BILL NUMBER: S7565

SPONSOR: SAVINO
 
TITLE OF BILL:  An act to amend the public health law, in relation to
normalizing the organization of registered organizations to produce,
sell, deliver or distribute medical marihuana under strong regulation;
and to repeal certain provisions of such law relating to pricing of
medical marihuana

 
PURPOSE:

To allow registered organizations to contract for facilities, equipment,
or services, and remove price controls on medical cannabis products.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1: Adds a new subdivision 14 to section 3364 of Public Health
Law allowing a registered organization to contract with persons or enti-
ties to provide facilities, equipment, or services related to the regis-
tered organization's functions or activities. All laws applicable to the
registered organization shall apply to the contractor.
              

Section 2: Repeals section 3369-d of the Public Health Law, which
currently authorizes the Commissioner to set prices per dose of medical
cannabis products.

Section 3: Effective date.

 
JUSTIFICATION:

New York's medical cannabis program has established a secure foundation
and is ready to be expanded and enabled to operate more like other regu-
lated industries, so it can adequately serve the seriously ill patients
who now do not have reasonable access to medical cannabis. These changes
are consistent with preserving strong regulation in the public interest.

Registered organizations (R0s) are not currently allowed to contract out
any part of the production and distribution processes. They must own
every part of the operation from growing to dispensing. These
restrictions on ROs raise costs, discourage efficiency, make it diffi-
cult for entities with expertise in one part of the process to apply
that expertise, and are an obstacle to entry of qualified participants
in the field. For example, ROs produce medical cannabis in one location
and distribute it elsewhere to be dispensed, but cannot simply ship its
product with a shipper (no matter how secure) like any other manufactur-
er. Instead, the RO must own the delivery trucks itself and directly
employ the drivers. This bill allows the RO to contract out some of its
functions while ensuring that all laws applicable to the RO apply to the
contractors as well.

The law also now authorizes the Commissioner to fix prices per dose on
medical cannabis products. ROs are prohibited from charging less or more
than the fixed price. Although the Commissioner is directed to consider
fixed and variable production costs, this form of strict price control
may not reflect the complexity of medical cannabis production and
distribution systems. This bill removes the price control in order to
encourage ordinary competition among ROs, particularly as they are
allowed to operate more like traditional business. This bill is a

significant step towards expanding patient access by ensuring adequate
supply and statewide availability of medical cannabis.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediate