BILL NUMBER: S9679A

SPONSOR: HINCHEY
 
TITLE OF BILL:

An act to amend the cannabis law, in relation to authorizing a cannabis
showcase event permit

 
PURPOSE:

The purpose of this bill is to provide the NYS Office of Cannabis
Management with the authority to draft new regulations that will update
and improve upon the governing structure of the successful Cannabis
Growers Showcase program, which automatically sunset on January 1, 2024.

 
SUMMARY OF PROVISIONS:

Section 1: The cannabis law is amended by adding a new section 130-a.

Section 130-a 1. has been added to clarify what constitutes a "cannabis
event" as it relates to future permits.

              

Section 130-a 2. has been added requiring permit applicants be licensed
retailers, as the only individuals who can organize the cannabis events.
It also allows the applicant to identify license holders from the supply
tier who may wish to participate with the event to "showcase" or provide
education about their own cannabis products.

Section 130-a 3. has been added to authorize approved permit holders
(licensed retailers) to sell cannabis products at the approved cannabis
event. It also authorizes supply tier licensees to "showcase" their
cannabis products at the approved cannabis event.

Section 130-a 4. has been added to require separate, new permits for
each cannabis event being held.

Section 130-a 5. has been added to clarify that a cannabis event permit
cannot be used for multiple or different events; one permit per cannabis
event. This section also authorizes permit holders to participate in
numerous, simultaneous cannabis events, so long as each event has its
own, separate permit.

Section 130-a 6. has been added to limit the duration that a temporary
cannabis event can operate, enforcing the "temporary" nature of the sale
of cannabis at the approved event or location.

Section 130-a 7. has been added to require permit fees covering the
costs of reviewing and processing applications.

Section 130-a 8. has been added to provide clear and concise, mandated
inventory and sales reporting that, with fees, fines, and penalties for
violations to provide transparency in tracking and tracing of all canna-
bis products.

Section 130-a 9. has been added to require that the Cannabis Control
Board promulgate regulations in accordance with the State Administrative
Procedure Act (SAPA) to govern the cannabis events permits.

Section 2: Established the effective date.
 
JUSTIFICATION:

The Office of Cannabis Management's Cannabis Growers Showcase (CGS)
program was created in 2023 to aid cannabis cultivators who had been
struggling with the lack of legal markets for their products.  Thousands
of pounds of unsold cannabis products resulted from litigation-related
and other delays that enjoined the State from issuing retail dispensary
licenses and prevented the opening of new dispensaries where the canna-
bis could be sold.

The CGS program was a novel way to partner cultivators with dispensary
licensees, so that they could educate the market about their offerings,
sell their product, generate much needed income, and provide legal
access to consumers who were too distant to legal dispensaries or who
didn't want to purchase their cannabis from illicit sources. As an
experimental policy, the. CGS program was designed to sunset on January
1, 2024, to allow the Office to review the program's successes, analyze
issues and challenges, and use the lessons learned to inform the devel-
opment of future event authorizations.

By all accounts, the program was a success, bringing cultivators,
processors, and retail licensees together in a way where they could
directly interact with and educate consumers, build brand recognition,
and orient consumers to the legal market's offerings. In all, the
program approved 60 CGSs; 75 AUCCs, 19 AUCPs, and 12 CAURDs for a total
of 106 licensees participating. Local municipalities also played a major
role in approving and assisting operators in setting up the Showcases,
and there were no reports of problems in any of the localities where a
CGS was held, ensuring that all stakeholders, including local law
enforcement and State and local elected officials, saw the Showcases as
a success and liked that they kept patrons out of the illegal shops.

To establish a successful program that builds on the successes of the
Showcases, the Office will need to draft and present to the public a
full set of regulations that would establish clear and concise guide-
posts to protect the cannabis market and the public, create a stream-
lined processes for application submission, review, and approval, estab-
lish clear mechanisms for compliance enforcement, and ensure that all
cannabis products, and tax revenues will be accounted for. At the Decem-
ber 8, 2023, Cannabis Control Board meeting, the OCM committed to
releasing a new set of regulations to cover an updated version of the
Showcases.

To maintain the required separation of the two tiers of the cannabis
market only retailers who are licensed to sell cannabis products will be
allowed to apply for permits. The permit applicant will be allowed to
identify license holders from the supply tier who may wish to partic-
ipate with the event to "showcase" or provide education about their
cannabis products. Other rules will limit the duration that a temporary
cannabis event can operate, enforcing the "temporary" nature of the sale
of cannabis at the approved event or location and preventing the permit-
tee from presenting the event as a permanent or pop-up location to the
public and from gaining unfair market advantage by operating and/or
advertising an event as if it were an additional permanent licensed
location. Permit fees have been added to cover the cost incurred by the
Office for resources required to review and process the application.
Finally, to protect the health and safety of the public, inventory and
sales reporting mandates will provide transparency in tracking and trac-
ing in case any cannabis products are involved in a product recall or
quarantine. Strong compliance and reporting requirements will be essen-
tial to protect the public's health and safety.

 
LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS:

This legislation may provide additional tax revenue for the State and
local governments as it will provide additional sales opportunities for
cannabis growers to sell their products.

 
EFFECTIVE DATE:
This act shall take effect immediately.