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Prepayment Requirements and New York State Cannabis Licenses: What You Need to Know

Cannabis
Compliance
Delivery
E-commerce
July 24, 2023
Olivia Bobrofsky

Legal cannabis in New York has finally arrived and the regulations are precise and complex, especially regarding cannabis payments and deliveries. 

The state of New York voted to legalize recreational cannabis use for adults in early Spring 2021. Nearly two years later, many people are unsure of what's happening with legal cannabis and wondering, "When will dispensaries open in New York?". State officials can finally answer long-awaited questions, and as promised, the first retail dispensary, Housing Works Cannabis Company, opened its doors on December 29, 2022, in New York City's Greenwich Village. So far, that's the one, single location allowed to make in-person purchases on-site, thanks to an injunction issued by a federal judge. Legal cannabis in New York has been highly anticipated, and it’s essential to have a grasp of rules and regulations before businesses enter the market. 

New York state regulations for cannabis licensing

The Marihuana Regulation and Taxation Act (MRTA) was signed on March 31, 2021, allowing for the legal sale and possession of adult-use recreational cannabis. This legislation created the Office of Cannabis Management or OCM, governed by the Cannabis Control Board. The OCM is responsible for issuing all cannabis retail licenses. It is also responsible for creating and developing the regulations surrounding the new laws, particularly regarding how and when retail businesses can begin selling products in the burgeoning industry. 

The issued injunction temporarily blocks regulators from approving Conditional Adult Use Retail Dispensary (CAURD) licenses in certain parts of the state, including Central New York and Brooklyn. The directive calls for a sixty-day waiting period that allows the public to comment on the pending regulations before they take effect. 

However, the OCM's new guidance allows CAURD licensees to begin cannabis sales via prepaid delivery while awaiting the Dormitory Authority of the State of New York (DASNY) to build out over 150 turnkey dispensaries in New York. The workaround allows licensees with storefronts and warehouses in the same region to make prepaid deliveries until the injunction without further delay.

The recent adjustment to the guidance provides an opportunity that allows cannabis businesses to develop a customer base and generate revenue while waiting for in-store retail locations to be ready. Plus, digital payments and cashless transactions have a multitude of benefits for e-commerce cannabis delivery.

New York requires all cannabis deliveries to be prepaid and cashless

Despite all the required hoops cannabis business owners must jump through to remain compliant with the new laws and regulations, one crucial thing to know is that prepayment is mandatory. So if you're wondering which dispensaries take credit cards, the answer is none of them. Credit card and debit cards run on networks that do not allow cannabis payments. So, how can businesses accept cashless payments without credit and debit cards? Companies like Aeropay, provide compliant cash-free payment solutions through bank-to-bank transfers. For online delivery orders, customers simply select the Aeropay option at checkout, and link to their bank account to pay. Accepting prepayment and cashless payments for cannabis delivery orders is the best way to secure payments for dispensaries. It's the safest and easiest way to handle transactions. 

Change is coming to New York, and dispensaries are delivering cannabis with the most convenience. You can get just about any form of cannabis delivered, especially in New York City. With legal cannabis finally happening in the state of New York, the wait is over, and customers don't even have to leave their residences. Cashless transactions and digital payments for cannabis delivery in New York allow business owners to deliver products directly to consumers in their homes or private businesses without worrying about keeping track of cash. Logistically it's safer, easier, and ultimately offers the perfect opportunity for licensees to become profitable quicker than ever before. 

Social equity takes priority when it comes to granting cannabis licenses in New York

This week, the cannabis regulators in New York made a significant stride by granting approval to over 200 social equity retail licenses. Additionally, they introduced an innovative proposal to enable marijuana growers to sell their products at farmers' markets and various other venues, expanding the options beyond traditional dispensaries. The Cannabis Control Board in New York achieved a significant milestone by granting approval for 212 new provisional Conditional Adult-Use Retail Dispensary (CAURD) licenses. This decision almost doubled the total number of licenses, now reaching a count of 463.

Most new CAURD licensees will be awarded to "justice-involved" individuals disproportionately affected by the war on drugs. The goal is to provide 50% of licenses to minority and women-owned businesses, struggling farmers, service-disabled veterans, and people previously convicted of marijuana charges. In addition, the state plans to funnel 40% of tax revenues into disadvantaged communities. 

The first CAURD applicants must have previously faced conviction of a cannabis-related offense before legalization OR have a direct relative who was. They must also have a history of running a qualifying business. Regulators have since expanded the definition of a "justice-involved" person to those arrested for cannabis but charged with a lesser offense. With that, the Cannabis NYC Initiative promises to provide "support beyond the license" which intends to connect up-and-coming entrepreneurs with free or low-cost services and other funding opportunities.

The remaining licenses will go to non-profit organizations that support and assist previously incarcerated individuals with readjusting to society after detention and other marginalized communities. For example, the first-ever retail dispensary that opened legally in Greenwich Village is operated by Housing Works, a non-profit dedicated to fighting HIV and AIDS and building affordable housing, among other initiatives. 

How does weed delivery work in New York?

CAURD licensees who wish to start prepaid delivery services ahead of retail sales in physical stores must adhere to many guidelines that affect every part of the delivery process and business, including cannabis dispensary payments. Here are the most important requirements you need to know about to remain compliant with delivering cannabis in New York. 

Deliveries may only be made to adults over twenty-one with valid identification at a residential address or private business. Deliveries in public spaces, including parks, school grounds, places of worship, and virtually anywhere that isn't a residence or private business, are still illegal.

Businesses can only accept cash-free payments through compliant eCommerce platforms online or through the shopper’s mobile phones. Employees cannot complete in-person or curbside purchases or pick-ups at the temporary delivery facility and cannot deliver to anyone inside a motor vehicle. 

Cannabis retailers can hire up to 25 employees at this time, and delivery methods may include by motor vehicle, on foot, or by bike, scooter, or other similar transportation. An enclosed vehicle may have up to $20k in cannabis products at a time, while a non-enclosed transportation method may have up to $5k in products at any given time, with at least 30% of the product prepaid.

A full announcement on New York’s delivery guidance and regulations can be found here

Which payment providers are available in New York?

Partnering with an eCommerce cannabis service like Aeropay for compliant contactless payments allows customers to pay for cannabis deliveries directly from their mobile device or computer. Aeropay provides a convenient method for secure payments with bank-to-bank transfers customized to the needs of your delivery business. Cannabis delivery drivers and customers no longer have to worry about the hassles and risks that come with handling cash during door-to-door transactions. Aeropay facilitates cash-free, prepaid transactions in the state of New York that are also fee-free for customers. 

Request a demo to find out about how to offer contactless payments for cannabis deliveries.

Author

Olivia Bobrofsky

Enterprise Sales & Account Manager
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