New York's Rollout Of Its Adult-Use Cannabis Program Hits Another Snag

• Published date: 12 December 2022
• Law Firm: Carter Ledyard & Milburn
• Author: Mr Alexander Malyshev

As we previously covered in these pages, the story of New York's adult-use cannabis legalization is a long and tortured one. After numerous false starts, the Marihuana Regulation & Taxation Act (MRTA) was signed into law on March 31, 2021. Yet, almost two years later, there are still no legal sales of adult-use cannabis in New York. This, in turn, has led to a proliferation of unlicensed cannabis retail shops'euphemistically referred to as the 'grey market'even though '136 of the MRTA refers to such untaxed cannabis as 'illicit cannabis.' Recently, reports have circulated that a crackdown has begun in some parts of New York City on both trucks and 'smoke shops' selling such illicit cannabis (leading to at least two arrest). The proposed adult-use regulations, published on Nov. 21, 2022, warn that the sale of such illicit cannabis may preclude the award or renewal of licenses. See Proposed Rule '120.12(a)(9) (License Denials).

A delay was to be expected since the MRTA required the establishment of an entirely new bureaucracy'the Office of Cannabis Management (OCM)'and the promulgation of rules and regulations for the various tiers of the industry (cultivation, manufacture, distribution and retail). But at least some of the delay is attributable to New York's decision to prioritize its social equity through its Seeding Opportunity initiative, which was designed to give 'justice involved' social equity applicants a first mover...