New York Law Will Authorize Hemp Farmers and Processors to Cultivate & Process Cannabis

NEW YORK–On February 11, 2022, the New York Senate and Assembly initiated mirror image bills (A9283/S8084A) supporting legislation for conditional adult-use cultivator and processor licenses.

This legislation was signed into law on February 22 by Governor Hochul and is intended to accelerate the cultivation, processing, and distribution of cannabis in New York. 

Empire State hemp farmers who receive a conditional license will be permitted to grow and/or process cannabis starting in the 2022 growing season. To be eligible for these conditional licenses, applicants must have been licensed by the state to grow and/or process hemp. The Governor’s Office stated that the Office of Cannabis Management (OCM) will open the program as soon as possible. See the section below for conditional adult-use cultivator and processor license details.

The law is especially beneficial to social equity licensees, as it will ensure that social equity retail dispensary licensees have products to sell on day one of retail sales. Additionally, this law will facilitate interested social equity cultivators and processors with a pathway to licensure through invaluable experience and knowledge gained by partnering with current experienced hemp cultivators and processors through a social equity mentorship program.

68-c Conditional Adult-use Cultivator License

New section 68-c creates a conditional adult-use cultivator license for New York licensed hemp growers.

Permitted Grow Size

• This license will allow the cultivation of flowering canopy outdoors (up to 43,560 square feet) or in a greenhouse (up to 25,000 square feet) with up to 20 artificial lights.
• Outdoor and greenhouse cultivation is permitted if the flowering canopy in the greenhouse is less than 20,000 square feet and if the total flowering canopy is equal to or less than 30,000 square feet.

Location Restriction

• Cultivation is permitted only within the same or an adjacent county where the licensee was previously authorized to grow hemp.

Processing and Distribution 

• A conditional adult-use licensee (without an adult-use processor or distributor license) will be able to minimally process and distribute cannabis products.
• The products must be in the form of cannabis flower.

License Timing

• The conditional adult-use cultivator licenses will only be issued up until December 31, 2022 and will expire on June 30, 2024.
  • Any licensee in good standing will be eligible to apply for and receive an adult-use cultivation license.
  • A licensee may not separately apply for any license type permitting cultivation of adult-use cannabis while holding a conditional adult-use cultivator license.
• The temporary ability to process and distribute cannabis flower will expire June 1, 2023.
  • After June 1, 2023, a conditional adult-use cultivator will need to apply for and receive a processor and distributor license to perform this activity.

Environmental and Social Equity Requirements

• A licensee must participate in an environmental sustainability program and a social equity mentorship program.

Application Requirements

• Eligible applicants must:
  • Have held a valid industrial hemp grower authorization from the department of agriculture and markets as of December 31, 2021, and be in good standing with the department of agriculture and markets;
  • Have grown and harvested hemp for at least two of the last four years pursuant to the license mentioned above, and can provide proof of the amount of hemp the applicant planted during those two years hemp was grown; and
  • As an individual applicant have an ownership interest of 51% or more, or as any other applicant have an ownership interest of 51% or more of the entity that is the licensee.
• A conditional adult-use cultivator licensee must be operational within six months of the date of receipt of the license.
• Must enter into and maintain a labor peace agreement with a bonafide labor organization.

69-a Conditional Adult-use Processor License

New section 69-a creates the conditional adult-use processor license, authorizing the processing and manufacturing of cannabis product, if the licensee was authorized under a New York cannabinoid hemp processor license.

Permitted Activities

• This license authorizes the acquisition, possession, processing and sale of cannabis.
• Processing includes blending, extracting, infusing, packaging, labeling, branding and otherwise making or preparing cannabis products.
• Processing does not include the cultivation of cannabis.

Location Restriction

• The processing of cannabis will only be permitted at the same location where the conditional adult-use processor license is authorized to process hemp.

License Timing and Distribution

• The conditional adult-use processor licenses will only be issued until December 31, 2022 and will expire on June 30, 2024.
• Licensees have the authority to distribute cannabis products without holding an adult-use distributor license until June 1, 2023.
  • After June 1, 2023, conditional processors seeking to distribute cannabis products must apply for and receive a distributor license to do so.
• An adult use processor licensee may apply for and receive one distributor’s license solely to distribute their product.
• Any licensee in good standing will be eligible to apply for and receive an adult-use cultivation license.

Environmental and Social Equity Requirements

• A licensee must participate in an environmental sustainability program and a social equity mentorship program.

Application Requirements

• Eligible applicants must:
  • Have applied for a cannabinoid hemp processor license before January 1, 2022;
  • Hold an active cannabinoid hemp processor license issued by the office; and
  • As an individual applicant have an ownership interest of 51% or more, or as any other applicant have an ownership interest of 51% or more of the entity that is the licensee.
• A conditional adult-use processor licensee must be operational within 6 months of the date of receipt of the license.
• Must enter into and maintain a labor peace agreement with a bonafide labor organization.

Highly Capitalized thank Vicente Sederberg LLP for this update. They will continue to monitor the OCM’s program development. Please reach out to their New York team if you have any questions.