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Haylor Risk Management Blog

Is your business prepared for legalized marijuana in NY?

Posted by Gia Diep on Dec 7, 2021 12:13:00 PM

Residents of NY will be allowed to purchase, possess and grow marijuana for personal use.  It will be a regulated and taxed industry that will see significant growth in the coming years.  NY has formed the Office of Cannabis Management (OCM) to establish the regulations about production, distribution and sale of recreational marijuana. 


While there are already businesses involved with supplying medical marijuana, recreational use will likely trigger substantial growth in the market.  Since marijuana is still an illegal drug under federal law, all of these businesses will need to be domiciled in NY.  Hence, there will be more licensed producers and distributors in response to the demand.  There are insurance companies that specialize in the unique risks involved with production and distribution of marijuana.  If you need information about insurance in this specialized market, the team at HF&C can assist. 

There is also an HR impact on your business with the legalization of recreational marijuana.  For instance, companies may no longer be able to drug test for marijuana anymore.  In general, denying employment solely because an employee or candidate uses marijuana is not compliant with NY law.  The exception may be if an employee works for an company or performs a job that is regulated on the federal level.  Some examples may be for work performed under a government contract or when federal transportation laws apply.  However, all companies can restrict the use of marijuana on company property, during work times, and certainly prohibit an employee from working while under the influence of marijuana.  Similar to alcohol use, businesses will need to make sure they communicate clearly with their employees about working while under the influence of marijuana.  Seek guidance from your Human Resources department or legal counsel for specifics on hiring practices and updating employee handbooks/guidelines.  We have HR resources accessed through our Group Benefits Insurance team that can assist with HR related questions.   

The law that legalized recreational marijuana use in NY also allows a resident over the age of 21 to grow marijuana in their own private residence for personal use.  There are limits for how much an individual can grow and this provision is under a moratorium (until 2023) while the OCM sets the regulations.  Under this provision, residences include single family homes, apartments, condos and townhouses.  This can be a significant concern for landlords and property managers.  Imagine an apartment complex with scores of tenants running grow lights, heaters and water pumps 24/7 to grow marijuana for personal use.  The equipment can consume huge amounts of electricity and also increase the risk of fire.   While it is not clear how the law will apply, the current thinking is that an owner of a rental unit may be able to prohibit the tenant from growing marijuana on the premise.  Similarly, smoking marijuana may be able to be restricted like smoking cigarettes.  Landlords should consult their legal counsel to draft language in their leases that explicitly prohibit the growth of and/or smoking of marijuana on the premise, subject to compliance with the law. 

Lastly, while it is currently legal to possess small amounts of marijuana for personal use, the Office of Cannabis Management has not issued any licenses for the legal sale of recreational marijuana yet.  However, with some tribal governments beginning to sell recreational marijuana, widespread legal sales outlets will follow shortly. 

 As details are publicized by the NY Office of Cannabis Management, we will elaborate on the impacts.  This is an evolving process in New York State and changes are sure to come.

Topics: Insurance, Risk Management, Marijuana, Legalized Cannabis