New York Opens Doors to Out-of-State Cannabis Brands as Bill to Legalize Intoxicating Hemp Advances

New York’s fledgling legal cannabis market is set to undergo significant changes which could not only enable the sale of intoxicating hemp products in dispensaries but also open the door for out-of-state operators.

On Monday, March 03, a new bill was introduced in the New York Senate which would repeal emergency regulations restricting the sale of intoxicating hemp products, set to be enforced this July.

As the march of intoxicating hemp continues across the country with little to no regulation under federal law, individual states are continuing to issue their legislation to deal with this new and poorly researched set of substances.

New York’s Office for Cannabis Management (OCM) had pushed through emergency regulations to stem the tide of these products, which include THC variants like Delta 10 and Delta 8, which was scheduled to come into force on July 27, 2025.

Now, S05809 has been submitted to the New York State Senate, aiming to repeal this crackdown, focusing specifically on Delta 9 THC, the primary psychoactive compound in cannabis, potentially allowing for the sale of other THC variants in licenced dispensaries.

Furthermore, beginning January 1, 2026, licensed cannabis retailers would legally be permitted to sell cannabinoid hemp products, provided they meet safety standards set by the OCM.

Meanwhile, the OCM has this week introduced a new type of cannabis business licence, the Adult-Use Processor Type 3 Branding License, offering a new avenue for cannabis brands to enter New York’s legal market without operating a physical processing facility or engaging in direct plant-touching activities.

While New York’s cannabis programme was designed to promote local businesses and prevent giant multi-state operators from bulldozing their way into the market, this could effectively remove these guardrails.

The Type 3 Branding License enables a cannabis brand to market its products in New York through white-label agreements with state-licensed processors.

Under this arrangement, a licensed processor handles all cannabis-related activities—including extraction, blending, infusion, packaging, and labelling—while the brand licensee contributes intellectual property (such as logos and product specifications) and non-cannabis materials (like rolling papers, flavouring agents, or vaporizers). The processor must follow specific brand quality standards set by the licensee, ensuring product consistency.

Importantly, this license allows brands to enter the New York market without being classified as a ‘True Party of Interest’ in a processing facility, making it easier for companies to expand without direct financial or operational entanglements with New York-based processors.

However, the New York Office of Cannabis Management (OCM) still requires full disclosure of ownership, management, and financial details to ensure compliance with regulations on ownership limits, control, and undue influence.