Key Updates for Cannabis Licensees, Investors, and Entrepreneurs
Town of Riverhead
The Town of Riverhead is one of only a handful of towns on Long Island that “opted-in” to New York’s Adult Use Cannabis market. In connection with opting-in, Riverhead passed cannabis zoning regulations that were more restrictive than the zoning regulations imposed by the Marihuana Regulation and Taxation Act (“MRTA”) and subsequent Adult Use Cannabis Regulations (“Regulations”) i.e. Riverhead required adult use cannabis dispensaries to be not less than 2500 ft from one another while New York State required a 1000 ft distance, among other discrepancies. This restrictive zoning made finding a suitable, legal location in Riverhead exceedingly difficult. However, earlier this summer Acting State Supreme Court Judge Paul Hensley ruled that New York State cannabis laws preempt local zoning – paving the way for New York State Adult Use Retail Licensees to find more legally qualified sites throughout the Town.
New York State Office of Cannabis Management
As been widely reported, the Office of Cannabis Management (“OCM”) announced it was incorrectly measuring the distance between adult-use retail dispensaries and school property. As a result, hundreds of licensees throughout New York State were told by OCM that they were no longer compliant under the MRTA and the Regulations. This could result in operational stores potentially relocating and licensees with unopened stores staring down a blown investment, leading to a significant deleterious impact on the entire adult use cannabis market. Although legislation has already been introduced to address this issue, and a lawsuit was recently filed by impacted licensees, all cannabis entrepreneurs, licensees, and investors need to understand how OCM’s updated guidance may impact their decision mapping.
Federal Reclassification
President Trump confirmed this summer that his Administration is considering Rescheduling cannabis as a less dangerous drug. Currently, Cannabis is a Schedule I drug – the same category as heroin, which is defined by the DEA as having “no currently accepted medical use and a high potential for abuse.” By reclassifying Cannabis as a Schedule III drug, cannabis companies could be able to deduct business expenses on their taxes, which would be an obvious positive. However, reclassifying cannabis as Schedule III drug could also create extensive regulatory obstacles for NY cannabis entrepreneurs. Schedule III drugs are regulated by the DEA, and adult-use licensees would be required to register with the DEA, creating additional onerous reporting and regulatory requirements.
