While we wait, why not start pre-qualifying cannabis license hopefuls? (Guest column)

This guest column was written by Joe Rossi, the Cannabis Practice Group Leader at Park Strategies LLC.

As of Jan. 1, 2023, it has been 641 days since New York State officially legalized adult-use cannabis with the signing of the Marijuana Regulation and Taxation Act (MRTA) on March 31, 2021, and 453 days since the New York State Office of Cannabis Management (OCM) held the first Cannabis Control Board (CCB) meeting.

New Yorkers of all backgrounds are ecstatic that they are living in the moment when New York State legalized adult-use cannabis, and that the state is going to provide an expansive array of opportunities to be involved with the industry. But the wait to apply has been excruciating, especially as we watch other states that legalized cannabis in 2021 moving forward with their programs.

The 128-page MRTA includes opportunities under nine different adult-use cannabis licenses – (1) Cultivator, (2) Processor, (3) Distributor, (4) Cooperative, (5) Microbusiness, (6) Nursery, (7) Delivery, (8) Dispensary, and (9) On-Site Consumption.

Recently, the state released 282 pages of its long anticipated draft regulations which are currently out for public comment until February 14, 2023. The regulations must be finalized and approved by the Cannabis Control Board before any application period can open for those nine non-conditional license types.

After February 14, the state will review the public comments they received and then may revise the draft regulations based on those comments. This could take anywhere from 30 to 60 days after February 14. Then, the state would need to put out the revised regulations for final public review for an additional 45 days.

My point is: due to these procedural timelines alone, New Yorkers will not be able to apply for a non-conditional adult-use cannabis license until these regulations are finalized in the middle of next year, which was recently confirmed by the OCM Executive Director. For argument’s sake, let’s say that means July 1, 2023.

July 1, 2023, will be 823 days from when the MRTA was signed into law. That would be two years, three months and one day since the MRTA was signed if the application period opens July 1.

The rollout of adult-use cannabis has had its fair share of delays and missed deadlines and missed projections. But instead of pointing out and dwelling on those obvious implementation challenges, it is time we turn to viable and valuable solutions.

One solution I suggest the New York State Governor and the New York State Legislature consider is to direct the Cannabis Control Board to establish a pre-qualification application process between now and when the full application process opens for all the nine license types and for all interested New Yorkers.

I didn’t invent this idea. Michigan was the first legal cannabis state to issue a pre-qualification application process which they call “Step One” for a business to enter their legal adult-use cannabis market.

Why have a pre-qualification process? As the Michigan Cannabis Regulatory Agency states, the cannabis license approval is a lengthy process and “in short, prequalification involves vetting the entity and the individuals involved in the entity.” Simply put, an applicant submits their business plan and financial model, along with their fingerprints for a background check and the non-refundable application fee.

Also, once an applicant is pre-qualified for a cannabis license, it makes it a lot easier for that applicant to obtain financing and find a bank that will work with them. In Michigan, if the applicant is pre-qualified, they have up to two years to be prepared for full licensure, or else they need to reapply for pre-qualification.

Earlier this year, Vermont’s Cannabis Control Board became the second state in the nation to provide a pre-qualification process for an adult-use cannabis license. In their five-page guidance document on pre-qualification, the Vermont Cannabis Control Board states plainly “the purpose of pre-qualification approval is to smooth the application process for applicants, as well as assist the Board in anticipating the structure of the cannabis market …Getting approved for prequalification could potentially help with… obtaining financing … accessing financial services … completing agreements to use a property for your cultivation operation … and ensuring any business partners are not presumptively disqualified for a license based on the results of their criminal history record.”

The State of New York should implement a simple, voluntary pre-qualification application process for three major reasons. One, it helps those New Yorkers that need help with financing, finding a bank, and securing local approval for their adult-use cannabis plans. Two, it helps the Office of Cannabis Management and the Cannabis Control Board of New York understand who actually wants to seek an adult-use cannabis license in New York State. And three, it provides at least some clarity for an applicant on their future in this industry.

Implementing a pre-qualification process would be a good use of the first half of 2023 as we eagerly wait for the final regulations to be approved by the Cannabis Control Board sometime in summer 2023 – two years after the MRTA became law. And the best part is New York does not have to ‘recreate the wheel’ because other states have already done it.

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