To help New York cannabis industry entrepreneurs get their businesses off on the right foot, VS's New York team created an eight-part series of VS Insights to assist in navigating the path to applying for a New York cannabis license. The series covers essential topics for New York cannabis entrepreneurs, such as forming your business, preparing for the license applications, finding appropriate real estate, protecting your brand, qualifying as a social equity applicant, communicating with government officials, and fundraising and investment.

Part seven of the series focuses on New York’s environmental requirements for cannabis operators.

In 2022, New York was ranked as the second "greenest" state in the US—and, no, we're not referring to cannabis this time. A leader in environmental consciousness, New York proudly enforces a zero-tolerance policy against ecological threats and holds its residents and businesses to a high standard of sustainability, which will undoubtedly extend to the cannabis industry as we fight the ongoing climate crisis.

The Marijuana Regulation and Taxation Act (MRTA) acknowledged the industry's intent to protect the environment and improve the state's resiliency to climate change. We anticipate New York's adult-use rules will be one of the country's strictest in terms of environmental and energy standards and best practices for water and energy conservation. Regardless of what license type you're interested in pursuing or have already obtained, you'll need to add "environmental considerations" to your mental to-do list.

Per the MRTA, in reviewing applications, the Cannabis Control Board (CCB) will consider the applicant's "ability to increase climate resiliency and minimize or eliminate adverse environmental impacts, including but not limited to water usage, energy usage, carbon emissions, waste, pollutants, harmful chemicals, and single-use plastics."

What environmental requirements should New York cannabis businesses understand?

Cultivators

For cultivators, you can expect regulations, standards, and guidelines to require sustainable farming principles and practices. These are likely to mandate or strongly recommend using organic, regenerative, and integrated pest management models.

Additionally, regulations may restrict the use of pesticides to those registered by the Department of Environmental Conservation (DEC) or that meet the United States Environmental Protection Agency (EPA) registration exemption criteria for minimum risk. For example, the revised medical regulations require registered organizations to use only pesticides registered by the DEC or that meet EPA registration exemption criteria for Minimum Risk Pesticides. DEC has yet to release any cannabis-specific guidance.

In order for the Adult-Use Conditional Cultivators to transition to a "regular" Adult-use Cultivator license, the applicants will be evaluated on the extent that licensees demonstrate sustainable practices in the following:

• Greenhouse gas emissions reduction
• Waste reduction
• Sourcing (organic principles and waste)
• Water reduction

In addition, licensees can present information on sustainability practices and programs, such as a licensee's ability to generate renewable power onsite and to purchase carbon credits to offset their carbon footprint.

Manufacturers and Retailers

On the processing, packaging, and retail fronts, the recently released draft regulations to address packaging and advertising included the mandatory use of sustainable packaging. All license applicants must submit an environmental sustainability program for cannabis product packaging in their license application.

Under the proposed regulations, licensees have a few options for meeting these sustainability requirements. Options include:

• Propose reuse strategies for collecting reusable cannabis packaging components to be sanitized and refilled or reused as cannabis packaging

• The retail packages will need to be sanitized and disinfected either by a licensee or by a third party to ensure that they are in good condition and do not contain any harmful residue or contaminants

• The licensee must outline a sustainable packaging strategy that uses non-plastic, compostable, or recyclable materials, or packaging materials that exceed 25% post-consumer recycled content

• In addition, there are annual reporting requirements for licensees who package products for retail sale. The licensees must annually report key metrics, including but not limited to:

• The total amount of packaging material—by weight—sold, offered for sale, or distributed into the state by the licensee in the prior calendar year

• The total costs of packaging material

What can current and prospective New York cannabis operators expect moving forward?

Final regulations and additional guidance

Soon, the state will finalize all adult-use and medical implementation regulations. We anticipate all regulations will in some way factor in environmental matters to lessen the industry's burden on the environment.

Proposed legislation

In the last legislative session, an environmentally focused cannabis bill, SB8203, was sponsored by Senator Michelle Hinchey. This bill is intended to promote recycling in the industry by requiring adult-use cannabis retailers to apply a $1 deposit for any products sold in single-use plastic containers and reimburse customers that deposit if they return the container. It also requires that packaging is made of at least 50% recycled materials. When the legislative session kicks off again in January, we expect to see a number of bills similarly focused on cannabis and the environment.

How can New York cannabis operators stay compliant with the environmental regulations?

The most important thing with compliance, both environmental and general, is to stay on top of your game.

• Look to not only the cannabis regulatory agency for guidance, but also the DEC

• Be on the lookout for new FAQs, guidance, regulations, or comments from regulators that may indicate changes are coming

• Create checklists that you can easily reference

• When in doubt, ask your inspector for help

• Ask your legal team or compliance consultant for guidance