New York Governor Blasts Marijuana Licensing ‘Disaster’ And Wishes Lawmakers Would ‘Start Over’ With Legalization Law

The governor of New York is again slamming the rollout of marijuana legalization in her state, calling the protracted process a “disaster” and “insane,” while acknowledging that it’s unlikely the legislature would be willing to “start over” with crafting a framework for the legal cannabis market as she’d prefer.

Gov. Kathy Hochul (D) has recently become vocal about her frustrations with the implementation of the cannabis law she inherited. While she supports legalization, she told The Buffalo News editorial board the law was drafted “in a way that was not poised for success.”

“It’s a disaster. I will not defend that for one second,” Hochul said. However, she added that she’s “glad we stopped the mass incarceration of young people for consumption,” calling it “the right policy.”

Much of the governor’s frustration concerns the limited number of licensed retailers that have been approved since the state enacted legalization—an issue that’s significantly compounded by the proliferation of unlicensed storefronts.

Hochul said that one key problem is that the law lacks “teeth,” meaning provisions allowing for effective enforcement to eradicate the illicit market.

“It’s not [on] every street corner,” she said, referring to the unregulated shops. “It is every other storefront. It is insane.”

“I think it should be treated the way tobacco is: local law enforcement can stop illegal sale of cigarettes that are not licensed and taxed,” she said. “They don’t want to have the teeth in the law to stop the illegals.”

In terms of licensing regulated shops, the governor laid partial blame on the organizational structure of New York’s Office of Cannabis Management (OCM) and Cannabis Control Board (CCB). She said she’s “frustrated” that both divisions have paid executive directors where “inherently conflict was built in as to who’s the ultimate decider. That didn’t go well.”

Hochul also said it was a “bad idea” to charge the Dormitory Authority of the State of New York (DASNY) with identifying locations for marijuana business licensees, stating that the responsibility “was not their forte.”

She acknowledged that the delayed rollout was largely due to litigation that resulted in recently lifted court injunctions that had blocked regulators from processing hundreds of approvals.

That’s led to “farmers who are just losing money,” she said. “We’ve got these people who took out loans and are excited about their opportunities, ready to start. And meanwhile, no money is flowing back to the state. We have all this, and the illicit market is flourishing.”

The governor isn’t optimistic that the legislature will take steps to meaningfully reform the overall legalization law, even if there’s “a strong part of me that would just like to go in and just start over.”

“But I’d have to go back to the legislature and convince them to change the laws in every way I’ve described,” she said. “It’s probably not likely to happen.”

Instead, Hochul said she will continue to pressure lawmakers to expand enforcement authority, while advocating for policies that could bolster the regulated market.

For example, the governor released a budget plan this month that calls for the elimination of a THC potency tax, aiming to reduce costs for consumers in a way that could make the regulated market more competitive against illicit operators.

Hochul also recently described being “very fed up with how long it is taking” to expand the state’s recreational marijuana market with more licensed businesses, and she revealed that she urged regulators to “go back to the drawing board” to approve hundreds of new retailers.

Marijuana license applicants have voiced frustration over delayed approvals, as well as the abrupt cancellation of a Cannabis Control Board (CCB) meeting this month where regulators were expected to grant additional approvals.

When the governor caught wind of the fact that the board was only prepared to sign off on three new licenses, she said her office intervened.

Officials were also set to consider proposed rules allowing home cultivation of cannabis for adults at the meeting that was cancelled.

Also, as New York works to expand the state’s marijuana market, a bill filed in the Assembly this month would empower individual municipal governments to shut down unlicensed cannabis businesses and seize their products.

Over a dozen new cannabis retailers opened in December alone following a settlement agreement lifting an injunction that had imposed a months-long licensing blockade.

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Separately, the state’s Department of Labor last month published dozens of sample job descriptions for positions in the legal industry, which officials said are intended to help companies streamline hiring processes and allow prospective employees to assess their qualifications to work in various roles within the emerging cannabis industry.

Hochul, meanwhile, signed legislation in November that attempts to make it somewhat easier for financial institutions to work with state-licensed cannabis clients. She also signed a separate bill that’s meant to provide tax relief to New York City marijuana businesses that are currently blocked from making federal deductions under an Internal Revenue Service (IRS) code known as 280E.

While Hochul signed an earlier budget bill in 2022 that included provisions allow state-level cannabis business tax deductions—a partial remedy to the ongoing federal issue—New York City has its own tax laws that weren’t affected by that change. The new measure is meant to fill that policy gap.

Hochul also recently vetoed legislation that would have allowed hemp seeds to be included in animal feed for pets, horses and camelids such as llamas and alpacas.

In September, 66 state lawmakers—about a third of the entire state legislature—also wrote to Hochul urging her to sign a bill that would allow licensed marijuana producers to sell products to tribal retailers. The plan would offer a release valve to hundreds of cannabis farmers who are currently sitting on surpluses but have no place to sell their products. Last month, however, Hochul vetoed that bill.

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Photo courtesy of Philip Steffan.

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