New York Changes Dispensary Turnkey Rules; Delivery Guidance Laid Out

The New York Office of Cannabis Management (OCM) provided guidance Dec. 9 for adult-use cannabis retail licensees interested in making delivery sales but the rules for securing brick-and-mortar locations have changed. (The delivery guidelines are listed below.)

While OCM’s Cannabis Control Board approved the state’s first 36 Conditional Adult-Use Retail Dispensary (CAURD) provisional licenses last month, aspiring market entrants have yet to receive the turnkey locations they were promised for their businesses.

OCM regulators plan to issue up to 175 total retail licenses—150 for individuals impacted by prohibition and 25 for nonprofits whose services include support for the formerly incarcerated—and state officials from the Dormitory Authority of the State of New York (DASNY) were tasked with providing fully furnished dispensaries for the 150 individuals.

RELATED: What To Expect With New York’s First 175 Adult-Use Dispensaries

Now, instead of requiring retail licensees to rely on DASNY for their locations, OCM officials took a U-turn on Dec. 9 in announcing they are allowing CAURD licensees to find and secure their own retail locations ahead of the state’s sales launch.

“[CAURD licensees] can submit for approval their own proposed location for their retail store and may still qualify for financial support for renovations from the Social Equity Cannabis Investment Fund operated by [DASNY],” the office’s release read. “DASNY will continue the work of securing retail locations and locations will be matched with licensees as they become available.”

In June, Gov. Hochul announced the selection of a minority-led investment team to sponsor and manage New York’s $200 million Social Equity Cannabis Investment Fund that was authorized in the state’s fiscal 2023 budget. The fund was established to help New York finance the leasing and equipping of the 150 CAURD dispensaries to be operated by those who have been impacted by the inequitable enforcement of prohibition. Specifically, the fund is to assist DASNY’s efforts to:

• identify suitable locations for the dispensaries;
• acquire or lease the space for the dispensaries;
• design and construct the space to suit business needs; and
• fit out locations with furniture and other equipment.

To sponsor and manage that fund, DASNY selected NBA Hall of Famer Chris Webber and his business partner Lavetta, as well as a firm affiliated with Siebert Williams Shank, one of the nation’s leading minority- and women-owned investment banking firms. The fund managers were tasked with raising $150 million from the private sector to go toward the $200 million fund, but they failed to deliver that raise ahead of a Sept. 1 deadline, NY Cannabis Insider reported earlier this month.

With state regulators still aiming for a before-the-end-of-the-year deadline to launch commercial adult-use sales, OCM officials are now taking matters into their owns hands with last week’s announcement regarding retail locations. 

In addition to allowing CAURD licensees to find and secure their own retail locations, OCM also issued cannabis delivery guidance that allows:

• retail licensees to secure a warehouse from which to fulfill delivery orders while building permanent dispensary locations for up to one year;
• customers to place online/phone orders only (but no in-person sales or pickup from the warehouse location);
• customers to make online prepayments only (no cash payments from cannabis consumer to delivery employee);
• delivery to be made by bicycles, scooters or other similar methods of transportation as well as motor vehicles;
• delivery to consumers 21 years and older in New York, with ID verification upon sale and delivery; and
• up to 25 delivery staff per business, per requirements in the New York cannabis law.

The warehouses used for delivery must be located in the regions where retail businesses are licensed, but deliveries themselves can cross into other regions.

The delivery authorization applies to all retail licensees and requires adherence to all public health and safety regulations.