New York Regulators Greenlight Rec Market Entrance of Six Medical Cannabis Behemoths

New York marijuana regulators on Friday gave the formal thumbs up to six of the state’s 10 licensed medical marijuana companies – most of which are large multistate operators – to begin adult-use cannabis sales on Dec. 29, precisely one year after recreational sales were launched in the Empire State.

The half dozen that got the green light from the state Cannabis Control Board include:

Etain LLC, which is owned by Riv Capital (CSE: RIV) (OTC: CNPOF)
NYCANNA LLC, which is owned by Acreage Holdings Inc. (CSE: ACRG.A.U) (OTCQX: ACRHF)
PharmaCann of New York LLC
Valley Agriceuticals LLC, which is owned by Cresco Labs (CSE: CL) (OTCQX: CRLBF)

Ultimately those six companies will be permitted to set up co-located recreational sales at up to three of their existing medical dispensaries, but for the time being, each was only approved for a single shop that can open by the end of the month.

Four other New York medical marijuana companies weren’t mentioned during the CCB meeting, but technically they are eligible to apply for transition into the recreational market, including:

Citiva Medical LLC, which is owned by iAnthus Capital Holdings Inc. (CSE: IAN) (OTCQB: ITHUF)
Fiorello Pharmaceuticals Inc., which is owned by Green Thumb Industries (CSE: GTII) (OTC: GTBIF)
MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF)
Vireo Health International, which does business as Goodness Growth Holdings (CSE: GDNS) (OTCQX: GDNSF)

The CCB also approved new medical-only dispensary locations for both Citiva and Fiorello at Friday’s meeting, giving the former permission to open a dispensary in Ithaca and the latter for one on Long Island.

“The registered organizations being considered today have submitted the required materials to transition, including a community impact plan, medical patient prioritization plan, and an energy and environmental plan,” Damian Fagon, chief equity officer at the Office of Cannabis Management, told the board Friday.

“We are excited to have ‘registered organizations‘ enter the market, while continuing to prioritize and expand offerings to medical patients,” Fagon said, adding that the OCM recommended the allowance of all six so-called “R.O.’s.”

Adult-Use Locations

During the meeting, CCB Chairwoman Tremaine Wright said that Columbia Care intends to start recreational sales at its Brooklyn dispensary, Curaleaf at its Newburgh dispensary, Etain at its White Plains dispensary, NYCANNA at its Farmingdale dispensary, and PharmaCann at its Albany dispensary. She didn’t mention where Cresco/Valley Agriceuticals plans to start recreational sales.

Wright also emphasized that the R.O.’s will be required to reserve 50% of their shelf space for cannabis brands that are not owned by any of the R.O.’s, thus ensuring a measure of product diversity. That policy also addresses fears expressed by smaller operators, who were concerned about the R.O.’s potential to dominate the market through scale and capital.

OCM Policy Director John Kagia said that the R.O.’s have not yet begun stocking up on inventory from smaller brands because they were waiting for the formal thumbs up.

“The goal here was to ensure that we could get this approval done now so they could go out, secure the products, make sure the inventory loads were properly balanced,” Kagia said. “It takes a few weeks to acquire the amount of product we think they’re going to be selling through.”

The Dec. 29 entrance for the bigger medical companies – compared to the mom-and-pop nature of most of the licensed farmers, processors, and conditional adult use retail dispensaries (CAURD) that comprise the rest of the New York marijuana market – was also a major policy shift in May The original plan had the R.O.’s waiting another two years before being allowed into the adult-use market.

Not only that, but some of the R.O.’s – including Acreage Holdings, Curaleaf, Green Thumb Industries, and PharmaCann – threw their weight and finances behind a lawsuit that targeted the CAURD program and their exclusion from the recreational side of the cannabis trade. That suit, along with another that hampered the retail rollout, was settled late last month, setting the stage for more expansion in New York’s market.

“As New York works to turn the tide in shutting down the illicit market, the most effective tool to do so is with a robust legal market where New Yorkers can securely purchase safe, tested, and well-regulated cannabis products, and that is what this ratified agreement ensures,” Curaleaf CEO Matt Darin said in a statement.

Darin added that the MSO – one of the largest marijuana companies in the world – is eager to work hand-in-hand with small local brands, CAURD licensees, and other companies up and down the supply chain.

“This is a transformational moment not only for RIV and Etain but for the New York market at large,” Mike Totzke, COO and interim CEO of RIV Capital, said in a statement. “The excitement surrounding this expansion of the New York adult-use cannabis market is palpable.”

Totzke added that Riv Capital expects to pick its first recreational sales dispensary location “shortly.”

Nicholas Vita, CEO of Columbia Care – which rebranded recently as The Cannabist Company – said he’s “thrilled” that the company is finally fully joining “the cannabis capital of the East Coast.”

“New York is going to rapidly become the largest cannabis market in the country, and we are ready to supply that growing demand from our scaled cultivation and manufacturing facilities in Long Island and Rochester, with premium and enjoyable products,” Vita said in a release, which also noted that the company plans to begin wholesaling “immediately.”

Applications, CAURD Licensing Ongoing

Meanwhile, the OCM continues to accept recreational marijuana business applications in its latest licensing round. Although the deadline for fast-tracked retail shops closed on Nov. 17, the general application window is open until Dec. 18.

The OCM’s Fagon said the office has received almost 1,500 license applications thus far for retailers alone, and the agency has begun putting them in random order for processing. More than three-quarters of those filed as social equity applicants.

The OCM also received more than 350 microbusiness license applications, and more than 70% of those filed as social equity entrepreneurs.

The same court settlement that fixed the MSO lawsuit also paved the way for the CAURD program to continue, Fagon noted happily, meaning more of the 463 CAURD shops will be opening in the near future. Thus far only 31 legal recreational marijuana shops are open in New York, according to the OCM.

“Having concluded this legal challenge, we are very excited to resume the work of advancing the CAURD program,” Fagon said. “We have already issued half a dozen final licenses, with many more to go. Store openings are coming.”

He added, “By the end of the calendar year, the office anticipates bringing online over a dozen adult use retailers in … Rochester, Mount Vernon, Brooklyn, Long Island and the Upper East Side.”

End of Growers Showcases

The Friday meeting also drove home that a temporary outlet for cannabis growers – the farmers market-style “cannabis growers showcases” – will not continue after Jan. 1.

Kagia said that the program, which was always intended as a stopgap measure to relieve farmers as the state struggled with a retail bottleneck, had “been extraordinarily successful” with more than $5 million in sales as of Nov. 26.

By that date, Kagia said, there had been 141 calendar days of cannabis farmers markets in New York, involving 75 farmers, 19 processors and 12 CAURD retailers, and he said the program will directly inform new marijuana event regulations the OCM is planning to release in the first half of 2024.

“The (cannabis growers showcase) program may be sunsetting … but it has planted an invaluable seed that will grow throughout the future of this program,” Kagia said.

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