How To Open a Legal Dispensary In New York

New York’s legalization of adult-use cannabis has been a long time coming. But the state’s new laws are still in flux, and as a result, it can be difficult to know what you must do if you want to open shop and legally sell recreational weed. As of early 2019, the use of recreational marijuana has been legal in the state of New York. This means that people can power plant smoke in New York without worrying about getting in trouble with the law. However, there are still some restrictions on where people can smoke weed.

Fortunately, there are some things you should already have on your radar if you are considering opening a dispensary or growing operation in New York State.

1. Know what licenses are required for dispensaries

In order to legally sell recreational marijuana in New York, an individual needs to obtain one of several license types from the Department of Health (DOH). The DOH licenses include Retail Marijuana License, Medical Marijuana Center Operator License, and Marijuana Establishment License. You’ll need to get at least one type of license to operate in New York.

The Retail Marijuana License is for those who plan to sell retail marijuana products directly to consumers. This is considered “retail” because it doesn’t require any kind of medical certification, such as one would need with the Medical Marijuana Center Operator License.

The Medical Marijuana Center Operator License is for individuals who wish to operate a business that sells medical marijuana products to patients. As opposed to the Retail Marijuana License, this type of license requires that the applicant complete a physical exam and provide documentation to prove that they have a qualifying condition under New York law. Additionally, applicants must also pass a criminal background check and submit a financial statement demonstrating their ability to pay taxes as well as maintain a bank account in good standing.

For those looking to grow medical marijuana, the Marijuana Establishment License is needed for cultivation facilities. This license allows individuals to grow plants for medical purposes, but only on a small scale. It may not be enough to meet demand in the state. However, it does allow growers to cultivate plants without facing strict limits on how much they can produce per year.

2. Apply for a permit before you begin construction

If you are planning to open a dispensary, you’ll need to apply for a permit from the DOH prior to starting construction. A permit application will cost $500, although you can pay by credit card.

3. Make sure you have the proper insurance

Just like other businesses, you’ll need adequate liability insurance to protect yourself and your customers (and employees) in case something goes wrong. If you plan to do business in a brick-and-mortar location, you’ll likely want property insurance that covers both the building and its contents, including inventory items and equipment. If you plan to use a delivery service, you’ll also need general liability insurance.

You should also consider purchasing workers’ compensation insurance, which provides coverage for injuries suffered by your employees while they are performing services for you. You could choose to self-insure or purchase an optional third party insurance policy.

Finally, you might want to consider getting professional liability insurance, which protects you against claims made by third parties, such as customers and contractors. These kinds of claims are typically due to negligence, so they tend to be less costly than personal injury claims.

4. Get your employees insured

Employee health insurance is another important consideration when operating a business, especially if you plan to hire people. Employees are protected under the federal Affordable Care Act, but there are no similar protections available to independent contractors, meaning that they may be left unprotected in many cases.

If you don’t offer employee benefits, however, you will have to take responsibility for covering uninsured employees’ medical bills. For example, if you were to become sick during normal working hours, you would be responsible for paying all of your workers’ compensation premiums.

5. Consider hiring an attorney

While you are busy preparing your application for a license, you may also want to seek advice from an experienced cannabis lawyer. In addition to having a solid understanding of your own rights and obligations, such an attorney can help you ensure that you are meeting all of the requirements for obtaining a license and operating a successful dispensary.

A qualified attorney can take care of everything from drafting contracts and providing guidance on compliance issues to ensuring that your business complies with local zoning ordinances. They can also advise you on whether it makes sense to partner with outside vendors, such as transportation companies and delivery services.

6. Be ready to comply with local regulations

When you start applying for your licenses, you’ll need to familiarize yourself with the rules and regulations governing cannabis dispensaries. Local municipalities across the state have different licensing procedures, so it’s best to work with an attorney who specializes in cannabis law to make sure you are following the correct steps.

Some cities require that dispensaries be located within a certain distance of schools or hospitals. Others impose restrictions on where dispensaries can be placed and whether they can be operated inside or outside buildings. Even though these policies often make sense, you may find that some communities opt out of allowing dispensaries altogether.

7. Prepare for potential conflicts with local authorities

As noted above, each municipality sets its own rules regarding dispensaries, so you’ll probably encounter regulations that differ from city to city. And even if your community allows dispensaries, you should still prepare yourself for potential conflict with local officials. Some municipalities have enacted moratoriums or bans on dispensaries until further notice.

It may be necessary to negotiate with local officials on whether they are willing to grant you a temporary permit to open a dispensary or grow facility. If they are unwilling to budge, you may want to look into bringing your business elsewhere.

8. Understand the risks involved in opening a dispensary

Even if you follow all of the guidelines listed above and receive a license to operate a dispensary, you may still face significant obstacles if you choose to go forward. One risk is that the police may shut down your establishment based on complaints about your operation. Another possibility is that you may be charged with a crime after someone brings a complaint to the attention of prosecutors.

Some cities have adopted so-called “zero tolerance” policies, whereby anyone caught selling marijuana to a minor or possessing more than 25 grams or five plants is automatically arrested. Other cities have passed ordinances banning dispensaries outright, regardless of whether they are being run by authorized operators.