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Secure Your New York Cannabis
Cannabis legalization continues to sweep across the East Coast as New York State lawmakers reached a deal with Governor Andrew Cuomo on Wednesday, March 31, 2021, to legalize recreational cannabis for adults 21 years and older. New York will join Massachusetts and New Jersey as east-coast states with full legalization measures in place. Now, an estimated 56 million residents in the northeast are free from cannabis prohibition. Senate Bill S854A and A1248 will permit recreational cannabis sales to adults over the age of 21, set up a licensing process for the delivery of cannabis products to customers, and would also permit “lounges” or consumption sites. Under this Bill, adult residents of New York will be allowed to possess up to 3 ounces of cannabis or 24 grams of concentrate and cultivate up to three mature and three immature plants for personal consumption. Although adults can now legally possess and consume cannabis, retail dispensaries are not expected to open until 2022, at the earliest. First, the state must establish its new regulatory agency, the Office of Cannabis Management, and its licensing structure. Based on the historical progress of other states, this is generally a 12-18 month process. The Office of Cannabis Management will be composed of five members appointed by the governor, one selected by the State Assembly, and another by the Senate.
As a way of righting wrongs, the legislation also calls for the automatic expungement of records for people with previous cannabis convictions for activities no longer criminalized. Persons previously convicted of possessing three ounces or less will be subject to expungement and re-sentencing. “Passage of this bill will mean not just legalizing marijuana, but also investing in education and our communities, and it brings to an end decades of targeting people of color under state and federal drug laws. This legal industry will create jobs across our state, including for those who have had their lives upended by years of unjust drug laws,” said Assembly Speaker Carl Heastie.
In addition to legalizing recreational cannabis for adult use, the new law will further develop the existing medical cannabis program by expanding the list of qualifying medical conditions and the permission of new product options. For example, flower products, which were previously not allowed under New York’s medical program, may be permitted under the new expansion. This marks a monumental change for the program as flower and pre-roll sales account for nearly 70% of cannabis sales across the US as raw-flower is the preferred method of consumption.
Recreational cannabis sales will be subject to a 13 percent total sales tax in New York, combining a state tax of 9 percent and a local tax of 4 percent. Of the 9 percent state sales tax, 40 percent would go to communities of color most harmed by the war on drugs, 40 percent would go to education, and the remainder would go to anti-addiction efforts. Additionally, local governments and municipalities will have the option to opt out of retail sales. But should they? According to the New York State Governors office, recreational cannabis sales are expected to reach $3.5B per year, raising $350 million in annual revenue and creating an estimated 60,000 new jobs. Colorado, the nation’s most mature cannabis market, brought in $2B in recreational sales in 2020 and was outpaced only by California at $4.4B. New York is the 16th state in the Union to legalize adult-use cannabis. However, it is only the fourth state to have passed legalization efforts through the Legislature. Previously only Illinois, Vermont, and Virginia have accomplished this. This year, several other states, including New Mexico, Connecticut, and Rhode Island, are also looking to pass adult-use bills through the legislative process. With additional states considering medical cannabis programs and others looking to expand into recreational cannabis, there is more pressure than ever for the federal government to ease federal restrictions on cannabis. Recent Gallup Polls from the Fall of 2020 show that more than 2/3 of Americans believe that cannabis should be made legal.
The Office of Cannabis Management will ultimately determine the specific details of the program, including the types of products allowed advertising and marketing rules, packaging and labeling rules, the number of licenses allowed, the application and licensing process, and the implementation of a social equity program. Applicants can pursue licenses for both cultivation and processing, distribution, or retail, but are NOT permitted to be vertically integrated. Retail licensees may not have direct or indirect ownership in more than three retail locations, which is a somewhat unique approach to the legal cannabis market. The only other states that prohibit or limit vertical integration include California, Washington, and Illinois. This regulatory structure closely models traditional alcohol distribution models. Although there is no timeline in place regarding when applications will become available or any indication of how many licenses will be available, you can expect the licensing process to be very competitive. With a multi-billion-dollar industry up for grabs, licensees can anticipate a highly aggressive market that will require operators to differentiate themselves. Don’t get left behind! Start planning and developing a cohesive business and financial plan now.
If you’re interested in pursuing a cannabis business in New York, partnering with a team of experienced industry veterans can help navigate your company to success. Contact us today to learn how Catalyst-BC can help your company succeed in New York’s cannabis industry.
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- Open a Cannabis Consumption Lounge in New Jersey: Getting Started Guide
New Jersey’s adult-use law allows “cannabis consumption areas,” but only as an endorsement to existing licenses. The Cannabis Regulatory Commission (CRC) decided not to create a new license class; instead, licensed Class 5 retailers (or permitted medical dispensaries) can apply for a Consumption Area Endorsement to their facility. This means only approved dispensaries (currently still coming online in NJ) can add a 21+ onsite use room. Applications for consumption area endorsements opened in January 2025. - Open a Cannabis Lounge in New Mexico: Licensing & Compliance Guide
New Mexico’s Cannabis Regulation Act (2021) explicitly authorizes On-Site Consumption Area licenses (often called “consumption lounge” permits) under the NM Cannabis Control Division (CCD). The CCD issues two types of permits: Type I (non-smoking, edibles/vapor) and Type II (smoking allowed). A consumption area license lets a venue legally serve non-infused snacks/beverages and allow consumption of cannabis products by patrons age 21+. These can be standalone lounges or add-ons to other licensees (e.g. a dispensary or restaurant that obtains a consumption license). - New York Cannabis Lounge License: Guide to Compliance and Success
New York State law provides for adult-use on-site consumption licenses under the Office of Cannabis Management (OCM). As of 2025, New York is still in the early stages of issuing these licenses; only a handful of trial licenses have been granted. The Cannabis Law caps investment (no person can hold more than 3 consumption licenses) and prohibits vertical integration: lounge licensees cannot also hold dispensary, cultivation, or processor licenses. This was done to ensure lounges operate solely as consumption venues, not as sales outlets. Learn how to navigate the rules to successfully apply for your lounge license. - U.S. Virgin Islands Cannabis Consumption Lounge Getting Started Guide
The U.S. Virgin Islands legalized adult-use cannabis in 2023, and its regulators have explicitly created consumption lounge permits. Under the Virgin Islands Cannabis Regulatory Advisory Board’s rules (approved April 2024), a qualified operator can obtain an Adult-Use Lounge Permit. This permit allows on-site cannabis consumption by adults 21+ in a designated area. Unlike many states, the USVI permits both smoking and non-smoking lounges, provided you choose the correct permit type. - Nevada Cannabis Lounge License Guide: What You Need to Know
Nevada has enthusiastically embraced consumption lounges. In 2021, Governor Sisolak signed AB 341 authorizing the Nevada Cannabis Compliance Board (CCB) to license cannabis consumption lounges. After extensive stakeholder work, the CCB approved final regulations in late 2023. Lounges are split into two types: Retail Lounges (operated by licensed dispensaries or microbusinesses) and Independent Lounges (standalone sites). - Are Missouri Cannabis Lounges Legal? Here’s What Entrepreneurs Need to Know
Missouri’s adult-use legalization (Amendment 3, 2022) did not establish any state license for cannabis lounges. Consequently, there is no state-regulated consumption lounge for recreational cannabis at this time. Instead, an underground network of private, membership-only clubs has emerged.
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