Kaufman McGowan Submits Comments on Proposed Public Convenience and Advantage Cannabis Regulations

Kaufman McGowan attorneys Neil M. Kaufman and Sean J. McGowan submitted comments to New York’s proposed public convenience and advantage cannabis regulations to the New York State Office of Cannabis Management. 

See a copy of Kaufman McGowan’s letter below.

Click here for a PDF of the redline of the revised proposed New York adult-use cannabis regulations.

About Neil M. Kaufman
Neil M. Kaufman is the managing member of Kaufman McGowan PLLC, Long Island’s Corporate & Securities Law Firm ™ and Corporate & Securities Counsel to the Cannabis Industry™. He is one of the leading corporate cannabis lawyers in New York and the USA and a fixture of the New York and Long Island corporate and securities legal community. Learn more here!

About Sean J. McGowan
Sean J. McGowan is a partner in Kaufman McGowan PLLC, Long Island’s Corporate & Securities Law Firm ™ and Corporate & Securities Counsel to the Cannabis Industry™. He has been named one of the top cannabis lawyers in the world by Cannabis Law Report, a 40 under 40 recipient by Long Island Business News and was selected as NY Metro Rising Star 2020-2025. Learn more here!

 

May 13, 2025

VIA EMAIL: regulations@ocm.ny.gov

New York State Office of Cannabis Management
P.O. Box 2071
Albany, New York 12220

Re: Comments on Proposed Amendments to 9 NYCRR Part 119 – Public Convenience and Advantage Waivers

Ladies/Gentlemen:

We respectfully submit these comments on behalf of our client, Take N Toke Herbal Healing Solutions Inc. (“TNT”), CAURD License No. OCMCAURD-2022-000444, and in the broader interest of all applicants and licensees within the New York adult-use cannabis market, with respect to the proposed amendments to 9 NYCRR Part 119 issued by the New York State Office of Cannabis Management (the “Office”) relating to public convenience and advantage waivers (the “Proposed PCA Regulations”). These comments and suggestions are included in the following documents, each of which should be read and interpreted collectively:
1. this letter, which describes our concerns and includes suggested drafting revisions, with corresponding explanations setting forth our principal recommendations; and
2. the redlined copy of the Proposed PCA Regulations, a copy of which is attached hereto as Exhibit A (the “Redline”), which includes in footnotes and drafting revisions the same comments set forth in this letter, presented in what we believe is a format that is convenient to facilitate the Office’s implementation thereof.

We believe that the proposed amendments to 9 NYCRR Part 119.4 related to public convenience and advantage waivers (“PCA Waivers”) pose significant concerns that threaten to undermine the intent of the Marihuana Regulation and Taxation Act (“MRTA”) to foster an equitable, accessible cannabis industry in New York. TNT’s experience exemplifies these challenges: TNT has been leasing an ideal location in a bustling commercial district. The premises is already built as a cannabis store and could be opened quickly. However, it has faced procedural delays, and now the potential inflexibility of the Proposed PCA Regulations threaten to prevent the store from ever opening. We believe that TNT’s situation is emblematic of the challenges faced by many licensees and applicants, and that the Proposed PCA Regulations would undermine the broad promise of New York’s cannabis equity initiative. Accordingly, on behalf of TNT, and for ourselves, we oppose approval of the Proposed PCA Regulations and request that they be revised as provided herein and re-submitted for public comment.

To reiterate TNT’s experience and why the Proposed PCA Regulations are problematic, we note that TNT’s proposed location at 433 Fifth Avenue is an iconic part of the New York legal cannabis industry’s history. It was previously operated as a medical cannabis dispensary by MedMen NY, Inc., under the Compassionate Care Act, and Section 34 of Article 3 of the MRTA, and was one of the first state-legal retail cannabis stores ever opened in New York, to considerable fanfare. Its physical condition remains the same as when Medmen left — readily suitable for use as a cannabis dispensary and able to be opened quickly to help meet the strong consumer demand for legal cannabis in New York. The location’s infrastructure has successfully supported retail cannabis operations in the past, and it would be a highly efficient deployment of resources to use these cannabis-ready assets to support the New York cannabis industry. It is in a major commercial area near Bryant Park, with enormous pedestrian traffic and outstanding transportation infrastructure, with ample demand from local residents, workers (including commuters) and tourists to support multiple retail cannabis stores.

TNT’s premises is located modestly under 1,000 feet from 2 active dispensaries, one located approximately 904 feet northeast and the other 762 feet south. The dispensary which is 762 feet south of the proposed location opened on April 8, 2025. The proposed 9-month operational requirement would force TNT to sustain another 8 months of waiting, which would be well beyond the period in which the landlord of the proposed location could terminate the lease due to failure to get location approval. Further, the “Triangle Rule” described below would deprive the Cannabis Control Board (the “Board”) of its discretion to grant a PCA Waiver. Instead, it would require the Board to summarily reject TNT’s PCA Waiver request without the ability to consider critical factors such as local market demand or the demonstrated need for and efficacy of a dispensary at the proposed location.

Neema Wiggins, the founder of TNT, is a justice involved individual and victim of the war on drugs. He has put everything on the line to make TNT’s business work. Granting TNT’s PCA Waiver and permitting a Conditional Adult-Use Retail Dispensary (“CAURD”) licensee to operate at this proposed location, previously operated by a multi-state operator, would advance the principles underlying the MRTA and the goals of the Board of promoting equity and economic justice by creating opportunity for individuals impacted by the disproportionate enforcement of cannabis prohibition, while also bolstering New York’s regulated cannabis market in a location that is ideal for it. While we believe that several components of the Proposed PCA Regulations are generally problematic, its flaws are particularly evident when applied to TNT’s PCA Waiver request due to the proposed location’s unique location on Fifth Avenue, a globally recognized high-traffic commercial corridor. The inflexible application of the “Triangle Rule” would force the Board to treat TNT’s PCA Waiver request the same as it would a PCA Waiver request for a location in a far less trafficked area, thereby resulting in a disproportionate and undesirable impact on New York’s cannabis market. Specifically, it would deprive New York City of a well-positioned legal dispensary—one that is needed to help combat and displace the entrenched illicit market. In our view, that would be a travesty of social injustice.

I. Kaufman McGowan PLLC: Background

As known to the Office, we are a New York-based boutique corporate and securities law firm that over the past ten (10) years has developed a significant national corporate cannabis practice despite our home state not having an adult use market for all but the last few years. As a result, we believe that we have gained insights that have been and should continue to be helpful to the Office in implementing its goals, with which we philosophically have largely agreed. A summary of our background is set forth below.

1. We have participated in over $2 Billion of cannabis industry transactions across the U.S.A., primarily in structuring and restructuring cannabis corporate groups, private and public offerings of securities, mergers and acquisitions and commercial contracts. We represent, have represented or otherwise have worked with many leading cannabis companies in California, Colorado, Nevada, Washington, Oregon, Maryland and other states, as well as with cannabis industry-leading investors, investment funds and investment banks.
2. We participated in the Office’s Cannabis Compliance Training & Mentorship (CCTM) and CHIPS training programs, in connection with which we provided training sessions to social equity and other prospective applicants selected by the Office with respect to corporate structure, financing and other cannabis-related legal matters.
3. Our managing partner, Neil M. Kaufman, has several qualifications that have provided particularly relevant experience, including serving as:
   a. Chairman and chairman emeritus of the Long Island Capital Alliance, a non-profit organization which has assisted dozens of local companies in raising over $150 million in growth capital and has hosted five cannabis capital forum conferences featuring industry leaders (including Chair Wright) and approximately 30 aspiring New York cannabis companies.
   b. Chairman of the Long Island chapter of Financial Executives International, a non-profit organization that is the leading group of chief financial officers, controllers and other financial executives in the U.S.A.
   c. Trustee and Chairman of the Audit Committee of mutual fund families with an aggregate of over $6 Billion of assets under management, where he has been designated as an audit committee financial expert. In particular, this has provided valuable insight into the institutional investor community, including the compliance issues faced in connection with cannabis investments.
   d. Former chairman of the board of a NASDAQ-listed technology company.
4. Our partner, Sean J. McGowan, is the Founder and Co-Chairman of the Suffolk County Bar Association’s Cannabis Committee, providing a resource to the community for education on the New York cannabis industry.

II. Summary of Comments

We wish to highlight several significant proposed changes that illustrate our concerns with the amendments included in Proposed PCA Regulations. Other proposed revisions seem reasonably appropriate, including the additional factors to be considered for PCA Waivers, with respect to which we have only minor suggestions.

1. Prohibiting the Board from granting PCA Waivers with respect to locations:
   a. In a municipality having a population of 20,000 or more:

• within a 500-foot radius of another licensee, or
• within a 1,000-foot radius of two other licensees issued the same license type sought by the applicant, or

b. In a municipality having a population of 20,000 or less:

1. • within a 1,000-foot radius of another licensee, or
   • within a 2,000-foot radius of two other licensees issued the same license type sought by the applicant.

2. Section 119.1(a)(3) contemplates covering a population of 20,000 or more, while Section 119.1(a)(4) contemplates covering a population of 20,000 or less. A population of exactly 20,000 is covered in both Sections, which is duplicative and conflicting if a municipality had a population of exactly 20,000. Accordingly, we recommend that for the sake of clarity, Section 119.1(a)(4) should be revised to say “a population of less than 20,000”.[1]

3. Imposing a requirement for a waiting period before a licensee or applicant can apply for a PCA Waiver for 9-months after the existing licensee has begun operations with respect to a location:
   • 500-1,000 feet from another retail location in a municipality having a population of 20,000 or more; or
   • 1,000-2,000 feet from another retail location in a municipality having a population of 20,000 or less.

4. The Proposed PCA Regulations treat all microbusinesses the same, whether or not they are authorized to own a retail location. All references to microbusinesses in the Proposed PCA Regulations must be revised to include only “microbusinesses with retail”.

5. If a municipality does not respond to a licensee or applicant’s notice within the prescribed notice period, such non-response should be deemed to constitute no objection to the PCA Waiver.

6. In addition, we have additional detailed comments set forth in the Redline and summarized in the chart below beginning on page 11.

III. Qualitative Analysis

Our objections to the Proposed PCA Regulations are based on the following concerns.

1. Eliminating the Board’s Ability to Consider Public Convenience and Advantage Would Violate MRTA and Undermine the State-Legal Market. The Proposed PCA Regulations would prohibit the Board from granting PCA Waivers to licensees or applicants with locations that conflict with two or more existing licensees (referred to herein as the “Triangle Rule”), or within a 500 or 1,000 feet radius, as applicable. This represents a major diminution of the authority of the Board that would be in direct conflict with MRTA Section 64(g)(x) and the express provisions of the current regulations, which presumably were adopted in an attempt to effectuate such statutory provision and the intent thereof. Imposing rigid distance-based limitations beyond which the Board would no longer have the discretion to grant PCA Waivers would remove critical flexibility through which the Board can consider all PCA Waiver requests on a case-by-case basis in fulfillment of its statutory obligation to consider public convenience and advantage. The existing regulatory framework recognized that equity and public convenience and advantage often require case-by-case consideration, especially in dense urban areas (such as, but not exclusively, Manhattan), where geographic proximity does not necessarily equate to market saturation. The Board has engaged in this consideration extensively at its public meetings, and denying this opportunity to the Board would contravene the language, intent and spirit of MRTA while also weakening the ability of the state-legal cannabis market to overcome the illicit market by more fully satisfying consumer demand. 

We believe that one of the keys to the ultimate strength of the state-legal New York cannabis market will be appropriately calibrating the number and locations of licensed dispensaries in a manner that saturates the market to sufficiently satisfy consumer demand and thus eliminate (or at least substantially mitigate) demand for illicit products, without over-saturating the market with so many stores that the licensed dispensaries cannot operate profitably. We further believe that:
a. it is not possible at this still-early stage of the New York market to determine exactly what the “right” numbers will be in many regions;
b. regulatory discretion and flexibility will be a critically important tool in appropriately calibrating the market;
c. distance requirements that are irrevocably fixed prohibit the Board’s ability to take into account particular geographic or other factors that could be critical; for example, two stores that may be 400 feet apart but separated by an impassible highway or other structure may not actually compete in any material respect; and
d. inflexible regulations that could impede the Board’s ability to make these difficult calibration decisions must be avoided at all costs.

2. No Basis for 9-Month Waiting Period. We are not aware of any identified quantitative or qualitative rationale for imposing a requirement that any existing licensee has commenced operations for at least 9 months before any other licensee or applicant can apply for a PCA waiver. We surmise that one possible rationale for this provision would be to provide an opportunity for the Board to be able to assess sales volumes and the potential economic viability of existing licensees in considering whether to permit nearby competition. We submit that any such endeavor would be a very difficult “slippery slope”, for several reasons including:
a. Sales revenues can be influenced by many factors, including the experience and business savvy of the operators, the availability of capital, tax burdens and more;
b. A large number of illicit stores remain open across the State. As reported at Board meetings, in areas where illicit activity is slowed down or has been removed, legal dispensaries tend to experience an increase in revenues. Thus, current revenues may not accurately predict revenues in a more mature market. The impact of this uncertainty renders evaluations based on current revenues inherently unreliable.
c. We question the advisability of government agencies attempting to micro-manage the profitability of individual businesses, such as by determining which existing licensees are sufficiently profitable to withstand nearby competition or not, especially in light of the variables discussed above. We can easily foresee a plethora of Article 78 and possibly other lawsuits over these kinds of decisions.

In contrast, we have identified compelling reasons why such a waiting period would be problematic.
a. Many licensees require an extended period to design their store in compliance with applicable regulations; obtain necessary building permits, certificates of occupancy and special use permits; raise capital from the limited scope of investors available to invest in New York retail[2]; train staff; obtain inventory; and obtain final Office approval. In our anecdotal experience, this period to become operational has often comprised a year or more. If an additional 9-month waiting period is imposed, another licensee or applicant that has identified a location 990 feet away could be forced to wait almost 2 years before they could even apply for a PCA Waiver and more than 2 years to actually obtain such PCA Waiver, while incurring carrying costs such as lease obligations. This poses significant obstacles to other licensees and applicants that would be expected to materially reduce the supply of entrepreneurs and investors willing to operationalize licenses.
b. Based on the quantitative analysis set forth below, we believe that significant portions of New York State, particularly densely populated areas, can sustain far more retail cannabis stores than would be permitted under the Proposed PCA Regulations.

1. 3. Quantitative Issues. The Proposed PCA Regulations, particularly through the combination of rigid proximity distances and the Triangle Rule, would cap the number of dispensaries and microbusinesses with retail that could be licensed to operate within a given geographic area at levels far below what the market could support and demands. This is especially damaging in densely populated areas like Manhattan and other areas of downstate New York, where real estate is limited but consumer demand is high. As demonstrated in our quantitative analysis below, the practical effect of these rules would be to limit Manhattan to fewer than 400 dispensaries and microbusinesses with retail on a combined basis (and likely substantially much less than that), a number that we suspect falls drastically short of meeting market demand, considering resident, commuter and tourist populations.[3]

   Such severe restrictions limit public access to legal cannabis by unnecessarily constraining the number of legal retail stores, thereby impairing the ability of the legal market to crowd out the illicit market. They would also undermine opportunities for applicants and licensees—especially CAURD and other social equity licensees—by creating unnecessary barriers to market entry. This is directly counter to the MRTA’s goals of promoting social equity, consumer protection and public safety.

   4. Distinctions between Retail Dispensaries and Microbusinesses: The current and proposed regulations apply the same proximity rules to both dispensaries and microbusinesses, despite their differing operational and consumer-facing attributes.
   a. Not all microbusinesses have a retail store. All references in the Proposed PCA Regulations should be modified to refer only to microbusinesses with retail.
   b. Critically, microbusinesses are required to be self-contained, virtually sole-source businesses and are often craft-oriented, hyper-local and provide a distinct product experience akin to microbreweries or wineries, as compared to regular dispensaries. Applying identical distance restrictions to these fundamentally different models disregards consumer demand for craft cannabis and could stifle the growth of a key sector that the Office and Board have actively championed. In fact, the Board itself has consistently recognized and emphasized these critical differences when considering PCA Waivers. We strongly recommend that the Proposed PCA Regulations and corresponding proximity limitations be reconsidered to substantially loosen distance restrictions with respect to microbusinesses (with retail) in order to ensure that the combined number of dispensaries and microbusinesses with retail in a geographic area is not so severely restricted as to damage market diversity and limit public access, convenience and advantage. Permitting the Board to retain its full flexibility to grant PCA Waivers would permit the Board to protect the unique market role of microbusinesses in New York cannabis while not imposing inappropriately rigid limitations.

   5. Communities Must be Heard: Each time the Board has considered a PCA Waiver, the Board has emphasized the importance of the voice of the community in which the proposed location is to be located. Rightfully so (we believe), the Board has provided deference and weight to the views of community leaders and members supporting the grant of a PCA Waiver and increased access to the legal market. This substantiates the need for a case-by-case review without rigid restrictions on the availability of PCA Waivers.

   6. Conflict with MRTA’s Equity Mandate: The MRTA was designed to redress harms caused by cannabis prohibition and to provide justice-involved and social equity individuals a key role in New York’s cannabis industry. Artificial restrictions and rigid geographic caps on locations and PCA Waivers can harm these very licensees, like TNT, frustrating the MRTA’s core legislative purpose.

   7. Unfounded Comparisons to Alcohol: We understand that the amendments included in the Proposed PCA Regulations rely heavily on parallels to the regulatory framework of the New York State Liquor Authority (“SLA”) under the Alcoholic Beverage Control Law (the “ABCL”). However, we note that:
   a. The SLA’s 500-foot rule, which is often cited for comparison, is fundamentally different. Such rule applies to on-premises liquor establishments such as bars and restaurants, but does not apply to liquor stores, wine/beer/cider or beer-only applicants or to cities, towns or villages with a population of less than 20,000. The Proposed PCA Regulations would impose restrictions on retail cannabis STORES that are far more stringent than those imposed on liquor STORES, even though on-premises consumption is not yet permitted at all in New York.[4]
   b. Cannabis dispensaries face distinct challenges that differ fundamentally from liquor stores, including managing perishable products, operating without access to interstate commerce, lack of access to established national and international brands, lack of an established distribution industry, far higher compliance costs, and contending with federal tax burdens under IRC § 280E. These differences necessitate a regulatory approach tailored specifically to the cannabis industry rather than one modeled on alcohol laws and rules just because the drafters of the MRTA based it on the ABCL[5].
   c. Currently, the SLA is not subject to the same rigid limitations that would apply to the Board if the Proposed PCA Regulations are adopted. As described above, the SLA’s PCA waiver process applies only to establishments seeking to serve liquor on-premises; even in that more limited context, the SLA retains broad discretion to grant a waiver whenever the applicant demonstrates public interest and public convenience and advantage—even if the proposed location is within 500 feet of three or more existing on-premises licenses. In fact, these waivers are routinely granted by the SLA. By contrast, the Proposed PCA Regulations would categorically prohibit the Board from even considering a PCA Waiver if the proposed dispensary is within 500 feet of another dispensary or within 1,000 feet of two active dispensaries, regardless of actual geographic or market conditions, consumer demand or community support. This categorical denial of discretion not only undermines the original intent of the MRTA but also would make the cannabis regulatory scheme far more restrictive than the alcohol regime on which it is allegedly modeled. The Board’s discretion under the cannabis framework should be no more restricted—and ideally more flexible—than the SLA’s discretion under the ABCL, especially given the broader public policy goals of the MRTA and the still-developing nature of the New York cannabis market.

   IV. Quantitative Analysis

   To analyze the practical implications of the Proposed PCA Regulations, we engaged in the following quantitative analysis, which focuses primarily on the densely populated borough of Manhattan as an illustration:[6]

   1️. Baseline Geometric Capacity of Manhattan
   • Manhattan spans approximately 22.7 square miles (~662 million sq ft).
   • Geometric modeling shows that approximately 200 dispensaries/microbusinesses with retail could be the maximum possible under a strict 1,000-foot radius rule, without considering setback restrictions based on the locations of schools and houses of worship. The actual number would likely be considerably lower; however, due to limited available correlated data we are unable to calculate the precise figure.

   2️. Public Convenience & Advantage Waivers: Minimum 500-Foot Spacing
   • If the Proposed PCA Regulations were to be adopted, and the Board no longer had any discretion to grant a PCA waiver within 500 feet (excluding the impact of setback and zoning requirements and the newly proposed Triangle Rule), the mathematical maximum number of dispensaries would rise to approximately 800 dispensaries/microbusinesses with retail.

   3. Triangle Rule Limitation
   • The rule prohibiting a third dispensary within 1,000 feet of two existing dispensaries would reduce the theoretical maximum number of dispensaries to approximately 500 dispensaries/microbusinesses with retail (before applying the setback rules).

   4️. After Impact of Setback Rules
   • We estimate that giving effect to setback rules, in addition to the proposed new 500-foot rule minimum and the Triangle Rule, the geometric capacity of dispensaries in Manhattan would be reduced to approximately 350 dispensaries/microbusinesses with retail.

   5️. Supply/Demand and Dispensary Viability

   Manhattan is home to approximately 1.61 million residents (of about 8.34 million residents in New York City). In addition, approximately 1.45 million people commute to Manhattan daily, and New York City welcomes an estimated 64.3 million tourists annually (or approximately 175,000 per day), most of which patronize Manhattan. This provides an enormous market for cannabis in Manhattan, comprising on average over 3.3 million people per day. In adopting regulations that govern throughout New York State, any limitations must accommodate the needs of this and other communities that may be on either end of the consumer demand spectrum.

   We note that the number of dispensaries per 100,000 population generally ranges from 2.2 to 36 in various states, and that in developed markets it is not unusual to have one dispensary for every 5-10,000 residents[7]. Based on the information set forth herein, we believe that appropriate store densities in New York State may vary by region. For example, counties like Manhattan, with a dense and wealthy population, as well as enormous commuter populations (including residents of opt-out regions like all of Nassau county) and tourists, likely can support a higher density of dispensaries without undermining their financial viability. For example, based on the Colorado density, Manhattan should be able to support at least 500 dispensaries, though as set forth above we caution that it is impossible to know at this point what that number really should be. Based on the LOCAL map, 71 adult-use licensees or applicants have proximity protection in Manhattan (35 of which are operational). Accordingly, Manhattan is nowhere near saturation at any level. Notwithstanding this, we already have regularly encountered distance conflict challenges with many of our clients.

   Based on this, we are very concerned that the Proposed PCA Regulations, particularly the Triangle Rule and the lack of Board discretion, would, in an arbitrarily fixed way, constrain access to state-legal cannabis in a manner that risks undercutting the legal market’s viability and ability to combat the illicit market (which fills any demand that the legal market cannot, as we have all so painfully seen). We are concerned that without meaningful regulatory adjustment, consumer demand will continue to far outweigh legal supply, incentivizing continued illicit market activity contrary to the MRTA’s goals; and that such regulatory adjustment would be substantially impeded by the Proposed PCA Regulation.

   V. Conclusion

   We respectfully urge the Office and the Board to reconsider the Proposed PCA Regulations as set forth herein to, among other things (set forth below and in the Redline):
   i. Preserve the Board’s discretion to grant PCA Waivers on a case-by-case basis and based on an analysis of certain critical factors unique to each proposed location. The proposed amendments impose rigid limitations that fail to account for the geographic and demographic realities of New York—particularly in high-density areas like Manhattan—and risk undermining the flexibility that PCA Waivers were originally intended to provide. By implementing fixed arbitrary proximity constraints without regard to actual market conditions or consumer demand, the Proposed PCA Regulations may inadvertently stifle the growth of a sustainable, legal cannabis market.
   ii. Not impose a waiting period for PCA Waiver requests.
   iii. Clarify references to microbusinesses to include only those with retail.
   iv. Clarify which municipalities are subject to the “over 20,000” or “under 20,000” requirements.
   v. Provide that a failure by a municipality to respond within a 30-day period would constitute assent.

   We encourage the Office and the Board to adopt the most pragmatic and flexible regulatory model possible—one that acknowledges the diversity of local conditions and allows for an informed and nuanced approach to PCA Waiver determinations. A fixed two-size-fits-all framework disregards the legislative intent of the MRTA and could have the unintended consequence of restricting access in areas where legal dispensaries are critically needed to serve consumer demand and eliminate the illicit market. Maintaining flexibility in the PCA Waiver process is essential to ensuring the success and integrity of New York’s adult-use cannabis program, and we strongly encourage that approach.

   TNT is an extreme example of how the Proposed PCA Regulations would have severe negative consequences in contravention of the letter, intent and spirit of MRTA. Granting TNT a PCA Waiver would:
   • Allow a justice-involved minority entrepreneur to achieve his dream and change his and his family’s lives forever by allowing his dispensary to open rapidly, on a pre-existing cannabis store site that:
     o is an iconic part of the New York cannabis industry; and
     o ironically, was previously operated by a large MSO.
   • Satisfy strong consumer demand in a bustling commercial district with strong infrastructure, thus also combatting the illicit market.

   The Proposed PCA Regulations would expressly prohibit TNT’s PCA Waiver request, almost as if preventing TNT’s PCA Waiver was their specific intent, by:
   • Imposing the new Triangle Rule and the 9-month waiting period; and
   • Taking away the Board’s discretion with respect to PCA Waivers, including with respect to the Triangle Rule.

   The Office’s initial denial received on February 3, 2025, advised TNT that it could submit a PCA Waiver request and that any supporting information would be provided to the Board for review and determination based on the factors outlined in § 119.4 (b), which, as of the date of that denial and as of the date of this letter, remain the existing and governing PCA Waiver regulations. Despite this, TNT has experienced significant procedural delays with respect to its PCA Waiver request, which was submitted over 3 months ago on February 4, 2025. Since then, TNT has received no substantive updates other than that its request remains “under review.” In light of these long delays, TNT’s lease for its proposed location can be terminated by the landlord shortly after the close of the public comment period unless TNT’s PCA Waiver request is approved at the May Board meeting. It remains unclear why TNT’s PCA Waiver has not been submitted to the Board for consideration under the current PCA Waiver regulations, before it would be irrevocably precluded by the Proposed PCA Regulations.

   As set forth above, we cannot conceive of any justification or balancing of considerations that would justify approval of the Proposed PCA Regulations in their current form, or the failure to consider and approve TNT’s PCA Waiver request. Instead, we respectfully request that the Proposed PCA Regulations be revised as provided herein and re-submitted for public comment.

VI. Specific Proposed Comments

In addition to the foregoing comments in Sections II through V above, all of which are incorporated into this Section VI, set forth below is a chart setting forth for each of our proposed revisions to the Proposed PCA Regulations, as set forth in the Redline, identifying (i) the applicable Section, (ii) the language we propose for revised Proposed PCA Regulations, and (iii) a corresponding explanation describing our principal concerns and comments. As mentioned above, for the Office’s convenience, the Redline with all of the following is transmitted herewith and should be read collectively with this letter.

 

	Section	Proposed Language	KM Commentary
1.	Section 119.4(a)	This prefatory lead-in as proposed should be deleted.	The inclusion of the proposed language—“The State of New York has a regulatory interest in the economic development of the cannabis market; ensuring that market growth proceeds in a manner that is reasonable, ordered, transparent; and the minimization of the collateral consequences resulting from inattention to the pace of growth”—raises significant legal concerns.   Under New York’s separation of powers doctrine and established principles of administrative law, the State’s regulatory interests are set by the Legislature through duly enacted statutes—in this case, the Marihuana Regulation and Taxation Act (the “MRTA”). An administrative agency such as OCM is charged with implementing legislative directives; it is not empowered to independently define, reinterpret, or expand the State’s regulatory priorities beyond the statutory text. We note that this type of language is not found anywhere else in the New York adult-use cannabis regulations and clearly deviates from the drafting style of the New York adult-use cannabis regulations.   The proposed language appears to declare new policy intent, rather than a straightforward implementation of the MRTA’s express mandates. This risks blurring the essential line between policymaking (a legislative function) and regulatory implementation (an executive/administrative function).   We are concerned that this language risks being construed as exceeding OCM’s authority under the MRTA and may invite legal challenge. We strongly recommend striking.
2.	[New] Section 119.4(a)(3) [renumbered to Section 119.4(a)(1)]	(1) within a 1,000-foot radius of a registered organization, ROD, or any other premises for which a retail dispensary license or a retail location for a microbusiness license has been issued, in a municipality having a population of 20,000 or more, unless the licensee or applicant seeking waiver has demonstrated to the board that issuing the license for the location would promote public convenience and advantage, except that distance requirements between a retail dispensary or microbusiness and registered organization shall cease to be a requirement past December 2023; or	The requirement that an existing dispensary be operational for nine (9) months before a PCA Waiver may be considered arbitrary and lacks any basis in the MRTA or legislative history. See Sections II, III, IV and V of this comment letter above, which is incorporated by reference herein.
3.	[New] Sections 119.4(a)(1) and 119.4(a)(3) [renumbered to Section 119.4(a)(1)]	See # 2 above (incorporated herein by reference)	Subdivision (1) of Section 119.4(a) has been deleted. Subdivision (3) of Section 119.4(a) has been modified to restore the references to the 1,000-foot radius rule, but permitting a PCA waiver in the same manner as under the current regulations. See Sections II, III, IV and V of this comment letter above, which are incorporated by reference herein.
4.	[New] Sections 119.4(a)(2) and 119.4(a)(4) [renumbered to Section 119.4(a)(1)]	(2) within a 2,000-foot radius of a registered organization, ROD, or any other premises for which a retail dispensary license or a retail location for a microbusiness has been issued, in a municipality having a population of less than 20,000, unless the licensee or applicant has demonstrated to the board that issuing the license would promote public convenience and advantage, except that distance requirements between a retail dispensary or microbusiness and registered organizations shall cease to be a requirement past December 2023.	Subdivision (2) of Section 119.4(a) has been deleted. Subdivision (4) of Section 119.4(a) has been modified to restore the references to the 2,000-foot radius rule, but permitting a PCA waiver in the same manner as under the current regulations. See Sections II, III, IV and V of this comment letter, which are incorporated by reference herein.
5.	[New] Section 119.4(a)(4) [renumbered to Section 119.4(a)(2)]	See # 4 above (incorporated herein by reference)	Section 119.1(a)(3) contemplates covering a population of 20,000 or more, while Section 119.1(a)(4) contemplates covering a population of 20,000 or less. A population of exactly 20,000 is covered in both Sections, which is duplicative and conflicting if a municipality had a population of exactly 20,000. Accordingly, we recommend that for the sake of clarity, Section 119.1(a)(4) should be revised to say “a population of less than 20,000”.
6.	[New] Section 119.4(a)(4) [renumbered to Section 119.4(a)(2)]	See # 4 above (incorporated herein by reference)	See comment in #2 above (incorporated herein by reference) for newly proposed Section 119.4(a)(3) (now renumbered to Section 119.4(a)(1)) as it relates to a 9-month operational timeline of an existing location prior to consideration of PCA Waivers.
7.	[New] Section 119.4(a)(5)	This Section should be deleted.	Newly proposed subdivisions (5) and (6) of Section 119.4(a) have been deleted. The “Triangle Rule” is arbitrary, not based in any Legislative intent, and artificially limits the number of dispensaries, which would have the effect of continuing to incentivize and foster illicit market activity. See Sections II, III, IV and V of this comment letter (which are incorporated by reference herein) for an explanation of why drawing this arbitrary line is counterproductive and disadvantages the public, particularly in terms of convenience and advantage.
8.	[New] Section 119.4(a)(6)	This Section should be deleted.	See comment in #7 above (incorporated herein by reference).
9.	[New] Section 119.4(b)(1)(i)	(1) the distance from any other existing approved licensee locations within: (i) 1,000 feet of the location in jurisdictions having a population of 20,000 or more; or	The reference to a 500-foot minimum was deleted. See Sections II, III, IV and V of this comment letter, which are incorporated by reference herein.
10.	[New] Section 119.4(b)(1)(ii)	(1) the distance from any other existing approved licensee locations within: (ii) 2,000 feet of the location in jurisdictions having a population of less than 20,000;	The reference to a 1,00-foot minimum was deleted. See Sections II, III, IV and V of this comment letter, which are incorporated by reference herein.
11.	[New] Section 119.4(b)(2)	(2) any geographic, structural, or topographic barriers that separate the proposed location from any existing retail dispensary locations, e.g., waterways, major roadways or highways, and significant travel distance, impediments or inconvenience required to get between the proposed location and any existing locations;	This Section was modified to clarify and provide additional examples of geographic, structural or topographic barriers that should be considered by the Board when granting a PCA Waiver.
12.	[New] Section 119.4(b)(2)	See # 11 above (incorporated herein by reference)	This Section was slightly modified to conform to the removal of the Triangle Rule.
13.	[New] Section 119.4(c)(1)	(1) A notice, to the applicable local municipality or local community board, of the licensee or applicant’s intention to submit a public convenience and advantage request from the board pursuant to this section on a form provided by the office. Pursuant to section 76 of the Cannabis Law and section 119.3(b) of this Part, that notice must include a copy of the application to be submitted to the board and state that the municipality or community board has a maximum of 30 days to submit a response prior to consideration of the application by the board. The board cannot act on the request until the municipality or community board submits a response or the expiration of the 30-day period, whichever happens first. If the municipality or community board fails to submit a response within the 30-day period, such non-response shall be deemed as no objection to the application, and the board may proceed with consideration of the application accordingly.	This Section was modified to strengthen procedural fairness by adding language stating that if a municipality or community board fails to submit a response within a 30-day timeframe, such non-response shall be deemed as no objection. This ensures that silence cannot be used as a procedural block to delay the PCA Waiver process unnecessarily, allowing the Board to proceed efficiently and fairly in the approval process. Also, the response timeframe was change from 45 days to 30 days in order to synchronize with other municipal notice requirements set forth in Section 119.3 of the current adult-use cannabis regulations.
14.	[New] Section 119.4(c)(2)	(2)        Notice to all existing licensees located within the applicable radius under paragraphs (1) or (2) of subdivision (a) of this section. Such notification must be made at the same time or promptly after the municipal or community board notification in paragraph (1) of this subdivision.	This Section was modified to provide more flexibility to applicants and licensees by slightly modifying the notice process.

Should you have any questions, or if we can be of further assistance, please do not hesitate to contact Neil M. Kaufman or Sean J. McGowan at (631) 972-0042 or nkaufman@kaufmanmcgowan.com or smcgowan@kaufmanmcgowan.com, respectively.

Footnotes:

[1] See comment 31 of our public comment letter to OCM dated February 13, 2023.

[2] See pages 2-6 of our public comment letter to OCM dated February 13, 2023, and Section 1 of our letter to Governor Kathy Hochul dated August 13, 2024 (a copy of which was concurrently sent to the Office and the Board, and attached hereto as Exhibit B).

[3] By comparison, (a) there are 1,687 licensed liquor stores in Manhattan; and (b) annual U.S. liquor store revenues are estimated to be approximately $79 Billion, and the U.S. state-legal cannabis industry is estimated to be more than half that size and projected to approximate that size within 5 years, possibly even exceeding alcohol.

[4] One possible solution would be to impose these alcohol-like requirements similarly to the cannabis industry (subject to appropriate adjustment based on the differences between these two industries, including as described herein), but only when on-premises consumption is permitted, with grandfathering similar to what happened with alcohol.

[5] See “Exclusive Interview: Untangling New York’s True Party of Ownership Rule” dated March 23, 2023 published by www.greenmarketreport.com where Axel Bernabe stated “The original MRTA (that legalized recreational marijuana) was the ABC law, the alcohol beverage control law in this state. Essentially, (someone) just inserted the word “cannabis” in the ABC law…’”

[6] We acknowledge that we have been unable to fully identify all relevant details, and that this analysis is based only on the information that we found to be available.

[7] For example, Colorado has one dispensary for every approximately 6,000 residents.

Nothing contained herein constitutes legal advice.