January 2024 Regional News Update: Lounges Are Coming To NJ, and More

Dried cannabis flower and a pre-roll in a clear case are positioned on top of $100 bills. This illustrates some of the major financial news to come out of New York cannabis in January 2024, including first year sales numbers and proposed tax revisions.

Each month, Cannabis World Congress & Business Exposition (CWCBExpo) offers a convenient roundup of the biggest cannabis news stories and hemp headlines emerging across the nation. Get these updates in your inbox by subscribing to our email newsletter, or follow us on Instagram, LinkedIn, Facebook, or Twitter (now X) to get the most recent edition when it’s published.

The Northeast cannabis industry is starting the year on the right foot. Here, we’ll take a look at New York, where the cannabis market has surpassed $150 million in total sales and regulators are mulling home grow policy reform and a repeal of the potency tax. And we’ll check in with New Jersey, where cannabis lounges could soon become a reality. Amid such rapid growth and evolution, the need for reliable sources of information is paramount. Join us on a journey through the latest milestones, regulatory shifts, and groundbreaking proposals as we explore the ever-evolving world of cannabis. 

New York cannabis market tops $150M during first year of operations

The New York cannabis market has surged beyond expectations, reaching $150 million in sales during its inaugural year. A report by the New York Office of Cannabis Management (OCM) noted that while just 40 adult-use cannabis dispensaries have opened for business across the state, there were more than 6,900 cannabis industry applications received in 2023, including:

  • 538 cannabis processor applications,
  • 372 cultivation license applications,
  • 351 distributor license applications,
  • 1,349 microbusiness license applications, and
  • 4,324 retail dispensary applications.
  • Of the 6,934 total applications, 3,826 — about 55% — were equity applications, regulators said.

“New York Cannabis has momentum heading into 2024 and we’ll keep working to make this market grow. We have a lot of work to do, and we have much to be proud of; now that the core market architecture is in place, my team at OCM is ready to scale and help this industry thrive across New York State,” OCM Executive Director Chris Alexander said in a statement. 

New York governor proposes repealing cannabis potency tax 

Gov. Kathy Hochul (D) is calling for the elimination of the THC potency tax as a part of her executive budgets, aiming to reduce costs for consumers in a way that would make the regulated market more competitive against illicit operators. 

Hochul’s proposal replaces the potency tax with a wholesale excise tax of 9% in an attempt to “simplify, streamline, and reduce the tax collection obligations and burden for cultivators, processors, and distributors.” Cannabis would still be subject to the existing 9% state retail excise tax and 4% local retail excise tax, as well. 

The brief for the budget changes says the tax changes would “promote and support the expansion of the legal adult-use cannabis market” and also result in $6.5 million in tax revenue for localities. Hochul’s budget proposes $68.1 million in funding for the OCM in the next fiscal year.

New York officials will vote on home cultivation rules in February

New York regulators will vote on a set of proposed regulations for home grow for adult use. The proposal comes more than a year after adult-use sales began in the state. 

The proposal rules would allow adults to grow up to three mature and three immature cannabis plants in their home. The proposal includes a per household limit of six mature plants and six immature plants per private resident, regardless of the number of adults who live there. 

Other proposed rules include: 

  • Individuals can only cultivate at a single location
  • Landlords will not be able to prevent tenants from growing cannabis and will be able to determine whether to install other mitigation policies 
  • Those residing in federal or federally-subsidized housing will not be able to cultivate at home 
  • Home-grown cannabis cannot be shared or gifted 

If passed, adults would also be permitted to keep up to five pounds of cannabis at a time that they have obtained from the legal plants they grow. Currently, adults can possess up to three ounces of cannabis in New York, so this would represent a major increase in the amount of cannabis that is legal to possess.

If the Cannabis Control Board (CCB) approves the proposed rules, a 60-day public comment period would begin. If no significant changes are made based on that period, the OCM will submit the regulations for final approval. A revised proposal would be followed by a 45-day public comment period, so it would still be some months before the rules were implemented if approved.

New Jersey regulators finalize plans for cannabis lounges

Regulators in New Jersey have officially signed off on rules governing the operation of cannabis consumption lounges and are expected to review applications in the coming months. Under the plan, dispensary owners would be eligible to open no more than one lounge, with an associated fee of $1,000 for microbusiness and $5,000 for standard businesses. 

Patrons must be 21 years of age or older to purchase or use cannabis products on-site in these lounges. Notably, medical cannabis patients will be permitted to bring their own products. Sales of food and alcohol will be prohibited. However, customers may be able to bring their own food or order food for delivery, mirroring the rules for New Jersey breweries, wineries, and distilleries. 

Navigating the shifting landscape

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