New York Cultivators Licensed to Grow Recreational Cannabis

The New York legal cannabis scene continues to take shape as legislators recently gave the green light for the second batch of applications for recreational marijuana cultivators. A report by Marijuana Moment stated that all this is in an effort to kick off the retail of recreational cannabis later this year.

New York’s Cannabis Control Board (CCB) approved the first batch of licenses to cultivate recreational cannabis back in April. It issued 52 permits to local hemp farmers marking a significant development in the state’s emerging recreational marijuana industry. In the second cluster of licenses, CCB granted an additional 36 cultivator licenses for existing hemp companies. 

New York Governor Kathy Hochul signed the Conditional Cannabis Cultivation Bill early this year, allowing hemp farmers in the state to start planting recreational cannabis. This move was to provide hemp farmers with a head start on growing weed to meet the state’s nascent recreational cannabis market. The new law also authorizes state authorities to award recreational cannabis processing firms temporary licenses. 

Under the new legislation, the state can immediately begin issuing adult-use cannabis cultivation licenses to hemp farmers. Even so, there are a few criteria that prospective licensees must meet before they get the permits. 

To begin, the state Department of Agriculture must have authorized them to cultivate hemp as of December 31st, 2021. The conditional cultivator licensees must also have grown hemp in two of the last four years. Moreover, they are required to participate in an environmental sustainability and social equity mentorship program. 

During the production of recreational marijuana, the licensees are allowed to cultivate an acre or 43,560 square feet of flowering crops outdoors. They can also farm 25,000 square feet of cannabis indoors or in greenhouses with up to 20 artificial lights. Cultivators can begin producing the adult-use cannabis immediately, and their permits are valid until June 2023. 

On March 10th this year, Gov Hochul revealed the Seeding Opportunity Initiative. This new program will prioritize retail licenses for recreational weed to individuals with prior marijuana-related convictions or families of those who have been harmed by criminalization. 

This initiative will put the people who have been on the receiving end of the war on cannabis ahead of the existing medical cannabis businesses. It will also help the legalization of recreational cannabis in New York become one of the most equitable legislation in the United States.

Still, there are business-related requirements for interested parties to be eligible. For instance, they must have held at least 10 percent ownership and control of a business that has been in profit for at least two years. However, a recent poll uncovered that most New York voters are against this proposal even though it aims at making the recreational cannabis industry more equitable.

Meanwhile, in last month’s CCB meeting, the board approved revised regulations to allow medical marijuana patients to grow their own plants for personal use. This move came after a public comment period on the proposed rules last year. 

This new rule would allow patients and caregivers to cultivate up to six cannabis plants, of which only three can be mature at a time. Furthermore, they can possess as much as five pounds of marijuana from the said plants, which is in line with the state’s legalization law. 

New York legislators recently sent a budget proposal to the governor incorporating provisions allowing cannabis businesses to take tax deductions. Since federal legalization of marijuana is now seemingly imminent, Gov Hochul signed the bill into law. 

Currently, medical and recreational marijuana firms can’t make federal tax deductions for business expenses under an Internal Revenue Code section known as 280E. However, the new proposal will create an exemption that would allow cannabis companies to take tax deductions. The bill aligns with the New York Cannabis Growers and Processors Association (NYCGPA) legislative agenda and would be a workaround for 280E. 

Senator Jeremy Cooney had filed a standalone bill last December that had a similar carve-out for New York’s budding cannabis market. The Senator also filed a bill last month that would allow regulators to disclose certain information about cannabis licensees to financial institutions. This proposal will help intensify the efforts in place to promote cannabis banking.

Since recreational cannabis legalization was only signed into law last year, regulators are still finalizing licensing rules. For this reason, retailers are yet to be authorized to sell marijuana for adult use in the state. However, as it stands, adults 21 years and older are allowed to possess and publicly consume cannabis. They can also give marijuana as gifts to other adults as long as they don’t receive compensation for it. 

Tremaine Wright, chair of the CCB, recently acknowledged the complicated legal landscape that has developed in New York as the state moves from prohibition. Still, the regulatory body has issued warnings to more than two dozen businesses allegedly selling cannabis without licenses or manipulating the gifting paradigm.

Gov Hochul explained that enacting laws to expedite the licensing process could help curb the number of firms exploiting the legal gifting provision. Essentially, some companies are effectively using the provision to give away marijuana for “free” when people make a non-cannabis-related purchase. 

At the same time, Gov Hochul announced that her administration is creating a $200 million public-private fund to help promote social equity in the state’s burgeoning cannabis sector. She included the proposal in a State of the State book and the governor’s budget released in January. 

Hochul believes that while retail licenses for recreational marijuana are yet to be issued, the market stands to make billions of dollars. She also acknowledges that it will create numerous opportunities for New Yorkers, particularly those from communities that were marginalized in the past