As always, we\u2019re open to any feedback, story ideas, criticisms, etc., at cannabis@nyup.com<\/a>, by phone at 315-282-8576, or on our social media channels:<\/p>\n An attendee of a Republican news conference about the introduction of a cannabis reform bill wears marijuana themed socks, Monday, Nov. 15, 2021, on Capitol Hill in Washington. (AP Photo\/Jacquelyn Martin)<\/p>\n<\/div>\n<\/div>\n by Brad Racino, NY Cannabis Insider | @bradracino<\/a><\/p>\n When New York\u2019s cannabis office released draft rules<\/a> earlier this month reserving the first wave of marijuana<\/a> dispensary licenses for those most affected by the War on Drugs, politicians and progressives alike praised the state for its bold move.<\/p>\n \u201cOffering the first retail licenses to people who have been convicted of marijuana-related offenses is a big step in the right direction,\u201d said State Sen. Liz Krueger, \u201cand will set the marketplace on a path where social equity applicants can compete successfully.\u201d<\/p>\n Yet attorneys, business owners, and other industry experts told NY Cannabis Insider that the proposed regulations need a lot of work, and as currently written, don\u2019t welcome into the fold the very people the state aims to uplift.<\/p>\n \u201cI think that they have succumbed to the pressure of \u2018go, go, go,\u2019 instead of \u2018take the time and get it right,\u2019\u201d said Ruben Lindo, the founder<\/a> of BlakMar Farms and a former director of the Hudson Valley Cannabis Industry Association<\/a>.<\/p>\n \u201cThis is the result of giving a baby that\u2019s been screaming for 40 days a pacifier,\u201d he said. \u201cMeanwhile, the baby\u2019s starving \u2014 a pacifier is not going to do.\u201d<\/p>\n NY Cannabis Insider forwarded many of the experts\u2019 concerns to Freeman Klopott, the spokesperson for the Office of Cannabis Management. Klopott responded:<\/p>\n \u201dWe\u2019re thrilled to hear the ideas and response from New Yorkers about the regulations we proposed earlier this month and look forward to an ongoing dialogue when they post on the state registry for a 60-day public comment period, which is expected to occur March 30.\u201d<\/p>\n He continued, \u201cStill, we\u2019d remind everyone that this is just a start as we\u2019re working on regulations for the entire market and building support across all license types to ensure equity applicants have every opportunity to not only obtain a license, but also build businesses that succeed over the long-term.\u201d<\/p>\n Experts interviewed acknowledged the unique challenge facing the state: Developing a first-of-its-kind program that addresses the disparate impact overenforcement has had on Black and brown populations while also setting up for success a complex ecosystem that is influenced by a variety of stakeholders \u2014 political, corporate and legacy, to name a few.<\/p>\n However, all those interviewed \u2014 six cannabis attorneys, a legacy operator, a consultant, and a business leader and advocate \u2014 want to see the state address their concerns with the draft regulations as soon as possible.<\/p>\n Some believe it\u2019s essential to save an industry that has barely begun.<\/p>\n \u201cIf we get it right, the world is watching us,\u201d Lindo said.<\/p>\n \u201cIf we don\u2019t get it right, it\u2019s a failed, flawed program and it will never, ever, ever take shape.\u201d<\/p>\n A new class<\/b><\/p>\n Front and center in the state\u2019s proposed rules for conditional retail licensing is priority for \u201cjustice involved\u201d individuals or businesses, roughly summarized as someone formerly convicted (not arrested) of a marijuana-related offense, or someone with a direct relationship to that type of person.<\/p>\n However, the voluminous Marijuana Regulation and Taxation Act<\/a> passed last year makes no mention of this applicant pool.<\/p>\n Therefore, the state\u2019s recent actions may create a new license class \u2014 one reserved for a narrowly defined subset of people \u2014 and open the door to potential lawsuits.<\/p>\n \u201cThis is going to be ripe for litigation, I fear,\u201d said Dave Holland<\/a>, an experienced cannabis attorney, president of the New York City Cannabis Industry Association<\/a> and executive director of Empire State NORML<\/a>.<\/p>\n Glass containers bearing the logo for the National Organization for the Reform of Marijuana Laws are displayed at the Cannabis World Congress and Business Exposition, Friday, June 17, 2016 in New York. (AP Photo\/Ezra Kaplan).<\/p>\n<\/div>\n<\/div>\n If the goal of prioritizing people under conditional licenses is to make sure smaller players have a competitive opportunity in a market that will include multistate operators and big money, Holland said, these new rules define specific individuals who \u201cmay not be the people that were envisioned to do that under the MRTA.\u201d<\/p>\n Holland and his organizations played an active role in drafting policy recommendations and lobbying for the MRTA, and he said he respects and is friendly with several of the people who are responsible for crafting the new regulations.<\/p>\n However, he said, \u201cthere\u2019s a lot that I cannot wrap my head around.\u201d<\/p>\n Jeff Schultz<\/a>, a partner at Feuerstein Kulick<\/a> who advises cannabis industry operators, agreed with Holland that some lawyer is likely to sue over the rules as currently written.<\/p>\n But, he added, \u201cAnybody who is litigating the legality of this licensing round for the sake of slowing things down, I wish those people the worst of luck, because this program needs to get off the ground immediately.\u201d<\/p>\n Despite their concerns over the state\u2019s proposed rules, both attorneys said they appreciate the magnitude of the work ahead for the Office of Cannabis Management and Cannabis Control Board, and both made it a point during their interviews to express the admiration they have for the state\u2019s efforts.<\/p>\n Chris Alexander, then policy coordinator for Drug Policy Alliance, who is now New York’s Office of Cannabis Management’s executive director, speaks as advocates urge New York state legislators to support the Marijuana Regulation and Taxation Act at the state Capitol, May 8, 2018, in Albany, N.Y. (AP Photo\/Hans Pennink, File)<\/p>\n<\/div>\n<\/div>\n \u201cThey are trailblazing in this industry with solutions for restorative justice that no one has applied yet,\u201d Schultz said, though he recognized that\u2019s also what makes the endeavor a double-edged sword.<\/p>\n \u201cWhile it\u2019s an amazing effort and task, it\u2019s also a monumental task,\u201d he said.<\/p>\n Discouraging legacy<\/b><\/p>\n Those interviewed are also concerned about the disclosures required for the first round of licensing: Ownership structures, organizational documents such as certificates of incorporation, documentation that the applicant will obtain insurance, the name of every financial institution linked to an applicant\u2019s business, and audited financials.<\/p>\n Both Holland and Schultz told NY Cannabis Insider that mandating that level of disclosure without offering some form of amnesty discourages the same legacy operators the state says it\u2019s hoping to incorporate.<\/p>\n For example, if during an audit \u2014 proof of which is required to apply \u2014 an accountant finds something amiss, \u201cit\u2019s disclosable to the IRS,\u201d Holland said.<\/p>\n \u201cSo, then you\u2019ve opened yourself up to various tax consequences,\u201d he said. \u201cThere\u2019s no way for them to disclose that without walking into a theoretical indictment.\u201d<\/p>\n Schultz strongly suspects the state is aware of this issue, but until the application comes out, \u201cit\u2019s unclear how applicants will walk the tightrope between disclosing their professional history and creating potential legal exposure for themselves,\u201d he said.<\/p>\n While including legacy operators among the first wave of applicants is not only equitable, experts said it\u2019s also a smart way to jumpstart the New York cannabis industry with proven and knowledgeable people.<\/p>\n Legacy operators have worked \u201cin a highly competitive marketplace under scrutiny, under penalty of life and liberty,\u201d said Lindo of BlakMar Farms, who is currently converting 40,000 square feet of a building in the Seneca Territory into a cannabis education and cultivation center.<\/p>\n Ruben Lindo is the founder of BlakMar Farms and a former director of the Hudson Valley Cannabis Industry Association. (Courtesy, Ruben Lindo).<\/p>\n<\/div>\n<\/div>\n \u201cAnd if they were successful in doing it under those circumstances, can you imagine how successful they will be when they\u2019re able to operate within the confines of a well-regulated industry that has an open and competitive marketplace that allows them to bring their brand, customers and knowledge into the marketplace?\u201d<\/p>\n Not welcoming them from the onset is, according to Lindo, a historically bad idea.<\/p>\n \u201cEvery time we leave the legacy market behind, they get organized, and they get stronger \u2014 it\u2019s happened in every single jurisdiction where cannabis has gone legal,\u201d he said, adding that he believes \u2014 like Holland and Schultz \u2014 that offering amnesty and \u201csafe harbor\u201d is the way to go, and will lead to more sophisticated products, delivery methods, \u201ceverything.\u201d<\/p>\n \u201cLet them come in with that knowledge and help bolster this industry,\u201d he said.<\/p>\n The language of criminal history<\/b><\/p>\n Since former Gov. Andrew Cuomo signed a bill<\/a> decriminalizing recreational marijuana possession in 2019, the state has removed from criminal search history results more than 300,000 convictions for low-level marijuana possession and sale, according to a spokesperson for the Division of Criminal Justice Services<\/a>. In addition, everyone in custody for solely a marijuana conviction has been released and has had those convictions expunged.<\/p>\n \u201cI can\u2019t front, they\u2019re doing a better job than most when it comes to that,\u201d said Charles Johnson<\/a>, an attorney and CEO of LeafSpotz<\/a>, a Black-owned B2B cannabis transportation and logistics software company in New York.<\/p>\n \u201cFor instance, in New Jersey, you\u2019re still seeing expungement clinics,\u201d he said. \u201cHere, it\u2019s supposed to be automatic.\u201d<\/p>\n In a way, the new conditional regulations piggyback on that progress: An applicant for a retail license must have been convicted of a marijuana-related offense in New York State prior to the March 2021 signing of the MRTA. Or they must have had a parent, legal guardian, child, spouse, or dependent who was convicted before that time.<\/p>\n In this Nov. 1, 2011 photo, Alfredo Carrasquillo, 27, a community organizer for Vocal-NY, which advocates for people with HIV, drug users and formerly incarcerated is photographed in New York. Every year prior to the 2019 decriminalization bill, the city arrested 50,000 people for having small amounts of marijuana, and Carrasquillo has been arrested numerous times for possession. (AP Photo\/Bebeto Matthews)<\/p>\n<\/div>\n<\/div>\n However, as several lawyers pointed out, a conviction is very different from an arrest, and neither the MRTA nor the new regulations address that discrepancy.<\/p>\n \u201cThat\u2019s another issue that I have a problem with,\u201d said Lauren Rudick<\/a>, the co-founder of Hiller, PC<\/a>\u2019s cannabis law practice. \u201cBecause an arrest can be just as destroying for someone\u2019s life as a conviction, depending on where they\u2019re from, and what the circumstances are.\u201d<\/p>\n \u201cAnd that should be fleshed out,\u201d she continued. \u201cAnd there should be a little bit of a call to action, because right now, we\u2019re rulemaking in New York, and people have the opportunity to put forth some testimony.\u201d<\/p>\n Also, what constitutes a marijuana-related offense? Tom Hughes<\/a>, a senior associate at Lippes Mathias<\/a>, said his firm has heard that question from a \u201ctremendous amount of people\u201d since the regulations were published.<\/p>\n Does a marijuana-related offense include offenses that have been reduced to something non-marijuana related, or non-convictions where people have had money or property confiscated in relation to the suspicion of marijuana-related activity?<\/p>\n \u201cAnyone who takes the time and effort to move forward with this is putting a significant amount of capital at risk to begin this process,\u201d said Hughes, a co-team leader of the firm\u2019s cannabis practice group.<\/p>\n \u201cAnd before they do that, it would be nice to have some additional clarification on exactly who the people are that qualify,\u201d he said. \u201cIt doesn\u2019t seem like it should be a vague term, but as we started to get all these questions, we realized that there is some specificity lacking, and some clarification certainly is needed.\u201d<\/p>\n \u201cThese proposed regulations, and the Seeding Opportunity Initiative that they advance, will open New York\u2019s adult-use market with farmers and social and economic equity entrepreneurs, not the big, out-of-state businesses that got a jump start in other states.\u201d<\/p>\n<\/div>\n Freeman Klopott, OCM spokesperson<\/p>\n<\/div>\n<\/div>\n Another question posed by legal experts interviewed: What about people with out-of-state arrests?<\/p>\n Shultz, the attorney with Feuerstein Kulick, said he interprets the new rules as disqualifying anyone with an out-of-state or federal conviction.<\/p>\n He told the story of one of his clients who lives in New York, who is beloved by his community, who spent over five years in prison, then emerged to become a very successful businessman. But his arrest and conviction were out of state.<\/p>\n \u201cI can\u2019t think of anybody more qualified than this person,\u201d Schultz said. \u201cThis is someone who literally owned a very profitable business, got arrested for a non-violent cannabis offense, spent time in prison, rehabilitated, is back out and running a successful company \u2014 and he doesn\u2019t qualify.\u201d<\/p>\n \u201cI don\u2019t know what the public policy is behind that,\u201d Schultz said, adding that he expects the issue to be raised during the regulations\u2019 60-day public comment period.<\/p>\n In general, the experts NY Cannabis Insider interviewed for this story remain optimistic about the future of New York\u2019s cannabis industry. They just want to get these concerns out in the open while there\u2019s still an opportunity to remedy them.<\/p>\n \u201cFor me, most of these issues \u2014 they require clarification,\u201d Schultz said.<\/p>\n \u201cI\u2019m not saying that they\u2019re wrong. They are just ambiguous.\u201d<\/p>\n \u2014 Lauren Rudick and Charles Johnson will speak about strategizing, pitching, and securing capital for cannabis businesses at our <\/i>upcoming conference<\/i><\/a> on March 31.<\/i><\/p>\n Tickets for our NY Cannabis Insider conference on March 31 are now available<\/a>! Hear expert guidance about financing your cannabusiness, sourcing and securing financial capital, understanding (and possibly changing) your area\u2019s opt-out status, and working with and respecting Native American cannabis operations.<\/p>\n Our stellar lineup of speakers includes:<\/p>\n Our virtual platform offers conference-goers the ability to network between panels, which is an excellent opportunity to connect with other industry professionals.<\/p>\n See our past speakers and topics<\/a> and purchase tickets to the March event here<\/a>.<\/p>\n While sponsorship for this event is sold out, we are now soliciting sponsors for <\/i>our<\/b><\/i> <\/i>May 20 in-person conference in the Capital Region<\/b><\/i>. Contact <\/i>Lindsay Marlenga<\/i><\/a>, senior marketing director, for more information.<\/i><\/p>\n A close-up photo of a hemp leaf at Main Street Farms in Cortland, N.Y. (N. Scott Trimble\/syracuse.com).<\/p>\n<\/div>\n<\/div>\n by Sean Teehan<\/b>, NY Cannabis Insider | @SeanPTeehan<\/a><\/p>\n As New York works to get its legal adult-use cannabis industry off the ground, advocates and businesspeople in the space are concerned with two controversial tax issues.<\/p>\n The first is a potency tax on businesses based on THC content, the second is an IRS code known as Section 280E<\/a>, which prevents cannabis businesses from writing off certain expenses.<\/p>\n Many in the industry think both measures are misguided, but tax experts interviewed by NY Cannabis Insider warn about the possible repercussions of repealing these policies.<\/p>\n New York\u2019s marijuana potency tax<\/b><\/p>\n New York\u2019s potency tax structure for the cannabis industry is a departure from earlier legal cannabis states like Massachusetts, but in line with Connecticut, which also plans to tax marijuana partially based on THC content.<\/p>\n New York\u2019s Marijuana Regulation and Taxation Act<\/a> taxes distributors:<\/p>\n That\u2019s in addition to a 9% sales tax and possible further municipal taxes.<\/p>\n \u201cI think that the THC potency tax has all negatives \u2014 I think it has no redeeming qualities,\u201d said tax attorney Jason Klimek<\/a>, co-leader of the Cannabis Team at law firm Barclay Damon<\/a>.<\/p>\n Klimek, who is also a member of the New York State Bar Association Committee on Cannabis Law<\/a>, told NY Cannabis Insider that a major problem with the potency tax is that it could drive New York\u2019s weed prices higher than those in other states.<\/p>\n He reasoned that since New York will have a sales tax in addition to the potency tax, the overall tax rate for flower cannabis could reach 30% \u2013 or possibly 55% for edibles \u2013 compared to Massachusetts\u2019 maximum 20% rate, which is tied to sales.<\/p>\n That could mean average retail prices of $70 per eighth of flower in New York, Klimek said, which is more expensive than legal weed in Massachusetts and about double the price that can be found on the illicit market, putting state licensed businesses \u201cat a competitive disadvantage.\u201d<\/p>\n Regulators may also struggle with people trying to game the system, Klimek said.<\/p>\n For example, the buds at the top of a cannabis plant<\/a> often contain more THC than those at the bottom. This could tempt some businesses to seek a lower tax rate by testing samples from the bottom \u2013 where the THC content is lower \u2013 while still selling a high THC product.<\/p>\n Aside from the possibility of inaccurate reporting, the government\u2019s laser-focus on THC could create a false impression to customers that the molecule is the only important metric to a user\u2019s experience, said Sally Nichols<\/a>, president of THC CBD for Bloom Farms<\/a>, a California-based company that sells hemp in 37 states including New York and cannabis in California.<\/p>\n \u201cOut of the gate, we will be educating New Yorkers that THC is the driver of their experience, and we all know that is not entirely true,\u201d said Nichols, who pointed out that cannabinoids like CBD and terpenes are important parts of user experience.<\/p>\n She added that she can\u2019t think of another consumer agricultural product that\u2019s taxed based solely on a single molecule, and that innovation around cannabinoids like THCV, THCA, relabeled Delta-9 THC and others could complicate the tax structure.<\/p>\n \u201cIf you\u2019re only going to look at THC and you\u2019re going to tax based on THC content, you\u2019re going to create an environment where only THC is valued,\u201d she said.<\/p>\n The tax could also put a squeeze on local cultivators, said Kaelan Castetter, founder of business consulting firm Castetter Cannabis Group<\/a> and co-founder of the New York Cannabis Growers and Processors Association<\/a>. That\u2019s because the potency tax will be imposed on distributors who will seek out lower prices to offset the burden, and large multistate operators are in a better financial position to offer lower prices than smaller cultivators only working in New York, Castetter said.<\/p>\n This problem could become more pronounced as the market matures, he added. Legal cannabis markets typically begin with high prices that recede as supply increases. Since the THC tax isn\u2019t tied to sales prices, cultivators will pay the same tax rates even as the price for which they\u2019re able to sell their goods falls.<\/p>\n \u201cReally, you\u2019re setting up cultivators to be in a position down the line where they\u2019re not able to eke out a profit, and the ones that will are the biggest ones,\u201d Castetter said.<\/p>\n However, not everyone thinks the potency tax is an altogether bad idea.<\/p>\n Lauren Rudick, co-founder of law firm Hiller, PC\u2019s<\/a> cannabis law practice, told NY Cannabis Insider that the tax could encourage innovation by incentivizing growers and sellers to offer products that are lower in THC but create a better user experience by balancing other cannabinoids and terpenes. It also presents an opportunity for the industry to better educate customers who may think THC levels are solely responsible for the experience a product induces.<\/p>\n \u201cI see this as a tremendous opportunity for people to become educated on the endocannabinoid system,\u201d Rudick said. \u201cI think it\u2019s going to spur some really unique product development.\u201d<\/p>\n Taxing based on THC potency also makes a lot of sense from the state government\u2019s perspective, said Ulrik Boesen<\/a>, director of excise tax policy at The Tax Foundation<\/a>, an independent tax policy nonprofit.<\/p>\n Since THC is one of the few commonalities between flower, concentrates and edibles, it seems logical to tax based on the molecule, Boesen said. Additionally, it\u2019s in the state\u2019s best interest to avoid pinning tax revenues to sales, as prices will likely start out high, but fall as the market matures.<\/p>\n \u201cIt\u2019s really hard for states to forecast revenue if it\u2019s based on the price of a volatile commodity. It\u2019s much easier for them to forecast volume,\u201d Boesen said. \u201cIf you do price-based tax in a state, the revenues are going to go down, too, and it\u2019s an issue, because most states are earmarking this revenue for specific purposes.\u201d<\/p>\n Patrick Oglesby, founder of the tax policy nonprofit Center for New Revenue<\/a>, said he thinks it\u2019s important for states to experiment with different cannabis-taxing methods.<\/p>\n Federal legalization will probably happen eventually, he said, so states can serve as laboratories that find the costs and benefits of different approaches.<\/p>\n How does 280E affect a businesses\u2019 bottom line?<\/b><\/p>\n Oglesby also believes many small cannabis businesses might want to rethink their position on Section 280E.<\/p>\n That part of the tax code<\/a> prohibits those engaged in the business of trafficking certain controlled substances \u2013 including cannabis \u2013 from writing off many business expenses on their taxes.<\/p>\n The section is largely reviled in the cannabis industry, and New York lawmakers are considering<\/a> legislation that would enable cannabis businesses to write off some of the same expenses as other legal industries on their state taxes.<\/p>\n Castetter said that while the state legislation won\u2019t amount to huge savings for marijuana businesses here \u2013 since their federal tax bills are higher \u2013 it does send the message that the state supports cannabis entrepreneurs. And like many in the industry, Castetter ultimately wants 280E repealed on a federal level.<\/p>\n However, Oglesby thinks getting rid of 280E puts smaller businesses at a further competitive disadvantage with large multistate cannabis corporations.<\/p>\n Businesses in the industry are already allowed to deduct \u201ccost of goods sold\u201d from their federal taxes despite 280E, Oglesby said. This means a cultivator can deduct things like the cost of fertilizer, greenhouses, and other expenses related to growing marijuana.<\/p>\n However, 280E prevents businesses from deducting costs related to things like advertising and a large number of retail employee salaries, which are costs more heavily incurred by larger companies, he said.<\/p>\n \u201cIt turns out that small businesses in general have a lot less of these selling expenses than big businesses do,\u201d Oglesby said.<\/p>\n Castetter said he understands that reasoning, but said large cannabis companies are also adept at separating their business into subsidiaries to lessen their overall tax burden.<\/p>\n The state\u2019s registered operators \u201care definitely in a better position on 280E, and vertically integrated operators in general,\u201d Castetter said.<\/p>\n He added that it can be difficult for cultivators to document costs of goods sold, and may still be unable to write off certain costs.<\/p>\n \u2014Sean Teehan is a reporter for NY Cannabis Insider. He can be reached at 508-498-6884 or by email at <\/i>steehan@nyup.com<\/i><\/a>.<\/i><\/p>\n Peter Su is a SVP with Green Check Verified (Courtesy, Peter Su).<\/p>\n<\/div>\n<\/div>\n by Peter Su<\/b>, Senior VP at Green Check Verified<\/a><\/p>\n Recently, stories of unlicensed cannabis sales in New York have been making the rounds. To the operators of such businesses, I have some advice:<\/p>\n Don\u2019t do it, it\u2019s not worth it.<\/p>\n Fear not, I don\u2019t intend to expound on the usual arguments for or against. I would like to point out something else, just as food for thought: These few months of unlicensed sales may ruin your future in the industry because it may prevent you from getting banking.<\/p>\n Perhaps you have heard? In most states, there are just a handful of banks or credit unions servicing the cannabis industry. This relative lack of competition coupled with a heavily regulated industry means financial institutions are highly selective and have stringent onboarding processes.<\/p>\n It will be no different in New York State.<\/p>\n While every financial institution will undoubtedly have its own set of criteria and considerations when it comes to onboarding, I\u2019m not aware of any that do not run some sort of a negative news scrub.<\/p>\n Consider this: Even after putting a cannabis business through a lengthy onboarding process with enhanced due diligence, there still remains a very potent and ongoing risk \u2014 inversion\/diversion. That is to say, the practice of either legal goods entering the black market, or black market goods entering the legal market.<\/p>\n Don\u2019t think a legal business would risk a license? Recent police operations in Oklahoma<\/a> resulted in the arrest of 13 individuals and netted some 100,000 plants and over $500 million worth of processed marijuana. These were licensed businesses in a medical state. These licensed operations are growing marijuana legally, but selling illegally.<\/p>\n In California, a recent lawsuit brought forth by the cannabis industry against state officials coined the phrase \u201cburner licenses\u201d \u2014 licenses applied for and approved, but simply for the facade of a licensed business.<\/p>\n These licensed businesses can legally buy weed bulk on the wholesale market, then move the products on the black market and potentially interstate.<\/p>\n Other examples abound, the point is \u2014 it\u2019s happening, and let\u2019s face it, there\u2019s even some incentive to do so.<\/p>\n How does a bank mitigate this risk? Well, it\u2019s a little bit like a credit report: Is there any history to review? What does that history suggest? Presumably, your intention is to join the green rush and pursue one of the coveted licenses from the Office of Cannabis Management.<\/p>\n Put yourself in the shoes of the bank compliance officer reviewing your request for banking. One quick search will turn up the fact that in the not-too-distant past, you openly flouted cannabis licensing regulations, and worse yet, perhaps even ignored cease and desist orders from the OCM itself.<\/p>\n Might this factor into the decision?<\/p>\n \u2014 Peter Su is a Senior Vice President with <\/i>Green Check Verified<\/i><\/a>, which provides technology and advisory services to financial institutions working within the legal cannabis industry.<\/i><\/p>\n (Elvert Barnes\/Flickr)<\/p>\n<\/div>\n<\/div>\n by Tom Wanamaker<\/b> for NY Cannabis Insider<\/p>\n In their continued enforcement of state laws against impaired driving, New York\u2019s police will increasingly rely on Drug Recognition Experts (DREs) to determine whether motorists accused of driving under marijuana\u2019s influence are actually guilty of doing so.<\/p>\n As scientifically based impairment standards and proven real-time testing equipment for marijuana intoxication remain elusive, New York appears, for now at least, to have gone all in on DREs \u2014 a readily available but potentially thorny response.<\/p>\n Freeman Klopott, spokesman for the state Office of Cannabis Management<\/a>, said that revenues collected under the Marijuana Regulation and Taxation Act will be used to increase the number of certified DREs deployed at law enforcement agencies throughout New York, while adding that the law also directs financial support \u201cto research emerging tools that could be used to accurately detect whether a driver is impaired by cannabis.\u201d<\/p>\n Patrick Phelan, executive director of the New York State Association of Chiefs of Police<\/a>, welcomes DREs and described them as \u201cspecially trained officers to determine whether a person is under the influence of drugs.\u201d<\/p>\n A certified DRE himself, Phelan told NY Cannabis Insider that a DRE candidate trains for two weeks to understand the effects of various drugs, including marijuana, on the human body, and how to recognize when a person is under the influence of a variety of substances.<\/p>\n In practice, a DRE interviews the suspect and arresting officers, then conducts a series of tests, including measuring eye reactions to certain stimuli and monitoring the accused\u2019s blood pressure and pupils, to determine whether an individual is under the influence of a drug, and which drug (or drugs) may be involved.<\/p>\n \u201cThere are only a small number of DREs in New York now,\u201d Phelan said. \u201cWe need more money for DREs and training to increase their number in the state.\u201d<\/p>\n Some New York police agencies are already moving in that direction.<\/p>\n Graduating New York State Police officers line up before a ceremony at the Empire State Plaza Convention Center in Albany, N.Y., Tuesday, Oct. 21, 2008. (AP Photo\/Mike Groll)<\/p>\n<\/div>\n<\/div>\n Sergeant Michael Curley, spokesperson for the Utica Police Department<\/a>, said his agency foresees \u201ca need for new DREs, which will be funded solely by the department.\u201d He added that through a partnership with surrounding Oneida County, his department has \u201caccess to the latest technology and recognition experts to detect impairment while operating a motor vehicle.\u201d<\/p>\n With about 100 trained DREs on staff, the NY State Police are \u201ctraining all troopers in the Advanced Roadside Impairment Driving Enforcement program, which provides additional training in observing and identifying the signs of impairment related to drugs, alcohol or both,\u201d according to an emailed statement from the department.<\/p>\n The DRE concept, however, does not come without baggage.<\/p>\n \u2018Debunked\u2019<\/b><\/p>\n The original idea of a law enforcement drug assessment was conceived in LA in the 1970s. Then, in the early 1980s, the National Highway Traffic Safety Administration used the LA program as a model for a nationwide effort.<\/p>\n The administration then commissioned two of the three studies debunked below.<\/p>\n Questions about DRE accuracy surfaced in 2013 when researcher Greg Kane published an analysis of three scientific studies<\/a> frequently cited in court cases involving the accuracy of law enforcement Drug Influence Evaluations (DIEs).<\/p>\n Kane\u2019s research found that all three of them used faulty methodology, and concluded, \u201cThe accuracies reported by these studies do not quantify the accuracy of the DIE process now used by US law enforcement. These studies do not validate current DIE practice.\u201d<\/p>\n \u201cThe three validation studies commonly cited in American criminal prosecutions to quantify the accuracy of current US law enforcement DIE practice did no reference testing of driving performance or physical or mental impairment, investigated tests different from those currently employed by US law enforcement, used methodologies that biased accuracies, and reported DIE accuracy statistics that are not externally valid.\u201d<\/p>\n<\/div>\n Greg Kane, Journal of Negative Results in Biomedicine, 2013<\/p>\n<\/div>\n<\/div>\n Further concerns appeared in 2019, when the Boston Globe reported<\/a> that defense attorneys and civil liberties advocates in Massachusetts \u2014 which had legalized recreational-use marijuana three years prior \u2014 said their state\u2019s DRE program was \u201cunscientific, deeply flawed, and could punish innocent people.\u201d<\/p>\n The Globe said that the DRE program \u201chas been rejected in numerous cases by Massachusetts judges who ruled it lacks scientific validation. Studies have found that the program\u2019s claims of accuracy are overstated, and that it is biased and prone to false alarms.\u201d<\/p>\n Michael Sisitzky is Senior Policy Counsel with the New York Civil Liberties Union<\/a>. He told NY Cannabis Insider that his organization is \u201cdeeply skeptical\u201d of the use of DREs to determine a motorist\u2019s level of impairment.<\/p>\n \u201cThey\u2019ve never been rigorously tested and validated as a means to detect impairment, whether due to marijuana or other types of drugs,\u201d he said. \u201cThe idea that DREs will lead to increased road safety is not grounded in science.\u201d<\/p>\n Sisitzky noted that law enforcement officers already have \u201ctools in their toolkit\u201d \u2014 namely the standard roadside sobriety tests currently in use \u2014 to determine driver impairment.<\/p>\n And while DREs have the word \u201cexpert\u201d in their title, Sisitzky called this \u201cmisleading\u201d because \u201cit implies expertise above and beyond what they actually have.\u201d<\/p>\n \u201cAt the end of the day, [DREs] are offering an opinion, which could run the risk of being informed by their own personal biases,\u201d Sisitzky said. \u201cWhat we\u2019ve seen is that DREs are not the answer.\u201d<\/p>\n While the use of DREs may present challenges for law enforcement, the greater obstacle \u2014 accurately determining a driver\u2019s level of marijuana intoxication while behind the wheel \u2014 may leave police officers little choice.<\/p>\n Unlike alcohol, which leaves the human body within a few hours, THC \u2014 marijuana\u2019s psychoactive ingredient \u2014 remains present in the body (metabolized into fat cells) long after its effects have worn off.<\/p>\n Thus, while blood or saliva tests may detect THC, this does not necessarily indicate that the individual was under the influence at the time of the test.<\/p>\n Research published last December by the Lambert Initiative<\/a> at the University of Sydney in Australia said that \u201cblood and oral fluid [saliva] THC concentrations are relatively poor or inconsistent indicators of cannabis-induced impairment. This contrasts with the much stronger relationship between blood alcohol concentrations and driving impairment. The findings have implications for the application of drug-driving laws globally.\u201d<\/p>\n The ideal solution for law enforcement is the development of a tool to determine, in real-time, whether an individual is under the influence of marijuana, and one that provides an accurate, fair, and scientific standard of THC intoxication.<\/p>\n \u201cThe private sector will take care of that,\u201d Phelan said, referring to detection devices.<\/p>\n In fact, portable THC breathalyzer devices that purport to measure real-time marijuana intoxication are currently in development.<\/p>\n One such handheld device, built by Hound Labs<\/a> in Oakland, is promoted as a \u201chighly sensitive\u201d and \u201cfair\u201d testing solution that, according to the company\u2019s website, \u201cdifferentiates between the person who smoked cannabis legally and responsibly at a BBQ on Friday night, versus their colleague who smoked Monday morning on the way to work.\u201d<\/p>\n A spokeswoman for Hound Labs told NY Cannabis Insider that the company\u2019s breathalyzer is not yet available, but \u201cwill be over the next several months.\u201d<\/p>\n Cannabix Technologies Inc.<\/a> is a publicly traded company based in Vancouver that says it has created<\/a> a handheld THC breathalyzer that performs what amounts to a smell test on a person\u2019s breath.<\/p>\n The tool\u2019s underlying technology \u201cuses microfluidic sensors coupled with machine learning algorithms which operates under principles similar to mammalian olfaction systems,\u201d according to the Cannabix website.<\/p>\n Cannabix did not respond to requests for comment.<\/p>\n None of these tools take into account the growing popularity of THC-infused edibles \u2014 candy, cookies, etc. \u2014 which have intoxicating effects that cannot be measured by a person\u2019s breath.<\/p>\n Joseph Sinagra is a member of the Cannabis Industry Association<\/a> chapters in both New York City and the Hudson Valley. He is also the chief of the Saugerties Police Department.<\/p>\n \u201cNo, I\u2019m not a user,\u201d he said during a recent interview. \u201cI want to see that this is done right. If it\u2019s done right, I think it\u2019s a good business. It\u2019s a good revenue source for the state and localities.\u201d<\/p>\n Sinagra agrees that law enforcement agencies \u201cdon\u2019t have nearly enough DREs to address the issue.\u201d But he laments that they may not be the most effective way to enforce the law, offering the following scenario:<\/p>\n \u201cMaybe I see a blunt or a joint in the car and detect odor in the vehicle,\u201d Sinagra said. \u201cOdor doesn\u2019t give me probable cause, but the blunt or joint does. If there is no alcohol in the person\u2019s system, I bring in a DRE. If the DRE determines drug influence, the person is arrested.\u201d<\/p>\n But the problem becomes that \u201cthe DA probably won\u2019t be able to prosecute because we don\u2019t have definite scientific evidence that the person\u2019s intoxication was the result of cannabis,\u201d Sinagra continued.<\/p>\n \u201cSo we have to break down where the person was during the previous three or four hours, get witnesses, and put the puzzle together. But how much time and energy are being spent?\u201d<\/p>\n In the end, Sinagra believes that New York State jumped the gun.<\/p>\n \u201cI don\u2019t have an issue with legalization, but we did it before we addressed concerns about real-time detection without roadside instruments to test people,\u201d Sinagra said.<\/p>\n \u201cWhen it comes to drinking and driving, we have established thresholds. But with cannabis, they haven\u2019t been established. We have no roadside testing equipment available for THC testing. There is no way for a DA to prove when someone is under the influence \u2014 there is no real-time detection.<\/p>\n \u201cWe put the cart before the horse in New York,\u201d Sinagra said.<\/p>\n Ngiste Abebe, president of the New York Medical Cannabis Industry Association, and vice president of Public Policy at Columbia Care, speaks at an NJ Cannabis Insider conference on Sept. 23, 2021. (Aristide Economopoulos\/NJ.com).<\/p>\n<\/div>\n<\/div>\n Last week, we published an investigation<\/a> that showed the state has been sitting on a few million dollars garnered from medical marijuana taxes since the program began in 2014. That money is supposed to fund addiction support and criminal justice services.<\/p>\n After publication, we heard from Ngiste Abebe<\/b>, the president of the New York Medical Cannabis Industry Association<\/a>. Here\u2019s what she had to say:<\/p>\n \u201cWe were surprised to hear that funds from the medical tax were unspent. It\u2019s definitely a sign that it\u2019s time for New York to stop taxing medical cannabis at 7% and treat it the same as over-the-counter and prescription medicines, which are taxed at zero percent. As for the funds that have already been collected, I hope they can be put toward youth use prevention or to make medical cannabis more accessible for the patients who cannot afford the out-of-pocket costs of getting a medical card.<\/i><\/p>\n \u201cNew York lags the country significantly in patient participation and access, with similar states like Florida approaching 700,000 registered patients while New York still has only 125,000.\u201d<\/i><\/p>\n NY Cannabis Insider will continue to follow this story and report back with any updates.<\/p>\n Chenae Bullock is the Managing Director of Little Beach Harvest, a cannabis business wholly owned by the Shinnecock Nation. She is the founder and owner of Moskehtu Consulting, which is an indigenous-owned and operated cultural and heritage preservation firm.<\/p>\n<\/div>\n<\/div>\n by Sean Teehan<\/b>, NY Cannabis Insider | @SeanPTeehan<\/a><\/p>\n Regulators of New York\u2019s adult-use cannabis industry are still working out the nuts and bolts of how they will oversee marijuana businesses in the state, but that\u2019s not the case for Indigenous tribes like the Shinnecock Nation<\/a>.<\/p>\n According to the Marijuana Regulation and Taxation Act<\/a>, any of New York\u2019s nine recognized tribes must reach a compact with the state if they want to buy weed from, or sell it to, businesses regulated by the Office of Cannabis Management<\/a>. <\/p>\n However, each of these tribes, including the Shinnecock, occupy sovereign land on which tribe members and officials vote on and establish their own rules regarding a host of issues, including drug policy.<\/p>\n So far, no tribe<\/a> has entered into a compact<\/a> \u2013 a negotiated agreement between tribal and state governments \u2013 to allow cannabis commerce between companies on tribal territory and businesses regulated by the OCM. And because officials on these sovereign territories operate under different public records rules than New York State, they\u2019re not required to disclose how they oversee marijuana.<\/p>\n Ahead of NY Cannabis Insider\u2019s March 31 conference<\/a> that will feature a panel about the marijuana industry on Indigenous land, two companies from the Shinnecock Nation spoke opened up about getting their businesses off the ground.<\/p>\n The Shinnecock Nation, which holds some 900 acres near the eastern tip of Long Island, legalized medical cannabis on their territory in 2016, and approved recreational marijuana last September. Since then, businesses like Little Beach Harvest<\/a> and Shinnecock Hemp<\/a> have started creating vertically integrated cannabis companies they plan to open in coming months.<\/p>\n This is \u201ca community that has pretty much been left out of every industry that has started in this land,\u201d said Chenae Bullock, managing director of the Shinnecock-owned Little Beach Harvest. \u201cWe\u2019re going to be able to do what is best for the citizens of the Shinnecock Nation, and one of the best things is for us to be self-sufficient.\u201d<\/p>\n New York\u2019s MRTA prohibits adult-use cannabis businesses from owning multiple parts of the supply chain \u2013 except for microbusinesses and pre-existing medical operators expanding into the adult-use market. That means a company that grows weed can\u2019t distribute it or sell it at retail, and retailers can\u2019t grow or process the products they sell.<\/p>\n That\u2019s not the case for the Shinnecock Nation, where the tribal government has already established rules and regulations for its cannabis sector, Bullock said.<\/p>\n Sovereignty on Indigenous tribal territory dates back hundreds of years in the U.S., according to the federal Bureau of Indian Affairs<\/a>. <\/p>\n During the 18th and 19th centuries \u2013 a period replete<\/a> with tribal land grabs and massacres of Native Americans \u2013 the U.S. government established treaties with Indigenous nations. <\/p>\n These \u201ccontracts\u201d established certain rights, benefits, and conditions for tribes that agreed to relinquish millions of acres of their land to the federal government.<\/p>\n The U.S. has an ugly history of ignoring these treaties, but by law they declare tribal governments to be \u201cthe supreme law of the land upon which federal Indian law and the federal Indian trust relationship is based.\u201d<\/p>\n Shinnecock officials have opted to allow for vertically integrated marijuana companies, and both Little Beach Harvest and Shinnecock Hemp plan to operate seed-to-sale marijuana companies.<\/p>\n Little Beach Harvest<\/b><\/p>\n A joint venture with Vancouver-based TILT Holdings<\/a>, Little Beach Harvest will operate as a destination retail and \u201cwellness lounge\u201d consumption site, Bullock said. The plan is to create an inviting space where customers spend time learning about cannabis\u2019 healing properties and Shinnecock culture.<\/p>\n \u201cThis is an opportunity for us to be able to educate so many people; not only just on the Indigenous perspective of cannabis \u2026 but who we are as a people,\u201d Bullock said. \u201cWe\u2019re able to show them who we are through wellness.\u201d<\/p>\n As part of the partnership, TILT will spend up to $18 million planning, designing and building a 60,000-square-foot facility for cultivation, processing and extraction; a two-story dispensary; and the wellness lounge, according to the company. The dispensary and lounge will sit on Montauk Highway near Southampton\u2019s business district, Cooper\u2019s Beach, and Shinnecock Hills Golf Club.<\/p>\n Bullock said that in addition to capital, TILT brings to the table experience in running cannabis cultivation, processing and retail operations in multiple states. The corporation is also on board with her vision of using Little Beach Harvest to help teach people about Shinnecock heritage.<\/p>\n \u201cTILT has been extremely open to learning our culture, our story,\u201d Bullock said. \u201cOnce your partners understand that, you can work together to really be successful in the entire endeavor.\u201d<\/p>\n New York\u2019s Office of Cannabis Management hasn\u2019t announced any rules regarding commerce between tribal and state-regulated businesses, but Bullock said Little Beach Harvest would like to carry products from New York marijuana companies and provide for New York dispensaries.<\/p>\n \u201cIt\u2019s really a win-win for all of us, if that is the case,\u201d Bullock said.<\/p>\n Shinnecock Hemp<\/b><\/p>\n![](\"https:\/\/www.syracuse.com\/resizer\/PAW-SViNUajMJxgjZ9Uhp54W11M=\/arc-anglerfish-arc2-prod-advancelocal\/public\/R36T4SDCXRC67IBBP54Y4SIHWA.jpg\")
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<\/div>\n\u2018The world is watching\u2019: Experts dissect NY\u2019s proposed retail regs<\/h2>\n
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<\/div>\nGet tickets now for our March 31 conference!<\/h2>\n
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<\/div>\nGetting into the weeds of the potency tax and 280E<\/h2>\n
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<\/div>\nA slightly different take on unlicensed cannabis sales [Guest column]<\/mark><\/h2>\n
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<\/div>\nIn wake of legalization, NY police focus on impaired driving<\/h2>\n
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<\/div>\nState medical cannabis industry association responds to NY Cannabis Insider\u2019s recent investigation<\/h2>\n
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<\/div>\nSeed-to-sale on sovereign lands<\/h2>\n
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