rooms, must not be accessible to customers or non-authorized workers. 

Cleaning and Sanitizing 

Licensees must upkeep and maintain all facilities, and cleaning and sanitizing shall be performed as frequently as necessary with appropriate sanitizing agents. 

Security 

Licensees must implement appropriate security measures to deter diversion, theft or loss of cannabis products, theft or loss of cash, prevent unauthorized entrance into areas containing cannabis or cannabis products, and ensure safety of workers and the general public. 

Licensees must take the following security measures: 

1. Implementing and maintaining a security plan. A security plan must include, at a minimum, a description of the measures a licensee will undertake to: 
   • prevent unauthorized access to the licensed premises by unauthorized persons and protect the physical safety of all individuals on the premises;  
   • deter theft or loss of cannabis products; 
   • prevent loitering and ensure that only individuals engaging in activity expressly or by necessary implication permitted by the Cannabis Law are allowed to remain on the premises of the licensee;  
   • lock all perimeter doors and windows; and  
   • provide for safe storage, handling and transportation of cash; 
2. Securing all entrances to the licensed facility to prevent unauthorized access;  
3. Ensuring that both the inside, and the outside perimeter of the licensed facility are sufficiently illuminated to facilitate surveillance;  
4. Maintaining trees, bushes and other foliage outside of the licensed premises so as to prevent a person from concealing themselves from sight; and 
5. Any other requirements as determined by the OCM. 

Licensees must have a security system to prevent and detect diversion, theft, or loss. The system must include: 

1. A perimeter alarm that communicates with an internal designee and a third-party commercial central monitoring station when intrusion is detected;  
2. Video camera surveillance in all areas that may contain cannabis products, all surveillance areas or rooms and at all points of entry and exit, and in any parking lot, which shall be appropriate for the normal lighting conditions of the area under surveillance. Video camera surveillance shall meet the following additional requirements:
   • video cameras shall be directed at all safes, vaults, sales areas, and any other areas where cannabis products are stored, handled, transferred or sold and for the purpose of securing cash;
   • video cameras shall be positioned at entry and exit points, and at each point-of-sale area, to allow for the capture of clear and certain identification of any person entering or exiting the facility or at the point-of sale; 
   • video cameras shall have the ability to immediately produce a clear color still photo from any camera image (live or recorded);
   • video recordings shall allow for the exporting of still images in an industry standard image format (including .jpeg, .bmp, and .gif). Exported video shall have the ability to be archived in a proprietary format that ensures authentication of the video and guarantees that no alteration of the recorded image has taken place. Exported video shall also have the ability to be saved in an industry standard file format that can be played on a standard computer operating system; 
   • video cameras shall include a date and time stamp embedded on all recordings. The date and time shall be synchronized and set correctly, measured in accordance with the U.S. National Institute Standards and Technology standards and shall not significantly obscure the picture; 
   • video cameras shall produce continuous recordings during hours of operation and at any time that cannabis products are handled, and motion activated recordings at all other times;  
   • For all video cameras, the licensee shall make available via remote access or login credentials for immediate viewing by the Office or the Office’s authorized representative upon request. All recordings shall be retained for at least 60 days;  
   • licensees shall make an unaltered copy of video camera recording(s) to OCM upon request;  
   • if a licensee is aware of a pending criminal, civil or administrative investigation or legal proceeding for which a recording may contain relevant information, the licensee shall retain an unaltered copy of the recording until the investigation or proceeding is closed or the entity conducting the investigation or proceeding notifies the licensee that it is not necessary to retain the recording, but in no event for less than 60 days; and 
   • the physical media or storage device on which surveillance recordings are stored shall be secured in a manner to protect the recording from tampering or theft;
3. a failure notification system that provides an audible, text or visual notification of any failure in the security system. The failure notification system shall provide an alert to the licensee’s designated representative(s) within five minutes of the failure, either by telephone, email, or text message;  
4. the ability for the security alarms and video surveillance system to remain operational during a power outage for a minimum of eight hours;  
5. limiting access to any surveillance areas and keeping all on-site surveillance rooms locked. A licensee shall make available to OCM or its authorized representative, upon request, a current list of all individuals who have access to any surveillance room or equipment; and 
6. keeping all locks, storage and security equipment in full operating order and shall test and inspect such equipment at regular intervals, not to exceed 30 calendar days from the previous inspection and test. Records of security tests must be maintained for five years and made available to OCM upon request. 

Site Plan 

A site plan must be maintained and submitted to OCM. It must contain: 

1. Location of the licensed premises;  
2. activities performed in each area of the licensed premises;  
3. details of all parcel boundaries including but not limited to physical boundaries, roads, and water crossings of the property;
4. location of sanitary facilities;
5. perimeter dimensions;
6. entrances and exits to both the property and premises (including emergency exits); and
7. documentation that the dispensary meets the requirements placed on its location in the Location of Licensed Premises section as discussed below. 

Location 

As stated above, OCM has reversed course and will now allow certain licensees to select their own dispensary locations (with Office approval), subject to the following restrictions: 

1. Premises cannot be on the same road and within 500 feet of school grounds (measured by nearest point of school grounds to nearest dispensary entrance); 
2. Premises cannot be on the same road and within 200 feet of a house of worship (measured by nearest house of worship entrance to nearest dispensary entrance);
3. Premises entrance must be located on street level of a public road legally zoned for business/commercial use.  

In addition to these objective standards, the new guidelines also allow OCM to condition approval of a dispensary location on the following criteria: 

1. The character and classes of other licenses in the area; 
2. Evidence of necessary licenses or permits from relevant governing bodies;
3. Whether there is a demonstrated need for such license; 
4. The effect of the dispensary on local levels of noise and pedestrian/vehicle traffic; and 
5. Any other factors that the Office may determine which would promote public convenience and public interest. 

Furthermore, licensees will have to notify the municipality where their proposed dispensary will be located using forthcoming notification procedures that will be promulgated by OCM.  

Municipality Notification 

Before license issuance, applicants must follow the local notification procedure pursuant to Cannabis Law. This procedure and its form will be made available by the OCM. 

Store Interior 

Licensees must post the following information inside the store (in a manner that is plainly visible to all customers): 

1. The licensee’s retail dispensary license;
2. Hours of operation;  
3. Notification that “Consuming cannabis is not allowed on this premises.”;  
4. Notification that “Cannabis can impair concentration, coordination and judgment. Do not operate a vehicle or machinery under the influence of cannabis.”;  
5. Notification that “Using cannabis, in any form, while you are pregnant or chest/breastfeeding passes THC to your baby and may be harmful to your baby. There is no known safe amount of cannabis use during pregnancy or while chest/breastfeeding.”; and 
6. Notification, in bold and including capital letters as indicated, that “Adult-use cannabis products are for use only by persons 21 years and older. KEEP OUT OF REACH OF CHILDREN AND PETS.” 

Licensees must ensure the store is kept in an orderly manner, even during heavy customer traffic. No cannabis products may be displayed in any area visible from outside the store. 

Store Exterior 

Licensees may not have more than two signs outside the store. Exterior signs must be on the same parcel as the store and affixed to a permanent structure, and they cannot be larger than necessary to reasonably display the information to nearby individuals. The sign cannot utilize neon lights, and may not include a licensee’s logo, symbol, branded colors or any images, cannabis iconography, smoking or vaping imagery, mottos, selling messages, or any other non-essential text. Signs may only include: 

1. Business or trade name; 
2. Location and contact information; and 
3. Business type (i.e. “adult use cannabis dispensary”). 

Licensees must ensure customers do not impact public thoroughfare. Cannabis use or cannabis product use is not permitted in or around the dispensary. 

Refusal of Service 

Dispensary workers may refuse to sell cannabis products to a customer if they believe doing so would endanger the health or safety of the customer. Workers must refuse a sale if the sale would: 

1. Would result in the customer exceeding the legal possession limit; 
2. Would create a risk of diversion; or  
3. Would be to an individual who is under twenty-one years of age. 

Hours of Operation 

Municipalities may pass local laws governing the time, place, and manner in which dispensaries operate, but shall not restrict operations to less than 70 hours a week. Licensees may not operate from 12:00 AM to 8:00 AM, unless given express written permission by the municipality. Delivery orders may be accepted outside of this timeframe, but cannot be fulfilled until dispensary opening. 

Age Verification 

Dispensary workers must inspect a customer’s age before any purchase to verify the customer is over the age of 21. Valid ID includes: 

1. a valid federal, state, or local government identification, including IDNYC, stating the customer’s age and a photograph of the individual’s face;  
2. a valid driver’s license or non-driver identification card issued by the Department of Motor Vehicles, the federal government, any United States territory, commonwealth or possession, the District of Columbia, a state government within the United States, or a provincial government of the dominion of Canada;
3. a valid passport issued by the United States government or any other country; or  
4. an identification card issued by the armed forces of the United States. 

Workers are not required to deny a sale to an individual over 21 years of age if they are accompanied by someone under 21 years of age, unless they believe the sale would create a risk of diversion of products to an individual under 21 years of age. 

Distributors 

Dispensaries may only purchase cannabis products from licensed distributors (which will only be Adult-Use Conditional Cultivators and Adult-Use Conditional Processors upon market launch), who must sell cannabis products to any adult-use retail dispensary willing to pay cash (currency, check, money order, or other acceptable payment).  

Distributors may allow licensees to pay on credit, so long as they report such purchases to the OCM. Licensees may have 90 days to pay for these credited purchases, and Distributors must report licensees who are delinquent in payment (and the delinquent licensee will then be disallowed from purchasing products on credit from distributors). 

Inventory 

Licensees may only sell: 

1. cannabis products obtained from a distributor; 
2. cannabinoid hemp products (if licensed to do so); 
3. cannabis paraphernalia; 
4. stationery, gifts, and other minor incidentals; 
5. branded merchandise and apparel containing the licensee’s brand, including jewelry and accessories (in adult sizes only); and 
6. other items as approved by OCM. 

Licensees shall conduct an initial comprehensive inventory of all products at the premises on the date the licensee first engages in customer sales. Inventory requirements include the following: 

1. Inventory shall include damaged, defective, expired, or adulterated cannabis products awaiting disposal, including the name, the quantity, and the reasons for which the licensee is maintaining the cannabis product; 
2. The initial comprehensive inventory shall be reported to the Office utilizing the inventory tracking system;
3. Licensees shall establish inventory controls and procedures and conduct comprehensive inventories of cannabis products which shall include the following:  
   • Maintaining real-time inventory tracking;  
   • Conducting a monthly inventory audit of all cannabis products; and  
   • For each audit, recording at a minimum, the following, in the inventory tracking system: 
     • name(s) and signature(s) of worker(s) who conducted the inventory audit;  
     • date of the inventory audit;  
     • summary of inventory findings; and  
     • any other information as determined by the Office. 
4. A licensee, upon becoming aware of discrepancies identified during an inventory audit, shall notify the Office no later than twenty-four hours after discovery of the event in a manner prescribed by the Office. 

Menus and Prices 

Licensees must designate the price of all items for sale, including tax, and clearly communicate these prices to customers. If licensees display items for sale or utilize a “menu,” then a price tag, sign, or placard must accompany them. Licensees cannot give away any cannabis products, and may not advertise any giveaways, discounts, price reductions, and rewards or loyalty programs. 

Drive-thru / Pick-up Lane 

Licensees may operate a drive-thru service window and/or drive-thru pre-order customer pick-up lane, so long as they have written approval from the Office of Cannabis Management. These transactions maintain the same recordkeeping requirements as traditional in-store transactions. Drive-thru lanes may allow any type of transportation (including on foot) as long as there is adequate customer safety. 

A drive-thru service window allows customers to consult with dispensary workers and complete transactions without entering the store.  

A drive-thru pre-order customer pickup lane allows customers to pick-up orders placed in advance without entering the dispensary. Pre-order pickup lanes may also be established within the dispensary. 

Delivery 

Licensees may provide delivery services if the training manual includes written delivery procedures. Customers must pay for the order directly, and attest that the person accepting delivery is over 21. At the time the customer accepts the delivery, their age must be verified. No more than twenty-five employees (or the full-time equivalent thereof) may provide delivery services per week. 

The licensee must own (including through lease) any vehicle used for cannabis product transport. Unless approved by OCM, only ground transportation (car, van, bike, foot, etc.) can be used for delivery. 

The transportation used for all transport of cannabis products must: 

1. Bear no signs, markings, advertisements or marketing that would identify or indicate that the transportation is used to transport cannabis products; 
2. If necessary, based on the distance and weather conditions of the transport, have temperature controls to prevent the cannabis products from deteriorating during transport;
3. Secure the cannabis products in a fully enclosed and locked box, bag, cage, or other container;  
4. Only contain cannabis products that are on the shipping manifest for that transport; and 
5. Have an operating GPS system which can identify the delivery personnel’s location at any time to the licensee and, if requested, the Office. 

A shipping manifest and invoices must be maintained for all deliveries, and the employee must maintain proof (such as an employee ID badge) of their employment during deliveries. 

Upon delivery the licensee must provide an invoice to the customer that includes: 

1. the name, location, address and license number of the licensee’s facility;  
2. the name and address of the customer; 
3. the name and quantity of each item to be delivered to each customer;  
4. the name and signature of the customer and each worker performing or accompanying the delivery of the cannabis products; and 
5. any other information as determined by the Office. 

If the appropriate information is included, an invoice may also act as the customer’s receipt. 

Quarantine/Remediations/Recalls/Returns 

Written procedures must be established to track all quality assurance concerns and complaints, including, but not limited to, procedures for rapid notification to the licensees’ supply and distribution chain in case of recall. This must include notification to OCM within 24 hours of learning of a serious adverse event. 

Implemented written recall procedures shall include: 

1. identification of factors that necessitate recall and personnel responsible for implementing the recall procedures;  
2. notification protocols, including a mechanism to notify OCM within 24 hours of initiating a recall, and to notify any licensee that supplied or received the recalled cannabis product;  
3. instructions to the general public and other licensees for the return or destruction of recalled cannabis products; and  
4. a requirement that all recalled products held by a licensee be held in quarantine until OCM authorizes further action. 

Disposal  

Licensees must dispose of any cannabis product that is beyond its expiration date, damaged, deteriorated, contaminated, or otherwise deemed not appropriate for sale. Cannabis product waste shall be maintained in a secured receptacle or area until properly disposed. Cannabis waste may be disposed using one of the following methods: 

1. Deliver cannabis waste to a New York State Department of Environmental Conservation permitted solid waste management facility for final disposition; 
2. Manage disposal on-site by the licensee in accordance with the requirements of the New York State Department of Environmental Conservation; or 
3. Return the cannabis waste to the distributor that sold the product to the licensee. 

A licensee using a third-party to transport cannabis waste must maintain records and documentation concerning same. Those who self-transport cannabis waste must also comply with the following requirements: 

1. The licensee or its employees shall be registered or permitted as a waste transporter in accordance with the New York State Department of Environmental Conservation’s regulations; 
2. Self-transported cannabis waste shall only be transported by the licensee or its workers;  
3. Self-transported cannabis waste shall only be transported to a solid waste management facility that is permitted by the New York State Department of Environmental Conservation to accept cannabis waste; and  
4. The licensee or its worker who transports the cannabis waste shall obtain for each delivery of cannabis waste a copy of a record, indicating the amount of cannabis waste transported to the permitted solid waste management facility or receipt from the permitted solid waste management facility. 

Records and weights of each disposal must be kept and entered into the inventory tracking system before and after disposal (records must be maintained for five years). These records shall include: 

1. the form (or type) cannabis product being disposed;  
2. the quantity of the cannabis product;  
3. the batch or lot number, as applicable, of the cannabis product;  
4. the signatures of at least two of the licensee’s workers who witnessed the disposal; and  
5. any other information as determined by OCM. 

Inspection/Audit 

Licensed premises, transport vehicles, and all records shall be subject to inspection by OCM. The “Employee in Charge” must be available and present for any inspection. Any deficiencies found during inspection shall be documented in a statement of findings by OCM, and require licensee to submit a written plan of correction within 30 calendar days of the issue date. Any inspection which jeopardizes the immediate health, safety, or well-being of the public shall be deemed a critical deficiency, and require a corrective action plan within 24 hours of notification by OCM. 

A corrective plan shall address all deficiencies and contain: 

1. an assessment and analysis of the events and/or circumstances that led to the noncompliance;  
2. a procedure addressing how the licensee intends to correct each area of noncompliance;  
3. an explanation of how proposed corrective actions will be implemented and maintained to ensure noncompliance does not recur; and 
4. the proposed date by which each area of noncompliance shall be corrected. 

Interest and Ownership Restrictions 

Licensees must comply with previous CAURD guidance. To prevent inappropriate control over retail dispensaries, restrictions have been placed on ownership or investment interest across different license types. 

Retail dispensaries, their True Parties of Interest, passive investors, and any management service providers cannot have any ownership interest in any business anywhere that cultivates, processes, or distributes cannabis. Applicants with an interest in such a business, no matter how small that interest is, will not be approved for licensure. A licensee who, themselves or through their True Parties of Interest, passive investors, or any management service providers, holds a prohibited interest risks their license being cancelled, suspended, or revoked, or other potential enforcement actions being taken. The Cannabis Law also prohibits licensees authorized to cultivate, process, or distribute cannabis from giving something of value to retail dispensaries to induce the retail dispensary to buy something from the licensee authorized to cultivate, process, or distribute cannabis. Generally speaking, the OCM presumes that anything such a licensee gives to a retail dispensary is meant to induce the retail dispensary to buy their product, including, but not limited to: (1) gifts; (2) discounts (except not in excess of one per centum for payment, on or before ten days from date of shipment of cannabis); (3) customer loyalty programs; (4) loans of money; (5) premiums; (6) rebates; (7) free product offerings of any kind, except as permitted in regulations or guidance; (8) treats or services; or (9) property. 

Unauthorized ownership changes, even with a lack of profit, may affect the status of a license.  

Branding 

The branding-focused provisions of the new guidance reiterate much of what was included in the draft regulations for the packaging, labeling, marketing, and advertising of cannabis products in New York. These provisions emphasize the avoidance of being “attractive to individuals under 21,” and specifically  disallow the use of cartoons, bubble-type, neon colors, similarities to products commonly marketed to underage individuals, and certain specific terms such as “candy.” The use of medical terms such as: “drug”, “drug store”, “medicine”, “apothecary”, “doctor”, or “pharmacy” are similarly prohibited. For additional information please see the Packaging and Labeling Guidance for Adult-Use Licensees published by OCM. While the official regulations have yet to be adopted, much of this guidance is anticipated to remain the same. 

Availing 

“Availing” refers to a non-disclosed person holding true ownership or a controlling interest in a licensed entity. A licensee will be held responsible for third-parties availing their license.  

Evidence of availing includes:  

1. an agreement giving a financial or controlling interest to an undisclosed party;  
2. an undisclosed party receiving a percentage of the profits; and  
3. bank accounts, records and other licenses/permits in the undisclosed party’s name. 

A change in ownership without proper OCM approval is deemed to be availing the license. However, managers who oversee the business for the licensee are not availing the license.  

Other Guidance 

• Licensees must provide and make consumer education materials available to consumers. 

• Health claims concerning cannabis are prohibited, as is the provision of any specific medical advice to customers. 

• OCM reserves the right to issue changes to this guidance. 

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.