The New York Office of Cannabis Management on Friday released new guidance for retail adult-use cannabis dispensaries, only weeks before the state’s newly legal recreational marijuana market is expected to launch later this year. New York legislators legalized marijuana last year through the passage the Marihuana Regulation and Taxation Act. Regulated sales of recreational cannabis are expected to start by 2022.

Regulators began accepting applications for adult-use cannabis dispensaries this summer with a program that sets aside the state’s initial recreational marijuana retailer licenses for those with past convictions for cannabis-related crimes. Last week’s guidelines are intended to aid potential cannabis retailers with their business development and operations plans.

“This guidance document serves to provide the framework that will assist Conditional Adult-Use Retail Dispensary licensees plan for how to operate their dispensary before regulations are formally adopted,” the Office of Cannabis Management (OCM) wrote in the 27-page document released on Friday.

New rules provide guidelines on matters such as cannabis dispensary recordkeeping, employee training requirements, and inventory management. Adult-use dispensaries must source products from only regulated distributors. The regulations also specify the types of merchandise that can be sold. This document includes guidelines for selling cannabis via drive-thru, in-store and delivery channels. 

Dispensaries should be kept at least 500 feet of schools and no more than 200 feet from churches or houses of worship. The guidance is intended to guide adult-use marijuana retailers while complete regulations and postings online are made.

“Compliance with any current and future state rules, regulations, and laws is required by all licensees to remain in good standing with the Office,” the OCM wrote in the introduction to the guidelines. “This guidance document provides clarity on what the Office’s expectations are in relation to those regulations and laws currently in place and the regulations that will be promulgated in the future.”

MSOs are not allowed to operate in New York City according to the Guidelines

After reviewing New York’s guidance for adult-use cannabis dispensaries, Kaelan Castetter, managing director of the consulting firm Castetter Cannabis Group, told local media that the OCM’s initial rules seem relatively standard for the industry. He said that one part of the OCM’s new rules might pose problems to the industry. 

According to the new guidelines, the “true parties of interest” behind dispensaries including owners, passive investors, and service providers are prohibited from having an interest in any business that is licensed to cultivate, process, or distribute cannabis in New York or any other state. Multistate operators, commonly referred to by the MSOs or other vertically integrated cannabis businesses are now prohibited from operating in New York.

“I see what they’re trying to do, but it’s a very protectionist approach,” Castetter said. “What it basically says is: if you are in business in any other state – unless you only own a dispensary in another state – you can’t be part, in any way shape or form, a retailer here … it’s very anti-MSO.”

Earlier this month, New York Governor Kathy Hochul confirmed that the state’s first regulated recreational cannabis dispensaries will open this year, with nearly two dozen shops opening by the end of December. In an interview with the Advance Media New York editorial board on October 5, Hochul said the state’s plan to have 20 conditional adult-use retail dispensaries open by the end of 2022 is “still on track” and that “another 20” retailers would open about every month after that.

Hochul noted that New York’s plan to regulate recreational cannabis includes social equity provisions designed to ensure that those harmed by decades of cannabis prohibition have a path to ownership in the regulated marijuana industry. Under the state’s regulations, the initial 100 licenses for adult-use cannabis retailers will be awarded to applicants who have past convictions for marijuana-related offenses.

“We’re going to make sure that this is a model for the rest of the nation – especially with our desire to make sure that people who’ve been affected by the criminal justice system adversely … have the opportunity to work in this area,” Hochul said.