Pre-qualification, first day of sales and more: ‘Ask me anything’ about NY cannabis with Jeffrey Hoffman
Jeffrey Hoffman is a New York-based attorney who hosts “Ask Me Anything About Cannabis Legalization in New York” every week on LinkedIn. Hoffman and NY Cannabis Insider have partnered to bring those sessions to the press in a Q&A format.
Hoffman’s practice focuses on cannabis industry clients, including licensees in the adult use market, practitioners in the medical cannabis space, and providers of cannabis-adjacent products and services. It has a special interest in social and economic equity cannabis license applicants, and also informs and assists those convicted of cannabis offenses to have these convictions expunged from their records. He can be reached at [email protected]
The following AMA from January 4th has been edited for length and clarity. Hoffman’s next AMA is Jan. 11 at 4:20 p.m
Can you explain the idea of prequalification?
When I explain what is meant by pre-qualification – and I would encourage you not to just take my explanation of it, it was a great article, I think in NY Cannabis Insider. But the idea is rather than doing or waiting until OCM is ready to go live with the full application, which they can’t do, until we’ve gone through the regulatory review period – which we’re currently in a comment period of 60 days. , we will be done with this and at the beginning to the middle of February; and then the Office of Cannabis Management must decide whether or not to make any changes. And if they do — which I predict they will — it will be another 45-day period after they republish all the changes to the regulations, after however long it takes them to decide if they’re making changes and if they make those changes. .
So we have that whole time frame before OCM can open the application, the normal application. What you can do in a prequalification is start to gather information from individuals, figure out who your equity applicants are going to be versus your non-equity applicants. As we know here in New York, equity applicants will most likely have their applications reviewed first, and there will be all kinds of benefits that equity applicants will receive.
One of the things they could do is get a pre-qualification for equity applicants. One of the ways you will be able to qualify as an equity applicant is by submitting your New York State Minority and Women-Owned Business Certificate. This is definitely proof that you are a minority or women-owned business, which is one of the qualifying classes to be a capital applicant. So they can move forward on that step. And prequalify people and say, Yes, you’re an equity applicant, or no, you’re not an equity applicant.
I think one of the biggest complaints OCM gets is that they are moving too slowly. This is definitely the number one complaint most lawyers get from their clients is that they don’t react or move fast enough on their case – it’s always the biggest complaint with the government. As humans, if there’s one thing we excel at, it’s complaining, we’re great at it. I know, I’m great at it. So I have no doubt that everyone else on planet Earth is good at it, and that’s all we often do is complain. So I encourage people to do more than complain and, and actually participate here and make comments about the rules and and let OCM know if you think they should do prequalification here.
What was the first day of legal adult cannabis sales like in New York?
It was amazing, wasn’t it? It was absolutely incredible. We were down there at Eighth and Broadway, south of Union Square. I was very lucky to be invited to the press conference which took place at 10am, before the store opened. I have some videos of it on my LinkedIn feed if you want to take a look.
The event was just incredible to meet all the people and see, I understand what everyone has to say – and some of you have been extremely negative about OCM and the people who work there. I don’t share your negativity there, but I respect your opinion. I think the people at OCM are overworked. They are building the plane as fast as they can while they are flying it. I understand that their staff is about 130 to 140 people; that’s not nearly enough to do what they need to do – not even close. So I hope they will continue to hire strongly.
But look, again, I get that people who weren’t psyched about what happened last week are going to say, ‘Well, you know, they pushed it and it was a show and it didn’t do what it was supposed to do.’ I disagree with all those comments.
How often does anyone in government do what they say they will do? I got – somewhat wrongly – the governor was allowed to say that 20 stores would be opened. I think it unfortunately came from a comment by a board member at an event. And I think that was wrong when the board member said that, and unfortunately, the governor or someone on her staff acknowledged that. And then the governor made that comment. This was unfortunate. At no point was a larger comment made by OCM. OCM’s position all along has been that we will have the first sale of adult-use cannabis before the end of 2022.
Complain all you want about this data, and it was rushed, and we don’t like the way they did it and everything; complain as much as you want again. I am a wonderful complainer. We are all wonderful complainers. It’s your right, keep doing it. But then again, how often does the government do what they say they will do? And it’s generally never right. I tend to be surprised when the government does what it says it will do. Just look at the dysfunction in the House of Representatives right now.
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But OCM said they would have the first sale of adult-use cannabis by the end of ’22, and they did, so hallelujah and kudos to them for doing what they said they were going to do. In my book, the most important thing in a startup—and I’ve been involved in a lot of startups—the most important metric for you as a successful entrepreneur is whether or not you execute.
The event was amazing. I’ve met thousands of people I’ve only known virtually in person. So that was amazing. I need to meet the people that Housing works for. And they clearly care about what they are doing. Great people, they’re hopefully going to be doing some things with some other organizations that I’m involved in, we’ll be announcing that here in the not-too-distant future, I hope; so stay tuned for that.
It was incredible, the line went up the block to Astor and then all the way back to Lafayette again to Eighth and all the way back down to Eighth to Broadway.
So kudos to OCM, kudos to Housing Works and keep executing in 2023. I know it’s going to be challenging and I know there are going to be places and times where OCM doesn’t make the grade, they’re not going to execute at the level that they want, or the rest of us want. And you know, we’re going to be there to encourage them and help them when we can to get this regulated market up and running.
For licensed CBD shops, do you think OCM will regulate the purchase limits as a distributor for products containing Delta-9 THC?
Who knows? I think it’s entirely possible that they’ll make all CBD-derived THC products unsellable in dispensaries. We already know Delta-8 and some of the others are; I think it’s entirely possible to do the same with Delta-9. So we’ll just have to see what they do.
If they do, then I think they will adjust the purchase limits making the purchase limit zero. If not, I don’t know what they will do with it. It’s definitely not straight CBD. It definitely has more intoxicating effects to it, that’s why people are interested in it and are buying it. If I had to bet, I think they will say that dispensaries cannot sell Delta-9 products, so they will adjust the purchase limit and the purchase limit will be zero. But again, I don’t have any baseball inside for that. So we’ll have to see what happens.
Any updates on the Michigan class action lawsuit that affects retail licensing?
There are five regions in New York State that are required to issue cannabis licenses, if I remember correctly, they are Western New York, Central New York, Hudson Valley, Finger Lakes and Brooklyn. These are the five regions where you are not allowed to issue cannabis licenses.
The update is that the state has appealed. I think we already have a big Court of Appeals opinion in the First Circuit saying that the Dormant Commerce Clause is alive and well in Maine. And as a result of that decision, no other state in the First Circuit can enforce any protectionist legislation or any kind of legislation within their state that is discriminatory when it comes to interstate commerce and people living in other states, very clearly from First Circuit that this is alive.
It makes sense to try to get the judge in the District Court to limit the decision to just one of these five regions. OCM has made it very clear that no one CAURD applicant can get any region other than their first region. The OCM told the judge, ‘hey, judge, nobody can get anything but their first choice. So there’s no way the guys in Michigan can get anything other than their first pick, so let’s limit the order to just their first pick.’ Their first choice was the Finger Lakes and although Jason and Brittany up there and the Finger Lakes, we love you guys and we want you to get a cannabis license. We think it would be wise for the judge to limit it to the Finger Lakes, right, let’s go ahead and issue the licenses and the other four regions. And I would also ask the Second Circuit, I mean, I understand they’re not going to move any faster than they would otherwise, because I want them or somebody else wants them. But please second circuit, let’s decide on these things boldly. So we can move here, right, we’re really harmful. Many people who applied for CAURD licenses here in New York without letting them know what the status is and without letting them go ahead with what they are going to do. So that’s really the status.