Proposal: Microbusiness License Reform

A Policy Recommendation for NYS OCM

Policy Demand

The New York State Office of Cannabis Management (OCM) must distinguish microbusiness licenses from retail licenses to ensure fair regulatory treatment and economic opportunity for small businesses.

Background

A recent New York State court ruling has led to an injunction affecting both microbusiness and retail licenses, creating uncertainty and limiting opportunities for microbusiness owners. Given that microbusiness licenses primarily function as cultivation licenses, they should not be subjected to the same restrictions as retail licenses.

Key Considerations

1. Microbusiness Licenses Are Distinct from Retail Licenses

Under OCM Regulation § 123.11(a), a microbusiness license is primarily a cultivation license, with retail operations being optional. The regulation explicitly states:

“A microbusiness shall engage in cultivation and at least one of the following additional activities authorized by the Cannabis Law: (1) processing; (2) distribution; or (3) retail sale.”

Additionally, OCM Regulation § 123.11(b) outlines several revenue-generating business-to-business (B2B) activities for microbusinesses that are not retail-focused, including:

  • Selling cannabis to a processor
  • Selling cannabis products to a distributor
  • Sending cannabis products to a processor for refinement while maintaining ownership
  • Operating a consumption facility

Microbusinesses should therefore be regulated separately from retail businesses to ensure fair treatment and operational flexibility.

2. Microbusinesses Promote Social and Economic Equity

The Marijuana Regulation and Taxation Act (MRTA) § 73(3) mandates that microbusiness licenses be structured to promote social and economic equity. The legislation states:

“The granting of such licenses shall promote social and economic equity applicants as provided for in this chapter.”

However, despite this mandate, the majority of licenses have been awarded to the AUCC cohort, which does not necessarily align with the social equity priorities outlined in the MRTA. This raises concerns about whether the state remains committed to its social equity mission.

3. Microbusinesses Drive Innovation and Specialization

Microbusinesses are essential to fostering product innovation in New York’s cannabis industry. Unlike large-scale producers, microbusinesses are not limited to mass-market products (e.g., smokable flower, vapes, and gummies). Instead, they create space for specialized, high-quality, and artisanal cannabis offerings, promoting diversity and differentiation within the market.

4. Opening the December Queue Supports CDI Applicants

Applicants from Communities Disproportionately Impacted (CDI) by the war on drugs predominantly applied during the December Queue. Allowing these applications to proceed is crucial for restoring economic opportunities to historically marginalized communities.

Moreover, CDI applicants bring unique talent, expertise, and lived experience to the cannabis industry, strengthening its foundation while ensuring that the benefits of legalization reach those most affected by past criminalization.