STATE OF NEW YORK ________________________________________________________________________ 8084--A IN SENATE January 25, 2022 ___________ Introduced by Sens. HINCHEY, KRUEGER, RAMOS -- read twice and ordered printed, and when printed to be committed to the Committee on Agricul- ture -- reported favorably from said committee and committed to the Committee on Rules -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the agriculture and markets law and the cannabis law, in relation to providing a conditional adult-use cultivator license and a conditional adult-use processor license The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 520 of the agriculture and markets law is amended 2 by adding a new subdivision 3 to read as follows: 3 3. The department shall, to the extent practicable, share data and 4 documentation related to an agricultural research pilot program with the 5 office of cannabis management. 6 § 2. The cannabis law is amended by adding a new section 68-c to read 7 as follows: 8 § 68-c. Conditional adult-use cultivator license. 1. A conditional 9 adult-use cultivator license shall be subject to the same authori- 10 zations, restrictions and requirements applied to any adult-use cultiva- 11 tor pursuant to section sixty-eight of this article for the duration of 12 the conditional period of the license, as well as to any new terms and 13 conditions imposed by the board and office. 14 2. To be eligible to apply for a conditional adult-use cultivator 15 license, a cultivator must: 16 (a) have held a valid industrial hemp grower authorization from the 17 department of agriculture and markets, as of December thirty-first, two 18 thousand twenty-one, which authorized the growing of cannabinoid hemp, 19 and is in good standing with the department of agriculture and markets; 20 (b) have grown and harvested hemp for at least two of the past four 21 years pursuant to that license and be able to provide proof, as defined 22 by the office, of the amount of hemp planted by the applicant during 23 each of the two years that hemp was grown; and EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD14348-09-2S. 8084--A 2 1 (c) as an individual applicant have an ownership interest of fifty-one 2 percent or more, or as any other applicant have an ownership interest of 3 fifty-one percent or more of the entity that is the licensee. 4 3. A conditional adult-use cultivator license shall authorize the 5 cultivation of cannabis outdoors or in a greenhouse with no more than 6 twenty artificial lights unless otherwise authorized by the office. A 7 conditional adult-use cultivator licensee may cultivate up to forty- 8 three thousand five hundred sixty square feet of flowering canopy 9 outdoors or twenty-five thousand square feet of flowering canopy in a 10 greenhouse. A cultivator may cultivate both outdoors and in a green- 11 house provided the flowering canopy in a greenhouse is less than twen- 12 ty-thousand square feet and the total flowering canopy is equal to or 13 less than thirty-thousand square feet. 14 4. A conditional adult-use cultivator licensee must comply with any 15 environmental standards and requirements mandated by the office. 16 5. The cultivation of cannabis shall only be permitted within the same 17 or an adjacent county in which the conditional adult-use cultivator 18 licensee had previously been authorized by the department of agriculture 19 and markets to grow hemp. 20 6. A conditional adult-use cultivator licensee shall have the tempo- 21 rary authority to minimally process and distribute cannabis products, 22 provided that such final products shall be in the form of cannabis flow- 23 er, without holding an adult-use processor or distributor license estab- 24 lished pursuant to sections sixty-nine and seventy-one of this article; 25 provided that the licensee complies with all requirements for the proc- 26 essing and distribution of cannabis products as set out by the board in 27 regulations or in the terms and conditions of the conditional license. 28 Such authority to minimally process and distribute cannabis products 29 expires on June first, two thousand twenty-three. After June first, two 30 thousand twenty-three, any conditional adult-use cultivator seeking to 31 process and distribute cannabis products shall be required to apply for 32 and receive a processor and distributor license to conduct this activ- 33 ity. 34 7. For the duration of the conditional period of the conditional 35 adult-use cultivator license, the ownership or organizational structure 36 of the entity that is the licensee shall not be amended, except pursuant 37 to the provisions of subdivisions two, three and four of section sixty- 38 seven of this article. 39 8. The office shall set out specific terms and conditions setting out 40 requirements necessary to be awarded and maintain a conditional adult- 41 use cultivator license, including but not limited to the requirement 42 that a licensee agrees to participate in an environmental sustainability 43 program and a social equity mentorship program. Such mentorship program 44 shall be directed to train individuals interested in becoming licensed 45 cultivators and shall leverage remote and in-person mentees with experi- 46 ence in agriculture business management, sustainable cannabis culti- 47 vation, and best practices. Candidates for the mentorship program must 48 be at least eighteen years of age, must be a New York state resident, 49 and must be individuals that would be considered social equity appli- 50 cants as defined by section eighty-seven of this article. The license 51 terms and conditions set out by the office shall include requirements 52 that a licensee enter into a labor peace agreement with a bona-fide 53 labor organization that is actively engaged in representing or attempt- 54 ing to represent the applicant's employees within six months of licen- 55 sure, that the maintenance of such labor peace agreement shall be anS. 8084--A 3 1 ongoing material condition of licensure, and that licensees shall meet 2 any other eligibility requirements established by the office. 3 9. The board shall establish a non-refundable application and license 4 fee, in a manner consistent with section sixty-three of this article, 5 for the conditional adult-use cultivator license. No such license shall 6 be issued after December thirty-first, two thousand twenty-two and such 7 license shall only be valid through June thirtieth, two thousand twen- 8 ty-four. 9 10. A conditional adult-use cultivator license shall be deemed to have 10 been surrendered to the board and a conditional adult-use cultivator 11 licensee shall be deemed not to be in good standing, as determined in 12 the discretion of the executive director in a written notice, effective 13 upon delivery to the licensee at the licensee's last known address on 14 file with the office, for reasons including but not limited to: 15 (a) failure to abide by all the terms and conditions of the condi- 16 tional adult-use cultivator license; 17 (b) failure to adhere to all requirements set out in regulations and 18 guidance, including those promulgated after receiving the conditional 19 adult-use cultivator license; 20 (c) failure to submit information, records, or reports; 21 (d) failure to correct deficiencies in accordance with an approved 22 corrective action plan; 23 (e) deviation from regulations, licensing terms, or standard operating 24 procedures in a manner that the office determines may jeopardize health 25 or safety of the public, or the quality of products grown or produced; 26 (f) failure to provide office employees with access to the premises; 27 and 28 (g) failure to begin operations within six months of the date of the 29 issuance of the license. 30 11. A licensee whose conditional adult-use cultivator license has been 31 deemed surrendered may within ten days of the delivery date of such 32 notice appeal the determination of the executive director to the board 33 pursuant to subdivision eighteen of section ten of this chapter. The 34 board shall have sole discretion to determine the conduct of the appeal, 35 which shall include notice and an opportunity to be heard. Upon review 36 by the board, the board shall issue a final written determination which 37 may then be reviewed pursuant to section one hundred thirty-five of this 38 chapter and article seventy-eight of the civil practice law and rules. 39 12. In the event that a conditional adult-use cultivator licensee 40 elects to cease operation of all permitted activities or to surrender 41 its license, the following provisions shall apply: 42 (a) the conditional adult-use cultivator licensee shall notify the 43 office in writing at least thirty days prior to the anticipated date of 44 closure; 45 (b) such written notice shall include a proposed plan for closure. The 46 plan shall be subject to office approval and shall include timetables 47 and describe the procedures and actions the licensee shall take to prop- 48 erly destroy or otherwise dispose of all the licensee's supply of canna- 49 bis and/or cannabis products; and 50 (c) the licensee or former licensee must maintain and make available 51 to the office all records related to the cultivation of cannabis for a 52 period of three years. 53 13. No later than ninety days before the expiration of a conditional 54 adult-use cultivator license, the office shall, pursuant to a request by 55 the licensee, review the conditional adult-use cultivator licensee to 56 determine whether they are in good standing with the office. Good stand-S. 8084--A 4 1 ing shall include, but not be limited to, compliance with subdivision 2 seven of this section. Any licensee found to be in good standing shall 3 be eligible to apply for and receive an adult-use cultivation license, 4 provided the licensee can meet all requirements of the new license. Such 5 a licensee will receive, at minimum, an adult-use cultivator license for 6 the size of flowering canopy that they were licensed to grow pursuant to 7 their conditional adult-use cultivator license or a larger size flower- 8 ing canopy and authorization to use artificial light as may be set out 9 by the board in regulation. A licensee may not separately apply for any 10 license type under this article permitting the cultivation of adult-use 11 cannabis while holding a conditional adult-use cultivator license. 12 14. For the purposes of this section, the office has the authority to 13 define terms including but not limited to "greenhouse", "immature 14 plant", "flowering canopy" as part of the terms and conditions of the 15 conditional adult-use cultivator license. 16 15. Nothing herein shall limit the authority, power, or other rights 17 or remedies of the board or office. 18 § 3. Section 69 of the cannabis law is amended to read as follows: 19 § 69. Adult-use processor license. 1. A processor's license shall 20 authorize the acquisition, possession, processing and sale of cannabis 21 from the licensed premises of the adult-use cultivator by such licensee 22 to duly licensed processors or distributors. A person holding an adult- 23 use processor's license may apply for, and obtain, one distributor's 24 license solely for the distribution of their own products. 25 2. For purposes of this section, processing shall include, but not be 26 limited to, blending, extracting, infusing, packaging, labeling, brand- 27 ing and otherwise making or preparing cannabis products. Processing 28 shall not include the cultivation of cannabis. 29 3. No processor shall be engaged in any other business on the premises 30 to be licensed; except that a person issued an adult-use cannabis culti- 31 vator, processor, and/or distributor license or a processor who has also 32 been issued a hemp grower license by the department of agriculture and 33 markets or a cannabinoid hemp processor license under this chapter may 34 hold and operate all issued licenses on the same premises. 35 4. No cannabis processor licensee may hold more than one cannabis 36 processor license provided a single license may authorize processor 37 activities at multiple locations, as set out in regulations by the 38 board. 39 5. No adult-use cannabis processor shall have a direct or indirect 40 interest, including by stock ownership, interlocking directors, mortgage 41 or lien, personal or real property, management agreement, share parent 42 companies or affiliated organizations or any other means, in any prem- 43 ises licensed as an adult-use cannabis retail dispensary or in any busi- 44 ness licensed as an adult-use cannabis retail dispensary or in any 45 registered organization registered pursuant to article three of this 46 chapter. 47 6. Adult-use processor licensees are subject to minimum operating 48 requirements as determined by the board in regulation. 49 § 4. The cannabis law is amended by adding a new section 69-a to read 50 as follows: 51 § 69-a. Conditional adult-use processor license. 1. A conditional 52 adult-use processor license shall be subject to the same authorizations, 53 restrictions and requirements applied to any adult-use processor pursu- 54 ant to section sixty-nine of this article for the duration of the condi- 55 tional period of the license, as well as to any new terms and conditions 56 imposed by the board and office.S. 8084--A 5 1 2. To be eligible to apply for a conditional adult-use processor 2 license, a processor must: 3 (a) have applied for a cannabinoid hemp processor license pursuant to 4 section ninety-two of this chapter before January first, two thousand 5 twenty-two; 6 (b) hold an active cannabinoid hemp processor license issued by the 7 office; and 8 (c) as an individual applicant have an ownership interest of fifty-one 9 percent or more, or as any other applicant have an ownership interest of 10 fifty-one percent or more of the entity that is the licensee. 11 3. A conditional adult-use processor license shall authorize the proc- 12 essing and manufacturing of cannabis products provided the licensee 13 complies with all requirements for the processing and manufacture of 14 cannabis products as set out by the board. A conditional adult-use 15 processor licensee shall only perform extraction activities if author- 16 ized to under the licensee's cannabinoid hemp processor license and all 17 extraction methods are subject to office approval. 18 4. A conditional adult-use processor licensee must comply with any 19 environmental standards and requirements as mandated by the office. 20 5. The processing of cannabis shall only be permitted at the same 21 location in which the conditional adult-use processor licensee is 22 authorized to process hemp, unless expressly authorized by the office. 23 6. A conditional adult-use processor licensee shall have the authority 24 to distribute cannabis products without holding an adult-use distributor 25 license established pursuant to section seventy-one of this article 26 until June first, two thousand twenty-three, provided that the licensee 27 complies with all requirements for the distribution of cannabis products 28 as set out by the office. After June first, two thousand twenty-three, 29 any conditional processor seeking to distribute cannabis products shall 30 be required to apply for and receive a distributor license to conduct 31 this activity. 32 7. For the duration of the conditional period of the conditional 33 adult-use processor license, the ownership or organizational structure 34 of the entity that is the licensee shall not be amended, except pursuant 35 to the provisions of subdivisions two, three and four of section sixty- 36 seven of this article. 37 8. The office shall set out specific terms and conditions setting out 38 requirements necessary to be awarded and maintain a conditional adult- 39 use processor license, including but not limited to the requirement that 40 a licensee agrees to participate in an environmental sustainability 41 program and a social equity mentorship program. Such program shall be 42 directed to train individuals interested in becoming licensed processors 43 and shall leverage remote and in-person engagement to provide mentees 44 with experience in processing techniques and good manufacturing prac- 45 tices. Candidates for the mentorship program must be at least eighteen 46 years of age, must be a New York state resident, and must be individuals 47 that would be considered social equity applicants as defined by section 48 eighty-seven of this article. The license terms and conditions set out 49 by the office shall include requirements that a licensee enter into a 50 labor peace agreement with a bona-fide labor organization that is 51 actively engaged in representing or attempting to represent the appli- 52 cant's employees within six months of licensure, that the maintenance of 53 such labor peace agreement shall be an ongoing material condition of 54 licensure, and that licensees shall meet any other eligibility require- 55 ments established by the office.S. 8084--A 6 1 9. The board shall establish a non-refundable application and license 2 fee, in a manner consistent with section sixty-three of this article, 3 for the conditional adult-use processor license. No such license shall 4 be issued after December thirty-first, two thousand twenty-two and such 5 license shall only be valid through June thirtieth, two thousand twen- 6 ty-four. 7 10. A conditional adult-use processor license shall be deemed to have 8 been surrendered to the board and a conditional adult-use processor 9 licensee shall be deemed not to be in good standing, as determined in 10 the discretion of the executive director in a written notice, effective 11 upon delivery to the licensee at the licensee's last known address on 12 file with the office, for reasons including but not limited to: 13 (a) failure to abide by all the terms and conditions of the condi- 14 tional adult-use processor license; 15 (b) failure to adhere to all requirements set out in regulations and 16 guidance, including those promulgated after receiving the conditional 17 adult-use processor license; 18 (c) failure to submit information, records, or reports; 19 (d) failure to correct deficiencies in accordance with an approved 20 corrective action plan; 21 (e) deviation from regulations, licensing terms, or standard operating 22 procedures in a manner the office determines may jeopardize health or 23 safety of the public, or the quality of products produced; 24 (f) failure to provide office employees with access to the premises; 25 and 26 (g) failure to begin operations within six months of the date of the 27 issuance of the license. 28 11. A licensee whose conditional adult-use processor license has been 29 deemed surrendered may within ten days of the delivery date of such 30 notice appeal the determination of the executive director to the board 31 pursuant to subdivision eighteen of section ten of this chapter. The 32 board shall have sole discretion to determine the conduct of the appeal, 33 which shall include notice and an opportunity to be heard. Upon review 34 by the board, the board shall issue a final written determination which 35 may then be reviewed pursuant to section one hundred thirty-five of this 36 chapter and article seventy-eight of the civil practice law and rules. 37 12. In the event that a conditional adult-use processor licensee 38 elects to cease operation of all permitted activities or to surrender 39 its license, the following provisions shall apply: 40 (a) the conditional adult-use processor licensee shall notify the 41 office in writing at least thirty days prior to the anticipated date of 42 closure; 43 (b) such written notice shall include a proposed plan for closure. The 44 plan shall be subject to office approval and shall include timetables 45 and describe the procedures and actions the licensee shall take to prop- 46 erly destroy or otherwise dispose of all the licensee's supply of canna- 47 bis and/or cannabis products; and 48 (c) the licensee or former licensee must maintain and make available 49 to the office all records related to the cultivation of cannabis for a 50 period of three years. 51 13. No later than ninety days before the expiration of a conditional 52 adult-use processor license, the office shall, pursuant to a request by 53 the licensee, review the conditional adult-use processor licensee to 54 determine whether they are in good standing with the office. Good stand- 55 ing shall include, but not be limited to, compliance with subdivision 56 seven of this section. Any licensee found to be in good standing shallS. 8084--A 7 1 be eligible to apply for and receive an adult-use processor license, 2 provided the licensee can meet all requirements of the new license. 3 14. For the purposes of this section, the office has the authority to 4 define terms including but not limited to "extraction" as part of the 5 terms and conditions of the conditional adult-use processor license. 6 15. Nothing in this section shall limit the authority, power, or other 7 rights or remedies of the board or office. 8 § 5. The cannabis control board shall provide a report on the condi- 9 tional cultivator and processor licenses as provided for by this act. 10 Such report shall include, but not be limited to: the number of condi- 11 tional licenses applied for by geographic region and approved by the 12 board; the revenue received from such conditional licenses from fees and 13 taxation related to cultivation, distribution, and eventual sale of 14 adult-use cannabis; the number of individuals, if any, that transition 15 from a conditional license to other licenses issued by the board and the 16 types of licenses awarded; the number of applicants determined to be 17 social equity applicants that applied for and received a conditional 18 cultivator and processor license; the effectiveness and participation 19 data related to the social equity mentoring program; and other such data 20 and information that the board deems necessary and appropriate. Such 21 report shall be published on the office's website and presented to the 22 governor, the majority leader of the senate and the speaker of the 23 assembly, no later than January 1, 2023 and again on January 1, 2024. 24 Nothing shall preclude the office from providing such reporting as part 25 of the annual report required by the board pursuant to section ten of 26 the cannabis law, provided, however, that the information required by 27 this act shall be clearly separate from other reporting. 28 § 6. This act shall take effect immediately, provided however, that 29 the provisions of sections two and four of this act shall expire on June 30 30, 2024 when upon such date the provisions of such sections shall be 31 deemed repealed.