New York governor slams cannabis market rollout as ‘disaster’

New York Gov. Kathy Hochul blasted her own state’s performance in launching its adult-use cannabis market over the past year, labeling it a “disaster” and saying she’s “frustrated” with the rollout during an interview last week with the editorial board of The Buffalo News.

Hochul laid much of the blame on her predecessor, Gov. Andrew Cuomo, and the state Legislature, saying the 2021 legalization law set the state up for failure before she took office. The Marihuana Regulation and Taxation Act has led to an interminably slow process for getting legal marijuana shops operational, she said, while allowing the unlicensed market to run rampant.

“It’s a disaster,” Hochul said. “I will not defend that for one second.”

Hochul specifically called out the most recent Cannabis Control Board meeting, which had been slated for Jan. 24 but was canceled at the last second, and indicated she had expected regulators to sign off on around 400 new licenses. But on the agenda at the time, the CCB had only planned to consider five cultivators, two microbusinesses, three processors, and three retailers. The City reported that the CCB meeting was canceled at Hochul’s request.

The news of the canceled meeting came just after officials from the Office of Cannabis Management informed stakeholders they only planned to award 250 retail permits and 110 microbusiness licenses for applicants who had submitted their paperwork by Nov. 17, which came as a major disappointment to many who had hoped to win permits, given that regulators indicated last year a starting goal was to award up to 1,000 retail permits and 220 microbusiness licenses.

Several applicants have already filed suit since December against the OCM and CCB over the licensing process, which has already been stalled multiple times by litigation since late 2022, which has also slowed the overall launch of the New York adult-use market.

Hochul became animated enough that she “slapped her hand on the table when calling the rollout a ‘disaster,’” The Buffalo News reported. The governor called the Marihuana Regulation and Taxation Act of 2021 a law without “teeth” that has let the illicit market flourish across New York.

“We’ve got farmers who are just losing money. 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,” Hochul said.

Hochul said the framework of the 2021 law – which prioritized decriminalization and social justice – has led to a lawless market where illegal cannabis sellers dominate New York City and the state overall.

“It is every other storefront. It is insane,” Hochul said of unlicensed sellers in New York City.

There are just 59 operational legal cannabis stores in the state as of Jan. 26, according to the OCM. The first one opened for business on Dec. 29, 2022 in Manhattan. The agency has over 4,300 retail permit applications on file from the most recent application window, which closed in December.

OCM agents, in conjunction with the Department of Taxation and Finance, have also been issuing civil fines, conducting ongoing enforcement inspections and seizures at unlicensed cannabis stores, and trying to get a handle on the market. But the impact has not yet come close to shutting down the illicit trade. By the end of 2023, the OCM reported that its investigations had performed 381 site inspections and seized 11,800 pounds of illicit cannabis.

The New York City Council estimated in August last year, however, there could be as many as 8,000 illegal smoke shops selling cannabis in the city.

And it’s thus far unclear how much of a deterrent civil fines will prove to be for unlicensed sellers; some, such as the high profile Empire Cannabis Club, vowed to fight the state in court for their right to sell cannabis legally under the 2021 legalization law. Empire has five locations and is still operational, according to the company website, despite having been raided last summer for unlicensed sales.

The governor told The Buffalo News further reforms will be necessary in order to fully replace the current unlicensed market with a fully regulated one, which will include giving more power back to local law enforcement to crack down on illicit shops and dealers.

“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,” Hochul told The Buffalo News.

“There’s a strong part of me that would just like to go in and just start over,” she said. “But I’d have to go back to the Legislature and convince them to change the laws in every way I’ve described. It’s probably not likely to happen.”

Instead, Hochul reiterated, the Legislature needs to act and grant some of her requests to re-empower law enforcement to root out rulebreakers in the cannabis trade.

“There should be strict penalties and fines, and there aren’t,” she said. “The Legislature needs to increase the penalties, and I’ve tried. I’ll try again.”

The governor also criticized the paid positions of both OCM Executive Director Chris Alexander and CCB Chairwoman Tremaine Wright, which she said led to conflicts over “who’s the ultimate decider” when push comes to shove.

“That didn’t go so well,” Hochul said.

She further criticized the involvement of the Dormitory Authority of the State of New York, which was tasked with overseeing the raising and deploying of a $200 million fund that was intended to help social equity cannabis retailers find locations for their stores.

“That was not their forte,” she said. “Bad idea. So that took a long time.”

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