N.Y. Comp. Codes R. & Regs. tit. 9 § 124.1

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

Section 124.1 - Undue Influence and Incentives

(a) No person shall enter into any agreement which would cause undue influence over a licensee, as set forth in this Part. Nothing herein shall be construed as prohibiting the placing and accepting of orders for the purchase and delivery of cannabis or cannabis products that are made in accordance with usual and customary or common business practices and that are otherwise in compliance with this Title.

(b) Licensees shall only enter into agreements with third-party platforms, marketplaces, or aggregators that:

(1) sign and submit the Office's Confidentiality and User Agreement or other agreement as required by the Office, if such third-party accesses, extracts, or otherwise relies on the transmission of data from the State's seed to sale track and trace system;

(2) when advertising or listing a cannabis product, list all licensees authorized for the retail sale of such cannabis products;

(3) provide open read and write application programming interface access for all data points in a point of sale or track and trace system;

(4) when aggregating, compiling, anonymizing, or otherwise exhausting data derived from consumer interactions with a licensee, receive explicit opt-in from the licensee to establish such a data sharing agreement, and no standard software agreement by a third-party platform, marketplace, or aggregator shall include any default data usage rights for the technology provider, other than system usage data used to tune third-party system performance and database optimization in compliance with these regulations; and

(5) for all digital interactions with a potential cannabis consumer:

(i) only display, sort, or order cannabis products, or paraphernalia as part of a search result, browse grid, or other digital interface based on objective, consumer-oriented criteria, such as time to deliver to the consumer; available delivery times; product form; distance in miles from the retail dispensary; or independent and verified consumer reviews; and

(ii) redirects from the third-party marketplace or aggregator to a domain or web-based interface hosted via a platform that supports search engine optimization or SEO credits accruing to the domain of a licensee authorized for retail sale of cannabis, before the price of adult-use cannabis products are displayed.

(c) No licensee shall list cannabis products on a third-party platform, marketplace, or aggregator, that:

(1) does not allow for any licensed distributor, who is willing and in good standing, to be listed as an option for logistics and transportation purposes,

(2) does not allow customers to negotiate fees for such services directly with such distributors, or

(3) requires the exclusive use of such third-party platform, marketplace, or aggregator for the listing or the distribution of cannabis products.

(d) No licensee shall enter into an agreement with a goods and services provider, including, but not limited to: a third-party aggregator or marketplace, point of sale provider, payments service provider, payments processor, inventory tracking system, customer loyalty program, or seed to sale tracking system, that conditions the sale or lease of one product or service on the consumer's agreement to take a separate product or service.

(e) No nursery, research license, cultivator, processor, distributor, microbusiness, cooperative, ROD, or ROND shall, directly or indirectly, advance to any licensee authorized for the retail sale or delivery of cannabis or cannabis products to consumers, and no licensee authorized for the retail sale of cannabis or cannabis products to consumers shall receive money or a benefit equivalent to the value of money under an agreement or by means of any other business practice or arrangement such as:

(1) gifts;

(2) discount, except as permitted in this section;

(3) customer loyalty programs;

(4) loans of money;

(5) premiums;

(6) rebates;

(7) royalties;

(8) free cannabis product of any kind, except as permitted by this section;

(9) preferential shelf space or displays; and

(10) treats or services of any nature whatsoever, except:

(i) a discount that is not more than one percent for payment on or before 10 days from date of shipment of such cannabis; or

(ii) such agreements and services as are authorized in this section or which may be authorized by a license issued pursuant to the Cannabis Law.

(f) Licensees are prohibited from requiring the purchase of other products or services by other licensees as a condition of a transaction of cannabis or cannabis products. Products and services include, but are not limited to, other cannabis or cannabis products or brands, merchandise, cannabis paraphernalia, property, software or applications, or services.

(g) A nursery, cultivator, processor, microbusiness, cooperative, distributor, ROD, or ROND may provide free samples of cannabis products to negotiate a sale to a retail dispensary or on-site consumption licensee premises that does not currently carry the cannabis product being sampled. Such licensees shall abide by any sample limits set by the Office and shall record the amount, transfer, and receipt of each cannabis product sample in the licensee's inventory tracking system in accordance with pursuant to the requirements set forth in section 125.8 of this Title. The sample shall be clearly labeled as a "retailer sample" and recorded and tracked on a transport manifest. The receiving licensee shall receive the 'retailer sample' in the inventory tracking system prior to sampling the cannabis product. All other packaging and labeling requirements in this Title shall apply. The retailer sample may be useable by the retailer and employees of a retailer but shall not be sold or given away to cannabis consumers.

(h) A nursery, cultivator, processor, microbusiness, cooperative, distributor, ROD, or ROND may provide retailers or on-site consumption licenses and their employees with cannabis merchandise of nominal value as determined by the Office. These items can only bear the brand of a licensee. The items may not be forwarded on and given to retail customers, through purchase or giveaway.

(i) Retail advertising specialties. A cultivator, processor, microbusiness, cooperative, distributor, ROD, or ROND may provide retail dispensary, delivery, ROD, or on-site consumption licensees with retail advertising specialties. The total value of all retailer advertising specialties furnished by a licensee to a retailer may not exceed $200 per brand in any one calendar year per licensee, and licensees cannot pool or combine their dollar limitations to exceed the threshold. The value of a retail advertising specialty is the actual cost of the item to the manufacturer or wholesaler who initially purchased it. Transportation and installation costs are excluded. Records verifying the cost of retail advertising specialties provided to each dispensary shall be made available for inspection at the request of the Office.

(j) No nursery, cultivator, processor, microbusiness, cooperative, distributor, ROD, or ROND shall provide category management services to retailers, including, but not limited to:

(1) dictating the placement of products at retail by any means, including, but not limited to, by providing a retailer with planograms, or other suggested shelf schematics related to the store layout;

(2) conditioning the purchase of one product or product category on the purchase of another product or product categories; and

(3) offering slotting, shelving, and other preferential practices.

(k) Licensees are prohibited from giving away or distributing promotional items such as branded or unbranded merchandise to cannabis consumers except as provided for by Part 129 of this Title.

(l) Any person who, under the definitions in this Title, would be considered a true party of interest of an entity, and who is permitted to conduct activities which are authorized for a licensee under the Cannabis Law, shall be subject by the true party of interest requirements for that license type.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 124.1

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