As New York’s adult use cannabis industry begins to take shape, there is, unsurprisingly, intense interest among New York’s hospitality industry.
New York’s hospitality industry is huge, to say the least, with some 25,000 establishments in pre-COVID-19 times. The legal cannabis industry in New York will be modeled, in many ways, on the state’s alcohol industry, with which the state’s hospitality industry is deeply familiar. For example, alcohol producers cannot also be retailers, and the same so-called two-tier structure will apply to the cannabis industry. But while the two industries will share this common core, there are several critical elements of the new cannabis law that will make all the difference for those hoping to participate in the industry.
These similarities and differences were in focus this week during a cannabis-focused webinar hosted by the New York City Hospitality Alliance, a trade association that represents bars, restaurants, and hotels across the city, with Max and Robert Bookman of law firm Pesetsky & Bookman and Joni Yoswein and Jeffrey Denman of consulting firm Yoswein New York. Also in focus was the fact that this process in its earliest stages, with months of rulemaking to go before any licenses are issued, along with anticipated tweaks in the legislature.
During an overview of the new law, Max Bookman focused extensively on the limitations of licensing and ownership in the forthcoming adult use cannabis market. Participants, for example, wanted to know whether part owners and passive investors were subject to the same restrictions as full owners and active investors, and the answer was, in short, yes.
“As a general principle,” he said, “if you’re considering getting into this space, and this is just like alcohol, you’re going to have to decide which segment of the supply chain, which segment of the industry, you want to be in.”
Bookman also went in depth when it came to on-site consumption spaces. The Alliance pushed, for example, for on-site consumption of both alcohol and cannabis, which is not allowed in any legal cannabis space, in large part due to concerns regarding the public health implications of co-use. The Alliance envisioned spaces where famous bartenders and chefs could serve up foods and drinks with THC.
One big unknown with on-site consumption spaces is what happens with the unused cannabis. While these spaces will be allowed to sell cannabis, they are distinct from retail outlets, just as a bar is distinct from a liquor store, and so one possibility raised during the webinar is that these licensees would only be allowed to sell in small quantities.
When the conversation turned, briefly, to the topic of New York City’s community boards, which will require a 30-day notice before a license application can be filed with the state’s Office of Cannabis Management, Robert Bookman joked, “I just think I heard a collective groan from all 267 people on this.”
Max added that “anyone who is familiar with community boards knows that they require a special touch. And in the case of marijuana, it’s going to require a real special touch.”
Mandatory labor peace agreements and community reinvestment plans are just two of the areas where cannabis licensing is fundamentally different from alcohol. Licensees must allow for workers to unionize and they must demonstrate at each renewal that they are meeting the community contribution goals laid out in their initial license application.
Joni Yoswein and Jeffrey Denman then spoke about how to build relationships with and within communities.
“It’s not just about spending money,” Yoswein said. “It’s really going to be about meeting people and listening to them and what their fears are and how you address those fears and get past them.”
Denman added that “it’s always super important that you do your outreach and your homework on the community board and the community prior to coming to them,” adding that “outreach to local block associations, outreach to tenant organizations, outreach to community groups and other stakeholders can really determine if you’re successful or not.”
