New York State has legalized recreational marijuana usage, but the details are still being worked out. For starters, there is no established start date for recreational sales and use, though it is widely expected for everything to debut in 2022.
Other details that still need to be hashed are questions like who will be allowed to manufacture, supply, and sell marijuana? What the licensing requirements will be? These details and more are still being worked out by the newly created state Office of Cannabis Management and Cannabis Control Board.
If you’re hoping to get aboard the fledgling recreational marijuana industry in the Empire State, it’s time to get your house in order and be prepared for the date the board begins accepting applications. If you’re looking for help during this process, reach out to my office, Lawrence M. Gordon, Attorney at Law, PC, today to discuss your business plans.
I have decades of experience assisting New Yorkers with a myriad of different business transactions, specifically with helping those seeking entry into the liquor industry. I am now expanding my resources to help those eyeing the marijuana market and would love to offer my services to new businesses and entrepreneurs. My firm proudly serves clients in Long Island, and the surrounding areas of Bellmore, Nassau County, and Suffolk County, New York.
As mentioned above, details are still being worked out, but there is quite a bit of information that we do already know. The state aims to separate the manufacturers, the wholesalers, and the retailers so that no one company can monopolize the industry — much as it places similar barriers on the liquor industry.
In other words, a dispensary cannot manufacture marijuana or wholesale it to other dispensaries, and a manufacturer cannot wholesale or retail the product. Wholesalers themselves will forever be caught in the middle.
The marijuana legalization launch also aims to be socially inclusive, to use a popular term. In other words, the awarding of licenses will be prioritized to favor female and minority owners.
Half of the business licenses, for instance, are to be awarded to “social equity applicants.” This category includes not only women and minorities, but also distressed farmers and disabled veterans, as well as people from communities with high rates of marijuana enforcement. The law also provides for those who previously sold marijuana illegally to obtain a sales license.
The law prohibits out-of-state entities that currently operate medical marijuana facilities from opening more than four additional recreational stores, two of which must be located in underserved communities.
In the long run, there could be as many as 1,000 retail marijuana outlets across the state. Additionally, a 13% tax will be placed on marijuana sales to support the newly created New York state cannabis revenue fund — a state drug treatment and public education fund — and the New York state community grants reinvestment fund. The tax is expected to raise roughly $350 million a year and create 60,000 jobs.
The manufacture, sale, distribution, and use of marijuana is still currently forbidden by federal law, but 16 states, including New York, have nonetheless legalized recreational marijuana usage. The federal government has largely ignored these states, but it still has jurisdiction over the distribution of marijuana across state lines, as well as jurisdiction over illegal sales on the black market.
Perhaps the biggest consequence of the federal prohibition is that banks are reluctant to get involved, even in states that have legalized recreational usage, for fear of money laundering charges.
This means that dispensaries are typically an all-cash operation, meaning that no credit or debit cards are accepted. This poses not only security issues, but accounting challenges as well. Financing can also become a problem. If you cannot go to a bank for a business loan, then you must arrange funding in the private market or through personal savings or partnerships. Anyone seeking to enter the industry should keep this in mind.
Having said that, recent efforts led by Democrats in Congress, most notably from Senate Majority Leader Chuck Schumer, are hoping to end the federal ban. However, any attempt to do so must survive any filibuster attempts in the Senate.
To take advantage of this opportunity to enter the recreational marijuana industry on the ground floor in New York, it’s important to begin planning now. As I noted above, your first step is to begin lining up the necessary financing so you can figure out how to manage an all-cash operation.
You may want to consider creating a business entity that allows you to have a bank account where your revenues can be deposited. For liability purposes — meaning to protect yourself against lawsuits and other legal actions — you probably should opt for a Limited Liability Company (LLC) or a corporation.
You also may consider partnering with those who fall under the “social equity” category to increase your chances of getting your license approved as quickly as possible. Locating in an underserved community might also be worth considering to increase your chances of having your application accepted.
You will also need to check for any restrictions on your physical location. The property owner may object to opening a dispensary. Or, like restrictions on liquor sales, your new business location may be too close to a school, church, or playground.
You will also want to keep up with all of the regulations as they are finalized and published so that you can comply. Regulators may add new restrictions or legal hoops for you to jump through, so it’s important to stay current on all of the rules and regulations as they evolve.
At the end of the day, I have helped many other individuals just like you navigate the licensing process to join the liquor industry. I am both familiar with and experienced in the legal and administrative challenges associated with obtaining entry into a strictly regulated industry. I am now expanding my vision and attention to the burgeoning recreational marijuana industry to master that roadmap as well.
If you or someone you know is considering starting a business in the marijuana industry, don’t face this challenge alone. Call or reach out to my firm, Lawrence M. Gordon, Attorney at Law, P.C., today for reliable legal counsel and guidance. As an experienced business transactions attorney, I have the knowledge and experience needed to help you get your business up and running as quickly as possible. Reach out today to get started!
If you’re looking to get in on the ground floor of New York’s budding marijuana industry, contact me, Lawrence M. Gordon, Attorney at Law, P.C. Let’s work together to get you licensed and up and running as soon as possible as a manufacturer, wholesaler, or retailer. I proudly serve clients in Long Island, and the surrounding areas of Bellmore, Nassau County, and Suffolk County, New York — so call today to set up an initial consultation.