More than a year after New York State legalized recreational cannabis, Westchester’s own cannabis industry is looking to bloom. Local entrepreneurs are eager to open dispensaries; out-of-state players are eager to muscle into the county; and once-illicit dealers want to emerge from the shadows.
Despite the enthusiasm, though, there’s still an unexpected hurdle: the law. Although former Governor Andrew Cuomo signed the bill into law in March 2021, many legal questions remain. Who can obtain a license and how? What exactly are the tax rates and deductions for professionals in the industry? And how do you address the tension between state and federal law? (At a federal level, marijuana remains illegal.)
“People who are participating in the industry are going to need lawyers to help them comply with the law,” explains James Landau, a lawyer with the firm Prince Lobel, which expanded into White Plains (from Boston) earlier this year and specializes in cannabis law.
Amid this legal confusion, a sought-after expert is emerging: the cannabis lawyer. Across Westchester — and New York State more broadly — lawyers who know their way around the industry are in high demand. And those lawyers who don’t know the details are racing to catch up. After all, the industry “stands to provide thousands and thousands of jobs and generate a ton of taxable revenue for the state,” Landau says.
“The legal cannabis industry is in its infancy in New York, and it may not be so easy to find people who are actually qualified to help,” explains Landau, summing up a problem many would-be cannabis professionals are encountering.
Landau says some lawyers and firms affix “cannabis law” to their résumés without having the proper expertise. He compares it to economic recession tactics: “Every lawyer becomes a workout lawyer in a recession, but only some of them actually know how to restructure a business or work out its problems,” he says. “Pretty much any commercial lawyer who is attuned to recent [cannabis] developments is going to say, ‘We’ll help cannabis businesses comply with the law.’”
At the other end of the spectrum, Landau explains, are lawyers “who have been doing this for years, trying to learn about the industry and play a part in the evolution of the law. There are comparatively fewer of these people.”
Landau himself began working in the cannabis space in 2018, when the New York State gubernatorial primary pushed Cuomo to the political left on marijuana. Around that same time, hemp was removed from the federal scheduled controlled substance list.
“I started thinking, This industry may actually come to fruition in New York,” Landau recalls. “So, I started learning about it.” Landau is now a cofounder of the Cannabis Law Committee of the Westchester County Bar Association, which has grown from two members in 2018 to close to 80 today. He is also director of the Hudson Valley Cannabis Industry Association.
If Landau is one of the few local experts, so, too, is Lauren Rudick, a partner at Hiller, PC, a Manhattan-based firm that also serves Westchester. Rudick is chair of the firm’s cannabis practice and serves as director of the board of the International Cannabis Bar Association.
“I initially came to the industry in 2009, through my mother’s end-of-life care,” Rudick explains. “She was a patient in California, and we were navigating the medical landscape there when she was undergoing treatment for cancer.”
The experience opened Rudick’s eyes to the myriad legal complexities in the space, from patients’-rights issues for consumers to due-process issues for investors. “It was very clear there was work for lawyers,” she recalls.
“We took issue with deprivation of life, liberty, and property without due process, all kinds of free speech issues, [and the] right to petition your government.”
—Lauren Rudick, Hiller PC
When New York legalized medical marijuana in 2014, Rudick started working on cannabis law in the region, specifically on issues like due diligence and acquisition. “We were navigating a very unique regulatory requirement.”
Hillary Peckham, chief operating officer of Etain, agrees. Etain runs a collection of New York State cannabis dispensaries, including one in Yonkers. “When New York first legalized medical cannabis, the qualifying conditions were very strict and limited,” Peckham says. “This meant that many people who could benefit from medical cannabis weren’t able to access this medicine.”
It was during this time that Rudick began by working on licensing, “helping clients apply for and win some of the more competitive medical marijuana licenses,” she explains. Her work also took on an advocacy bent, such as when she was part of a legal team that brought action against the federal government in an effort to deschedule cannabis on constitutional grounds. “We took issue with deprivation of life, liberty, and property without due process, all kinds of free speech issues, [and the] right to petition your government,” Rudick explains.
Now, nearly a decade later, all these complications are returning, but on a much larger scale.
Lawyers like Landau and Rudick have their hands full, as there’s no shortage of legal confusion to clear up. “If anything, it’s getting rockier,” Rudick says. “The New York program has not been easy — they’re rolling it out piecemeal, which makes business planning very challenging.”
For starters, the state has committed to awarding half of cannabis business licenses to social and economic equity applicants, like minority-owned and women-owned businesses. “And they haven’t quite figured out how they’re going to achieve that goal,” Rudick says. “What does that look like in terms of priority for licensing? What does that look like in terms of who can have a seat at the table when it comes to issuing licensing?”
Meanwhile, though recreational marijuana may now be legal in New York, it’s still not legal federally. “There are unique business challenges involved with operating in open violation of federal law,” Rudick explains.
As the state slowly rolls out its licensing scheme, Landau notes that “the big question I get all the time is: ‘When is licensing going to happen? Full-blown, permanent licensing other than these conditional licenses for processors and cultivators?’”
The answer remains unclear. “It’s something we could speculate about but don’t have a definitive answer for,” he adds.
“The big question I get all the time is: ‘When is licensing going to happen? Full-blown, permanent licensing other than these conditional licenses for processors and cultivators?’”
—James Landau, Prince Lobel
Other legal conundrums include the concern that out-of-state players may monopolize the market and, perhaps most of all, legacy operators — that is, people and businesses that have been in the cannabis industry since before it was legal.
“New York is one of the largest economies in the world, and it also has the most sophisticated and robust illicit markets,” Rudick explains. “So we have a lot of legacy to legal transition happening here.”
“It’s existed for eons,” she adds, “and it’s going to be very challenging for New York’s regulated market to compete effectively with the illicit market.”
Despite the legal hurdles, Westchester cannabis law experts are optimistic. “Right now, it is a challenging time, but I do nonetheless believe the risk will be worth the reward,” Rudick says. Indeed, she believes Westchester and New York State broadly will ultimately serve as a template for how other regions and states deal with the issue. “If you can make it here, you can make it anywhere,” Rudick says, echoing the popular song.
Etain may well be the archetype for how cannabis can thrive in Westchester, with a variety of offerings. “Patients can purchase high-quality THC products in a wide range of distribution methods, including capsules, flower, lotions, lozenges, powder, sprays, tinctures, and vape pens,” Peckham says. And that’s just the medicinal products. “We also offer products available to people not in the medical cannabis program. We curate a rotating selection of premium non-THC health and wellness products.”
And, like Rudick, Peckham is optimistic: “New York is building toward creating a very equitable industry,” she says.