How to Run a Cannabis Dispensary in New York: Guidance for New York Adult-Use Retail Dispensaries
By Michelle Bodian, Bridgette Nikisher, Sam Kovach-Orr, Meg Nash, Elliot Choi
Nov 3, 2022
On October 28, 2022, the New York Office of Cannabis Management (OCM) published Guidance for Adult-Use Retail Dispensaries on its website, cannabis.ny.gov. This guidance provides a basic framework for the operations of Conditional Adult-Use Retail Dispensary (CAURD) licensees and is meant to help CAURD licensees plan while OCM finalizes regulations.
Once finalized, the regulations will be made available on OCM’s website. In the meantime, this guidance provides us with the basics of what will be expected of these licensees and insight into what the regulations may look like. Like all other guidance posted to date, OCM reserves the right to make changes (and we expect/hope that OCM will make changes). In addition, CAURD licensees will be required to sign the guidance agreeing to abide by the rules.
There is a lot to unpack, but we highlighted the most notable provisions below.
Undue Influence and Inability to Cross Tiers
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Restrictions on the ability of an entity in one tier (e.g. cultivation) from having an interest in an entity in another tier (e.g. retail) of the industry.
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Retail dispensaries, their true parties of interest (TPI), passive investors, and any management service providers cannot have any interest in any business anywhere that cultivates, processes, or distributes cannabis.
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Applicants with an interest in such a business, no matter how small that interest is, will not be approved.
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The Cannabis Law 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.
Property: Locations Must Be Approved by OCM as Part of Site Plan Approval
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Certain dispensaries “may be permitted” to select the location of the licensed premises or relocate. No further guidance is offered as to which licensees may be permitted to select their location.
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Considerations for approval include: proximity of other dispensaries, impact on pedestrian and vehicle traffic, and noise considerations.
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The dispensary must be located in a store, the principal entrance to which shall be from the street level and located on a public thoroughfare in premises that may be occupied, operated or conducted for business, trade or industry.
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Proximity to school grounds: A dispensary cannot be on the same road and within 500 feet of school grounds.
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This measurement will be taken in a straight line from the nearest point of the school grounds to the center of the nearest entrance of the premises that the licensee wishes to locate the dispensary at.
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Proximity to houses of worship: A dispensary cannot be on the same street or avenue and within 200 feet of a building occupied exclusively as a house of worship.
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This measurement will be taken in a straight line from the center of the nearest entrance to the building used for the house of worship to the center of the nearest entrance of the premises that the licensee wishes to locate the dispensary.
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Licensees must not notify municipalities until OCM creates a procedure and form on how to do so.
Ongoing Documentation Disclosure Required
- CAURD licensees have an ongoing obligation to maintain current versions of all records and plans submitted to OCM as part of the CAURD application. This includes disclosing any material changes.
Hours of Operation
- Businesses cannot operate from 12-8 a.m. unless given express written permission from the town.
Purchase of Cannabis Products/CASH ONLY
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Businesses must pay cash. Distributors can allow licensees to pay on credit.
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All agreements to purchase cannabis on credit must be reported to OCM.
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CASH defined as: U.S. currency, certified check, money order, electronic funds transfer, bank officer's check or draft, or a check drawn on the licensee's account payable to the distributor. Checks cannot be from third parties.
Inventory Limitations
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Licensees may only offer for sale:
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Cannabis products obtained from a distributor
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Cannabinoid hemp products (if licensed to do so)
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Cannabis paraphernalia
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Stationary, gifts, and other minor incidentals
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Branded merchandise and apparel containing the licensee’s brand, including jewelry and accessories (in adult sizes only)
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Other items as approved by OCM.
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Licensees cannot sell apparel or merchandise, including jewelry or other accessories, that reference a specific cannabis product brand other than the licensee’s.
Menus, Pricing, and Limitations on Discounts
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Any items that are displayed for sale in the interior of the dispensary must have a price tag, sign, or placard stating the item’s price and total cost (including tax).
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Licensees cannot advertise giveaways, discounts, price reductions, points-based reward systems, or customer loyalty programs by using words including, but not limited to, “sale,” “free,” “price drop,” or “discount” on a menu, in any communications to customers, or elsewhere.
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Licensees cannot fill pre-orders that are placed on websites that are not registered to the licensee. Prohibited arrangements include, but are not limited to, licensees utilizing third-party entities to solicit, accept, or deliver customer orders.
All Retail Dispensaries Must Be in a Physical Brick-and-Mortar Store
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Licensees may operate a drive-thru service window and/or drive-thru pre-order customer pick-up lane but must have written approval from OCM before such operations may begin
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Customers can access the drive-thru on foot
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Licensees may provide delivery services if the training manual includes written procedures for how workers will provide delivery service
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The licensee must own (including a lease) any motorized or unmotorized vehicle
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Only ground transport is permitted unless approved by OCM
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Car, van, bike, foot, etc. is permitted
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Interested in applying for a New York cannabis business license? Don’t delay! VS has a track record of success and is ready to help you get started on initial preparation—including corporate formation, market research, real estate, and community benefits outreach—before applications are released. Contact our New York team today to get started.