Cannabis Legalization: How Will New York's Adult-use Regulatory Structure Function in Practice?
In the coming weeks, CCG will explore different aspects of New York's Adult-use legalization in our Taproot Cannabis Newsletter delivered to your inbox. As part two of our series breaking down the new cannabis law in New York (MRTA), we turned our attention to exactly how the regulatory structure will be created and function.
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While there is not much information about who specifically will lead these decision-making bodies, we know precisely how they will work and where the levers of control are. Given that the Legislature and the Governor have basically equal power in this structure, it is safe to say that provisions such as the MRTA’s social equity measures will be safeguarded and possibly even broadened as we move forward, as the Legislature could surely amend the bill and broaden its reach. See below for our reasoning why.
But first, the structure itself:
For starters, we have the Cannabis Control Board (CCB), through which all rules, regulations, and decision making ultimately flows. It’s comprised of five voting members: one chairperson proposed by the Governor and then approved by the Legislature; two who are direct appointments by the Governor (without the Legislature’s input); and two direct appointments from the President Pro Tempore of the New York State Senate, Senate Majority Leader Andrea Stewart-Cousins, and Speaker of the Assembly of New York, Carl E. Heastie, respectively. This structure means CCB’s decision making will theoretically balance between the goals and desires of the Governor’s Office and the Legislature, comprised of the Senate and the Assembly. All of the appointments are for three years each and should be demographically and geographically representative of New York State, as well as representing communities affected by the War on Drugs. No board member may have direct or indirect interest in a cannabis business.
The CCB will make all the big decisions going forward, and can assign responsibilities to the Office of Cannabis Management (OCM), including some of the responsibilities laid out below:
Appointing the necessary employees to oversee market
Limiting or prohibiting all the products it oversees due to public emergency
Establishing licensing application periods
Establishing criteria for cannabis employees
Consulting with the Department of Agriculture and Markets and the Department of Environmental Conservation to form rules and regulations on “safe production of cannabis, including environmental and energy standards and restrictions on the use of pesticides and best practices for water and energy conservation”
With consultation from the Executive Director of the OCM and the Chief Equity Officer, deciding the rules and regulations for the market as a whole
The CCB, however, has the “sole discretion” in the following:
Issuing and refusing registrations, licenses, and permits (the chairperson makes first decision and then the rest of the board may appeal)
Limiting or not limiting the number of registrations, licenses, and permits
Revoking, cancelling, or suspending any registration, license, or permit
The CCB also choses, by a vote of 4/5 members, the Chief Equity Officer, who handles the social equity plan structure, laid out in last week’s Tap Root.
The CCB gives operational orders to the Office of Cannabis Management (OCM), which is established under the New York State Liquor Authority, and which actually enforces the rules through the Executive Director, who like the chairperson of the CCB is chosen by the Governor and then confirmed by the Legislature. The Executive Director also serves for three years.
The responsibilities of the OCM are as follows:
Records and forms of licenses, and other tasks not within the CCB’s purview
Inspections for recreational, medicinal, and hemp cannabis businesses
Quotas and price controls [to be confirmed by CCB]
Coordinating across state agencies to study the market’s effect
Advising and assisting the CCB
Established within the OCM is the State Cannabis Advisory Board (SCAB), which collaborates with the CCB and Executive Director. It is comprised of 13 voting members from the industry plus ex-officio members from various New York state departments. Of all, the Governor Cuomo has 7 appointments, Senate Majority Leader Andrea Stewart-Cousins will have 3 and Assembly Speaker Carl E. Heastie will have 3. They will all serve three-year terms, and a chairperson and vice chairperson will be voted in by the board itself. In addition to consulting with and advising the CCB and OCM, the SCAB will also govern and administer the New York state community grants reinvestment fund.
But when will these decision-makers actually make decisions?
At the moment, it is tough to say when rules and regulations will be formed by the CCB, as specific time frames have not been announced for filling the positions at the CCB, the OCM, or when the rule drafting process will begin. However, the MRTA calls for the CCB to write an annual report on the bill’s effectiveness, due January 1, 2023, so the CCB will have to get all this done in time for sales to start in 2022.
Governor Cuomo’s original proposal, the CRTA, was a far cry from the MRTA in terms of social equity protections. The power structure in his CRTA allowed him to directly appoint the Executive Director of the OCM (the CCB was not a part of the CRTA), who then appointed the “Deputy director for social and economic equity,” likely with input from the Governor. All regulations would be made independent of the legislature, and the wording around social equity provisions was weak – it said they “may” waive fees for applicants, while the MRTA which passed guarantees such a waiver. These are just to highlight Governor Cuomo’s previous political angles, where before he had basically all the leverage, leading to watered down provisions, while now the playing field has been leveled between the Governor’s Office and the State Legislature. Regardless, it is within Governor Cuomo’s best interest to bend to the Legislature on this, given his numerous scandals and waning political leverage in Albany. Expect even stronger protections and growing investment in underserved communities going forward.