New York Marijuana Cooperative License

What Is a Marijuana Cooperative in New York?

A marijuana cooperative is a group of medical or recreational marijuana users assembled in a single location to ensure legal access to high-quality cannabis or marijuana. Generally, a marijuana cooperative comprises medical marijuana users and their caregivers. Within a marijuana cooperative, members can access marijuana flower, edibles, concentrates, and other associated paraphernalia. It is common with marijuana cooperatives for the associations to encourage members to work together to grow plants within the state's legal limits. Medical marijuana users in a marijuana cooperative commonly share the expense, work, and labor in a common grow area. Members of a marijuana cooperative may be able to access marijuana in various forms at much cheaper rates than is typically sold in pot shops or dispensaries.

Does New York License Marijuana Cooperatives?

Yes. According to the New York Marijuana Regulation and Taxation Act (MRTA), cannabis cooperative licenses are issued to qualified groups authorizing to acquire, possess, cultivate, possess, distribute, and sell from their licensed premises to duly licensed distributors, on-site consumption sites, existing medical marijuana dispensaries, and retail dispensaries. Cannabis cooperative licensees are not permitted to sell directly to consumers. This is consistent with the general prohibition on vertical integration and monopolies contained within the guidelines in the MRTA.

How to Get a Marijuana Cooperative License in New York

A cannabis cooperative, as defined under Section 70-2 of the MRTA, must:

• be composed of New York residents and organized as a New York LLC, LLP, or other business structure authorized by the New York Cannabis Control Board (CCB).
• subordinate capital by guaranteeing that investors' returns are restricted.
• be democratically governed, with each member having one vote.
• distribute interests based on members' active involvement.
• adhere to the International Cooperative Alliance's seven principles

Licenses for cannabis growing will be issued by the Office of Cannabis Management (OCM), a newly constituted body within the MRTA. Prior to issuing licenses, the Office of Cannabis Management must create and pass regulations to carry out the state's cannabis statute. As a result, the application process for cannabis growing permits and associated timelines remain uncertain.

While the OCM is not currently accepting new license applications, key criteria and requirements are already included in the MRTA. For example, the MRTA stipulates that applicants for cannabis cooperative licenses be at least 21 years of age. Furthermore, licenses are to be renewed every two years.

Additionally, the MRTA requires the OCM to enact regulations defining the conditions for granting a license to an application, which may include but is not limited to the following:

• The applicant is considered a social and economic equity applicant.
• The applicant will be able to effectively manage illicit cannabis trafficking.
• The applicant agrees to comply with all applicable federal, state, and local laws and regulations.
• The applicant and the cannabis establishment’s representatives are prepared, willing, and capable of conducting the activities for which a license is requested.
• The applicant either owns or has the right to utilize sufficient land, buildings, and equipment to properly carry out the activity indicated in the application or has a plan to do so if they qualify as a social and economic equity applicant.
• The applicant either meets the requirements for social and economic equity or demonstrates a commitment to assisting communities and persons who are disproportionately affected by cannabis law enforcement.

As part of the MRTA, New York incorporated the concept of social and economic equity to ensure that members of minority groups who have been disproportionately impacted by cannabis prohibition benefit from legalization. Social and economic equity applicants include:

• Individuals from communities disproportionately impacted by the enforcement of cannabis prohibition
• Minority-owned businesses
• Women-owned businesses
• Minority and women-owned businesses
• Distressed farmers
• Service-disabled veteran

Additionally, applicants who are members of a community that has been disproportionately impacted by prior cannabis prohibition enforcement, earn less than 80% of the county's median income, have been convicted of a marijuana offense, or have a close family member who has been convicted will be given preference. Applicants who meet the state's criteria for social and economic justice will also receive counseling, small business coaching, and compliance support to aid in the establishment and development of an adult-use cannabis company.

For social and economic equity applicants, licenses cannot be transferred or sold during the first three years after issuance, save with the board's prior written permission. After the three-year term, if a social and economic equity applicant wishes to transfer or sell its license, the Board may compel the license holder to pay the Board any outstanding balance on loans provided to the licensee by the Board as a condition of the sale or transfer.

The New York MRTA advises that an application for a cooperative license be granted in the public interest, taking into account the following factors, but not limited to:

• That marijuana cultivation, processing, transportation, distribution, and sale for adult use are privileges, not rights
• The quantity and type of cannabis licenses in the applicant's immediate vicinity, as well as throughout the municipality or subdivision thereof.
• Evidence that all necessary licenses and permits have been received or will be obtained from the state and any other applicable regulatory authorities
• The license's impact on pedestrian and vehicular traffic, as well as parking, near the site.
• The site's existing noise level and any additional noise generated by the proposed premises.
• Capacity to reduce adverse environmental repercussions such as water usage, energy consumption, and carbon emissions.
• The effect on the production and availability of cannabis.
• Any additional legal or regulatory considerations pertinent to assessing whether issuing a license is in the public convenience and advantage, as well as the public interest of the community.
• The applicant and its management executives have a good moral character and do not own or control more licenses or permits than the MRTA allows.
• The applicant has entered into a labor peace agreement with a legal labor organization that is actively representing or striving to represent the applicant's employees, and compliance with the labor peace agreement's conditions is a significant condition of licensing. When reviewing applications from businesses with 25 or more employees, the OCM must give priority to applicants who are parties to collective bargaining agreements with bona fide labor organizations in New York or another state and who engage union labor to construct their licensed facility.
• The applicant will contribute to communities and persons disproportionately impacted by cannabis law enforcement and will publicize these efforts through the OCM.
• Additionally, the application must meet any extra OCM requirements; and, if the applicant is a registered organization, the applicant must demonstrate the establishment's continued efforts toward producing, distributing, and/or studying medicinal cannabis in preparation for certification.

Section 62.3 of the MRTA requires applicants to affirm their applications are true under penalty of perjury. Furthermore, they can anticipate being asked for the following information:

• Race and ethnic origin information
• Ownership and investing information (including corporate structure)
• Demonstration of moral integrity (including fingerprinting)
• Information about the cannabis dispensary's location
• Financial Statements

Note that certain local ordinances may apply and some approvals may be required at the county or municipal levels for a cannabis license application to be successful. The ordinances and approvals are different for each location. Hence, it is recommended that you research the specific regulations, permits, and approvals applicable to your locality before submitting your application.

According to Section 76 of the MRTA, a cannabis license applicant in New York must notify the municipality in which the cannabis facility will be located of their desire to file a cannabis license application. Prior to filing the state license application, the notification must be submitted with the municipal clerk no less than 30 days before and no more than 270 days in advance. The notice must adhere to the format established by the Cannabis Control Board.

If a local government expresses an opinion in support or opposition to the registration, license, or permit application, such opinion becomes part of the record upon which the Office of Cannabis Management makes its licensure recommendation to the Cannabis Control Board. The Cannabis Control Board will respond to the municipality in writing with an explanation of how such viewpoints were evaluated in deciding whether to grant or deny the application.

Applicants who have been denied in their applications can apply to the Cannabis Control Board for a review of such decisions in a manner to be provided by the rules of the Board. By checking the OCM website frequently, you may stay informed about the application window and timelines.

How Much Does a Marijuana Cooperative License Cost in New York?

The cost of a New York marijuana cooperative license is not yet known. However, under MRTA, the cost for a marijuana cooperative license would be non-refundable. Still, the fee may be waived or reduced for applicants considered social and economic equity applicants. The cost may also be determined based on the criteria that may be outlined the rules being promulgated by the Office of Cannabis Management (OCM) for the regulation of the cannabis industry in New York. The regulations being prepared by the Cannabis Control Board and the Office of Cannabis Management is expected to clarify issues including:

• Canopy size limits
• Limits on the number of locations
• Measures to incentivize the use and licensure of marijuana cooperatives
• Minimum residency requirements for marijuana cooperative members
• Entities that will be permitted to be marijuana cooperative members

Can Licensed Marijuana Cooperatives Hold Other Cannabis Licenses in New York?

According to Section 70-5 of the MRTA, marijuana cooperative licensees in New York are not allowed to operate a dispensary, microbusiness, or on-site consumption facility directly or indirectly. Additionally, Section 70-4 of the MRTA states that no cooperative member may have a direct or indirect stake in any adult-use cannabis permits. A marijuana cooperative cannot have a financial stake, stock ownership, interlocking directors, mortgage or lien, or other property interest in a registered retail dispensary.