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OCM lawyers talk cannabis at NYS Bar Association meeting.
Lawyers for the Office of Cannabis Management spoke during the New York State Bar Association’s annual meeting in Manhattan this week. On Thursday, the Association’s cannabis law section hosted an event titled “Navigating the New York Green Wave: Understanding New York’s Cannabis Regulations and Empowering Attorneys for Client Success.”
During the event, the lawyers laid out some areas of concern based on what they’ve seen play out to-date, ranging from inadequate record-keeping to late payments.
“We are seeing a failure of a number of licensees to maintain their records,” said Laura Krzeminski, a senior attorney at OCM. “Failure to maintain records and accurately report can also jeopardize the licensees’ good standing,” and can also jeopardize, for example, a license renewal, transfer, or new license.
Krzeminski gave some other updates, including forthcoming product recalls for “certain improper testings.”
“At the Office, currently, we are issuing quarantine orders,” as well, Krzeminski said, for things like package mislabeling, lack of tamper evident and child resistance seals, products beyond their expiration dates, and QR codes that are not linking to accurate sources of information.
Another problem area is around labor peace agreements, a requirement in New York.
“So, what OCM is seeing right now is that there are some licensees that do not have their labor peace agreement signed and executed and submitted to the office. And that is actually very easy for the Office of Cannabis Management because if you don’t have it, you’re not going to transition to full licensure. That’s it,” Krzeminski said.
Patricia Heer, first deputy general counsel at OCM, laid out how out-of-state brands are entering New York.
Heer also talked about an ongoing concern with regard to brands: that some of these out-of-state brands are “ending up on the unlicensed shelves, in illegal shops in New York.”
This creates a “double-dipping issue” here in New York.
“You have legal products in other states ending up in unlicensed shops,” Heer said. At the same time, “those same producers are entering into agreements with a New York processor and being on a licensed retailer’ shelves.”
So, what’s the solution?
“There are ways and methods that are being looked into,” Heer said, for regulators to determine which brands are out-of-state or in-state. And, importantly, which brands are “complying with the regulations and the laws.”
For example, Heer continued, “Which brands are ending up on unlicensed, store shelves? How are they getting there? What are their records showing with regard to: where is that product going?”
Regulators would then be able, Heer said, “to determine whether they really should be able to reap the benefits of being a [True Party of Interest] and participating in activity that’s regulated in New York.”
Diana Yang, deputy general counsel at OCM, highlighted that some licensees aren’t paying their bills on time.
“Ya gotta snitch,” Yang told the audience of lawyers, many of whom represent licensees and license hopefuls. At some point in the future, a list of businesses that are delinquent could be published, though it might be at least partially redacted.
“It’s not intended to shame retail dispensaries,” Yang said. But, licensees need to make payments on time, and Yang said OCM is determining what those guardrails will be.
“We haven’t figured out what those default dates are, haven’t decided if it’s three strikes and you’re out, or one strike and you’re out. But we are looking at those parameters right now,” Yang said.
During the next panel, Tabatha Robinson, the Director of Economic Development at OCM, said that equity is at the center of her work. She spoke about a logo that will soon be made available to distinguish social equity-qualifying licensed cannabis businesses.
“Think about fair trade, right. Think about organic. When you see that, it signals something to you and that increases consumer engagement,” Robinson said.
Some of her office’s priorities this year are also focused on regional development initiatives, for example, in the Adirondacks. Robinson added that regulators are thinking about what a microbusiness will look like in that region, where peak tourist traffic comes in seasonal waves.
Ultimately, “New York is a brand,” Robinson said. “We still live in the world of federal prohibition, obviously. So interstate commerce isn’t permitted, as you all know. But, we are preparing our businesses here, businesses that are licensed by New York, to succeed once the walls do come down.”
NY regulators push back in latest licensing lawsuit.
This week, regulators filed a full-throated response to the emergency motion for a “temporary restraining order and preliminary injunction” that Variscite filed in December.
To refresh: As we reported back in December, Variscite, which was behind one of the first lawsuits to hold up adult use licensing in the state, put forth yet another lawsuit against regulators. Back in 2022, the plaintiff was Variscite NY One, and this time it’s Variscite NY Four and Variscite NY Five. However, the same person is at the center: Jeffrey Jensen.
What is striking about regulators’ argument in their motion this week is their repeated reference to Jensen’s previous lawsuits, not just in New York but in other states, like Washington and California. (Across these suits, the argument is largely the same, which is that regulators’ licensing requirements, in some way or another, violate the dormant Commerce Clause.)
This point about Jensen’s many suits also came up in Washington, as regulators there pointed out that the suit against them was not “the first challenge” that the plaintiffs had “brought to a marijuana Social Equity licensing law on this same legal theory.” (While the plaintiff in the Washington suit is a company called Peridot Tree, Jensen is also behind it.)
And, as far as Variscite’s previous suit in New York, regulators flagged in their motion this week that Jensen “cannot claim the existence of actual and imminent harm when he, on behalf of Variscite NY One Inc., its affiliates and attorneys, among other related entities, released and discharged defendants from the very same dormant Commerce Clause claims.”
All of this raises the question: will Jensen’s many similar suits come back to weaken this latest one in New York? Time will tell.
Minnesota regulators estimate adult use industry will need at least 381 shops.
The state Office of Cannabis Management released a “demand study” this week titled “An Examination of Cannabis Consumers and Cannabis Demand in Minnesota.”
As a refresher, Minnesota lawmakers legalized cannabis last year, as Cannabis Wire reported at the time, and adult use sales are expected to start in 2025.
In “evaluating city population size” across the state, regulators found that “there will be no less than 381 retail registrations.”
“However,” they continue, “many local governments may seek to have more retail registrations than the statutory minimum. As such, the legislature may consider a larger number than the statutory minimum.”
A couple of other interesting takeaways from the study: “25% percent of the sample reported cultivating cannabis at home, with an average of two cannabis plants grown at a time,” and “over 50% of the sample reported using at least one alternative cannabinoid (e.g., CBD, Delta-8 THC, Delta-10 THC) within the past month.”
