How to Qualify as Justice-Involved for a New York Cannabis Business CAURD License

By Kim Napoli, Bridgette Nikisher

Aug 2, 2022

To help New York cannabis industry entrepreneurs get off on the right foot, VS’s New York team created an eight-part series of VS Insights to assist in navigating the path to applying for a New York cannabis business license. The series will cover essential topics for New York cannabis entrepreneurs, such as forming your business, preparing for the license applications, finding appropriate real estate, protecting your brand, fundraising and investment, communicating with municipal officials, and environmental requirements.

Part five of the series focuses on the requirements for qualifying as a social equity applicant for a CAURD license.

The New York Cannabis Control Board (CCB) recently adopted regulations creating and governing the first batch of adult-use retail licenses, the Conditional Adult-Use Retail Dispensary (CAURD) Licenses. The licenses are reserved for individuals disproportionately impacted by the war on drugs, so named "Justice-Involved" individuals. Applications are expected to be released in August 2022.

What does "Justice-Involved" mean, and how does one take advantage of the benefits associated with that classification?

A "Justice-Involved" individual is someone who:

Was a New York resident convicted of a marijuana-related offense in New York before March 31, 2021
Had a parent, legal guardian, child, spouse, or dependent who was a New York resident convicted of a marijuana-related offense in New York before March 31, 2021
Was a dependent of an individual who was a New York resident convicted of a marijuana-related offense in New York before March 31, 2021

This equity-focused licensing program is intended to benefit individuals who were directly impacted by the over-policing and higher rates of arrest and incarceration stemming from cannabis prohibition. However, there are additional requirements that an eligible applicant must satisfy to qualify, outlined below. Notably, the Justice-Involved individual must hold or have held, for a minimum of two years, at least 10% ownership and control of a business that had net profits for at least two years, or a qualifying non-profit.

An "Eligible Applicant" is:

An applicant that:
1. Has a significant presence in New York State, either individually or by having a principal corporate location in the state
2. Is incorporated or otherwise organized in the state
3. Has majority ownership who are residents physically present in the state no less than 180 calendar days during the current year or 540 calendar days over three years
An individual, or an entity with one or more individuals, where at least one individual is Justice-Involved, and the Justice-Involved individual holds or held for at least two years at least 10% ownership and control of a business that had net profits for at least two years, or a qualifying non-profit
A non-profit that is recognized as a 501(c)(3); intentionally serves overpoliced communities; operates and manages a social enterprise that had at least two years of positive net assets or profit; has a history of creating opportunity for Justice-Involved individuals; has board members or officers who are Justice-Involved; and has at least five full-time employees

To ensure that these limited availability licenses go directly to people impacted by the drug war, the CCB adopted strict rules related to ownership and control. The entity applying for the license must:

Be at least 51% owned in the aggregate by one or more individuals who are Justice-Involved and currently hold or have held, for at least two years, at least 10% ownership and control of a business that had net profits for at least two years, or a qualifying non-profit
Have at least one Justice-Involved individual who holds or has held, for at least two years, at least 10% ownership and control of a business that had net profits for at least 2 years, or a qualifying non-profit, holds at least 30% ownership and exercises sole control of the applicant or licensee

I know I am a Justice-Involved Individual. How do I prove it?

Given that these licenses are reserved for a specific group of qualifying individuals, the state has set forth specific documentation requirements to prove that the applicant meets the established criteria.

First, be sure you can prove conviction.

As a reminder, the conviction must be for a marijuana-related offense in New York before March 31, 2021 and the convicted individual must have been a New York resident at the time of arrest.

It is easiest to provide a Certificate of Disposition or a Certified Indictment, but if you do not have either of these materials, the state will also accept any of the following as proof of conviction:

A record of judgment and conviction
A record of the plea, verdict, and sentence
A docket entry from court records that indicates the existence of a conviction
Minutes of a court proceeding or a transcript of a hearing that indicates the existence of a conviction
An abstract of a record of conviction prepared by the court in which the conviction was entered, or by a state official associated with the state's repository of criminal justice records, that indicates the charge or section of law violated, the disposition of the case, the existence and date of conviction, and the sentence
Any document or record prepared by, or under the direction of, the court in which the conviction was entered that indicates the existence of a conviction
Any other evidence that reasonably indicates the existence of a criminal conviction may be admissible as evidence thereof
An arrest record that indicates the existence of a conviction
A police file that indicates the existence of a conviction
Health records that indicate the existence of a conviction
Notarized attorney letters that indicate the existence of a conviction
Acknowledgment of Application to Destroy Expunged Marihuana Conviction Record (DCJS)
Submitted Application to Destroy Expunged Marihuana Conviction Record
A post-conviction CPL-440 Motion to vacate a criminal conviction or to re-open a criminal case
A Governor's Commutation letter
Responsive records maintained by local or state correctional facilities
Results from a criminal history background check

Additional materials may be considered on a case-by-case basis. We recommend reaching out directly to the Office of Cannabis Management (OCM) to check if materials not listed above would be sufficient.

Second, prove residency at the time of conviction.

One of the factors contributing to application scoring is the residency of the Justice-Involved individual at the time of conviction. Be sure you have the residential address at the time of the incident and a way to prove it.

If the individual was in public housing at the time of arrest, you will be asked to provide the name of the public housing authority. If they were in temporary housing, you will be asked to provide evidence that the convicted individual did not have permanent housing at the time of the incident. This may be in the form of a document from the temporary housing establishment dated at the time of the incident. An example would be a letter addressed to the Justice-Involved individual from a homeless shelter, dated at the time of temporary residency, indicating that the individual resided at the homeless shelter.

Some ways to provide proof of residency at the time of conviction include:

A valid New York State Driver's License, Non-Driver ID Card, or Learner's Permit
A State or Federal tax filing or return (with proof of filing)
Utility bills
Credit card statements
Leases
Mortgage statements
Property tax statements

Additional methods of proving residency include:

IDNYC Card
Letter from a public housing authority addressed to the applicant
Letter addressed to the applicant from a non-profit organization or religious institution that provides services to homeless individuals
Pay Stub(s)
Employment offer or notice of pay that shows employer-provided housing, including the address
A statement, bill, or record from a health institution or insurance company
Jury summons, court order, or another official document from a court
Letter from a domestic violence (DV) residential care program or organization that serves DV survivors
Letter from a charitable organization that provided services to the convicted individual that attests to the individual's residency
Document addressed to the convicted individual from any government entity

Additional materials may be considered on a case-by-case basis. We recommend reaching out directly to the Office of Cannabis Management to check if materials not listed above would be sufficient.

Third, provide proof of ownership of a qualifying business.

The Justice-Involved individual must hold or have held, for at least two years, at least 10% ownership and control of a business that had net profits for at least two years, or a qualifying non-profit. To meet the criteria, you must prove the ownership and profitability of the qualifying business.

You will be asked to upload the following documents:

Proof of ownership, including operating agreements or other corporate documents
Tax documents, such as W-3s, insurance receipts, or similar documentation
Two years of state, federal, or city tax documents from when the qualifying business had a positive net profit and the justice-involved individual was at least a 10% owner
Proof of operating at the location, such as utility bill, rental agreement, title or deed to a property

I think I qualify as a "Justice-Involved" individual, but I'm not sure.

Reach out to your legal counsel to see if you qualify. VS is happy to help! Our team will review your materials for a flat fee of $1,500 to help you determine if you qualify. Feel free to reach out to newyork@vicentesederberg.com to schedule a consultation.

Read other articles in VS’s New York cannabis business series:

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