N.Y. Comp. Codes R. & Regs. tit. 9 § 123.13

Current through Register Vol. 46, No. 36, September 4, 2024

Section 123.13 - Cooperative and Collective Ownership, Interests, Business Authorizations and Prohibitions

(a) A cannabis cooperative or collective shall have the same authorizations and prohibitions as adult-use cultivators, processors, and distributors, as provided in this Part, to the extent the cannabis cooperative or collective engages in such activities, notwithstanding that:

(1) a cannabis cooperative or collective is not limited in the number of processing premises it may operate, provided that additional application and licensing fees may apply for each premises over two (2) premises; and

(2) a cannabis cooperative or collective is not limited in the number of cultivation premises it may operate, provided that total combined canopy does not exceed that maximum allowed pursuant to the applicable license tier and that additional application and licensing fees may apply for each premises over six (6) premises.

(b) A member of a cannabis cooperative or collective shall not be a member of more than one (1) cannabis collective.

(c) A member of a cannabis cooperative or collective is a true party of interest of the cannabis collective.

(d) In addition to any other restrictions or prohibitions in this Title, including, but not limited to, Part 124, no cannabis cooperative or collective or its true party of interest is permitted to have any direct or indirect interest, including by being a true party of interest, passive investor, or having a goods and services agreement with, or by any other means, in an adult-use retail dispensary, on-site consumption, or delivery licensee.

(e) No person shall be a true party of interest in more than one (1) adult-use cooperative or collective, or in an adult-use cooperative or collective and an adult-use cultivator, microbusiness, ROD, or ROND license. Provided, however, a true party of interest in a cooperative or collective may simultaneously be a passive investor in any number of adult-use cooperatives, or collectives cultivators, processor, distributor, microbusinesses, RODs, or RONDs, if such true party of interest complies with all restrictions governing such relationships, including, but not limited to, undue influence, control, and true party of interest requirements.

(f) A cooperative or collective licensed under this Title shall be organized as either a cooperative, a traditional collective or a limited collective.

(g) A cooperative shall be organized pursuant to New York State Cooperative Corporation Law.

(h) A traditional collective shall have:

(1) all voting rights held exclusively by members that contribute to the traditional collective primarily with labor. Such members shall:

(i) each have one (1) vote;

(ii) comprise no less than a two-thirds majority of the governing body;

(iii) maintain a controlling interest of the traditional collective at all times;

(iv) own no less than 51% of the equity of the traditional collective at all times;

(v) not have their capital or interest subordinated to the capital or interest of any other member group or shareholders; and

(vi) own and control the traditional collective; and

(2) its profits, earnings, and losses distributed to members based on labor and not based on capital investment.

(i) A limited collective shall:

(1) have at least two-thirds of its voting rights in the aggregate held by members who contribute to the collective primarily with labor. Such members shall:

(i) not have their capital contributions proportionately tied to voting rights;

(ii) comprise a majority of the governing body;

(iii) receive distributions from the limited collective based on their labor contributions;

(iv) receive no less than 51% of profits and distributions, provided shareholders exist and are receiving distributions;

(v) own no less than 51% of the equity of the limited collective at all times; and

(vi) own and control the traditional collective;

(2) permit member contributions to consist of tangible or intangible personal property, or any other benefit to the collective, including, money, labor, services, promissory notes, agreements to contribute, and contracts to be performed, unless otherwise provided by the collective's internal rules;

(3) permit, before determining the amount of profits, its governing body to set aside a portion of profits to create or accumulate: a capital reserve; reasonable reserves for specific purposes, such as expansion or replacement of capital assets; or education, training, and information;

(4) permit distributions to be made in any form, including cash, capital credits, and allocated patronage equities;

(5) permit distributions to shareholders to be based on their capital contributions; and

(6) generate returns for members and shareholders based on profitability, distributions on profitable asset sales, refinancing, or through a liquidity event.

(i) A cannabis cooperative or collective shall have no fewer than five (5) members that contribute primarily with labor.

(j) The Office may request documentation and other support evidence to verify the validity of the applicant's cooperative or collective formation as described in the Cannabis Law, regulations, and guidance issued by the Office.

(k) All traditional or limited collectives shall be certified and recommended by a national trade association that has been approved by the Office.

(l) No cooperative, traditional collective, or limited collective licensee shall amend their cooperative or collective eligibility type, as described in this section, without the express approval by the Office.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 123.13

Adopted New York State Register September 27, 2023/Volume XLV, Issue 39, eff. 9/27/2023