New York To Open Adult-Use Marijuana Market To All Businesses, Including Large Multistate Operators And Medical Cannabis Companies

New York regulators will officially open the state’s cannabis market to all applicants—including big businesses and existing medical marijuana companies—beginning next month, under rules adopted on Tuesday. The move could allow the new retailers to open by the end of the year.

But the change, meant to speed the slow rollout of New York’s legal marijuana market, has sparked an outcry among smaller growers and social equity applicants. They say it will undercut the state’s ambitious plan to prioritize small businesses and companies owned by people most directly impacted by prohibition.

The New York State Cannabis Control Board (CCB) approved a handful of resolutions at its latest meeting, including the new rules allowing the state’s existing medical marijuana dispensaries to transition to the adult-use market more quickly than initially planned. Originally medical marijuana companies were to be prohibited from competing with new businesses for three years after the start of legal sales in New York, but with Tuesday’s change, that will be cut down to about one year.

“Today marks the most significant expansion of New York’s legal cannabis market since legalization, and we’ve taken a massive step towards reaching our goal of having New Yorkers being able access safer, regulated cannabis across the state,” Chris Alexander, executive director of the Office of Cannabis Management (OCM), said in a statement. “The regulations finalized today are the result of robust engagement with stakeholders across the State who submitted thousands of comments. This final package truly represents the values of equity and competition that we believe are central to this market.”

Other changes included allowing license applications for more medical marijuana businesses, known in New York as registered organizations (ROs), as well as opening applications for new research licenses.

Currently, retail licenses are only available to applicants under the so-called Conditional Adult-Use Retail Dispensary (CAURD) license program. To qualify for that program, an applicant has to have been “justice involved”—in other words, directly impacted by a marijuana-related conviction—and have some experience running a profitable business. Cultivation licenses, meanwhile, were first given out to participants in New York’s hemp pilot program.

Broadening eligibility for participation in the state’s marijuana market is likely to speed the opening of more legal businesses at a time when unlicensed retailers have proliferated, particularly in New York City. Despite the state approving adult-use legalization in 2021, so far only about two dozen legal retailers have opened statewide. Meanwhile, lawsuits have temporarily halted licensing, further complicating the issue.

Last month, a judge halted licensing under the CAURD program, preventing regulators from granting new conditional adult-use recreational dispensary licenses, or processing existing ones, while a legal challenge from a veterans group plays out.

Those who stand to benefit from the timeline change welcomed Tuesday’s news.

The New York Medical Cannabis Industry Association, which represents a number of ROs—including major multi-state operators (MSOs) such as Curaleaf, Acreage Holdings, Columbia Care, Cresco Labs and others—said in a statement that it “applauds” the efforts.

“The CCB’s approval of adult-use regulations demonstrates positive forward momentum,” the industry group said. “Today marks a pivotal step toward expanding and sustaining the state’s medical program and creation of an economically viable and equitable adult-use cannabis industry in New York. Once up and running, this market will help squeeze out illicit operators putting consumers at risk, provide growers with more opportunities to sell their products, and generate tax revenue for communities disproportionately impacted by the cannabis prohibition.”

But the Cannabis Association of New York, which advocates for small and midsized businesses, decried CCB’s move, saying in a statement that it “opened the door for big cannabis to come in and compete with New York-based businesses.”

“Regulations must be immediately fixed,” the group said, calling for changes that would give small, local cultivators the same amount of canopy grow space as ROs—an effort to make them more competitive. The group also called for lower taxes and more enforcement against illegal operators.

In a statement on Tuesday, CCB chair Tremaine Wright called the change a “defining moment for New York State’s commitment to entrepreneurship and fostering a truly diverse cannabis marketplace,” adding that social equity remained a top concern.

“Our pledge to social and economic equity will continue to take center stage,” Wright said, “ensuring that individuals and communities from all backgrounds have a fair shot at success in this burgeoning industry.”

But during public comments, small-scale growers and dispensary licensees under CAURD expressed frustration at regulators for making changes that would create more competition from well-financed companies.

“MSOs are looking to seize the market opportunities that we were promised and that we have worked hard for,” said the founder and CEO of Freshly Baked NYC. “If unchecked, they will unfairly dominate the industry, nullifying our efforts and our investments.”

Another said that equity businesses would have done better if they’d simply opened illegal stores. “You’re hurting people tremendously—the very people who you’re supposed to help,” he told CCB members. “The CAURDs would have been better off if they’d have opened illicit stores.”

The line drew applause from many in attendance.

Some speakers called for Gov. Kathy Hochul (D) to call a special legislative session, bringing lawmakers back to attempt to codify CAURD into statute. That, they said, would moot the current lawsuit against the program and allow conditional licensing to proceed.

As for growers, one said that she has grown more than 500 pounds of cannabis that is currently “sitting and rotting right now,” because of a lack of legal places to sell it.

Another grower noted that September is suicide awareness month, saying she’d recently called police to do a wellness check on a colleague and was aware of another industry member who also had a crisis intervention amid ongoing business struggles. “This is no joke,” she said. “We’re in trouble. Please do the right thing. Give the farmers a fighting chance to survive.”

Dasheeda Dawson, a medical marijuana patient and the founding director of the municipal marijuana agency Cannabis NYC, told state regulators that more than 200 CAURD licensees had been provisionally approved in New York City.

“I stand here to firmly say ‘no to RO’ and to stand with the CAURD licensees,” she said.

Dawson cautioned that following through on the process of building an equitable cannabis industry would be messy. “Government has never supported Black and brown, or social equity,” she said. “We are literally doing what America has never done before.”

“A lot of people made a lot of comments about what will happen if we allow big companies to come into this industry,” she added. “That’s probably going to happen regardless.”

While Tuesday’s meeting saw the formal adoption of the new rules, the proposed accelerated timeline has been on the table for several months. A May preview suggested the first co-located adult-use and medical marijuana dispensary could open this December, followed by later openings in mid-2024.

Meanwhile, a state Senate marijuana committee last week scheduled a hearing to discuss challenges to the New York’s legalization rollout. Sen. Jeremy Cooney (D), who was appointed to lead the Senate’s first-ever cannabis panel earlier this year, described the October 30 hearing as an opportunity “finally address the many challenges that we have seen with the rollout of adult-use cannabis here in New York.”

Cooney said last month that he was “disappointed” by the judge’s decision to halt new cannabis licenses while the legal challenge plays out.

“It is no secret that New York’s adult-use cannabis rollout has been slower than expected, and now is not the time to stand in the way of progress made,” he said in a statement. “We must focus on awarding non-conditional licenses, which will prioritize social equity candidates and allow more businesses to open.”

As part of the state’s effort to speed consumer access to legal marijuana, regulators also launched a program, known as the Cannabis Growers Showcase (CGS), an initiative of New York’s Office of Cannabis Management (OCM) that allows licensed growers and processors to sell directly to consumers.

Regulators voted to approve that program in July and quickly began accepting applications. The first pop-up event kicked off in the Hudson Valley on August 10, and another was held just down the road from this year’s state fair.

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Photo courtesy of Mike Lat

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