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This guest column is from NYMCIA. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views or positions of NY Cannabis Insider.
The New York Medical Cannabis Industry Association (NYMCIA) is committed to the accessibility and affordability of legal medical and adult-use cannabis. Through advocacy for implementation of the Marihuana Regulation and Taxation Act (MRTA) as written, the NYMCIA is working to create a more inclusive and equitable landscape for all cannabis programs in New York.
While other cannabis stakeholder groups thrive on misinformation about New York’s cannabis law and the role of registered organizations, NYMCIA remains steadfast regarding the importance of a functioning adult-use program, in accordance with the blueprint set forth by the MRTA.
NYMCIA urges the Office of Cannabis Management (OCM) to properly implement the MRTA to ensure a fair and balanced industry for all stakeholders by preventing any single entity from dominating the cannabis market. After two-and-a-half years of legalized cannabis, it’s now past time to open the market.
Unfortunately, the Cannabis Association of New York (CANY) has taken a divisive, zero-sum approach to New York’s struggling cannabis industry that is telling of the organization’s inexperience. The MRTA contemplates an ecosystem of diverse licensees engaged in business with one another, using funding from larger operators to help fund social and economic equity initiatives. Instead of seeking to smooth implementation of the MRTA’s master plan to create these cross-license trading opportunities, CANY lashes out at unfamiliar stakeholders while spreading fear and resentment. It’s time to set the record straight:
Counterpoints to CANY’s recent public statement
“The temporary court order issued this week stifles the opportunities, dreams, and finances of more than 400 CAURD licensees. These small, local businesses will cease to exist, and oversized corporate cannabis companies (ROs) will soon overrun the industry.”
FALSE: ROs will only be allowed to join the adult-use market after the final rules are established, an application is approved by the Cannabis Control Board (CCB), and upon payment of an initial $5 million fee earmarked for social equity.
Along with the entrepreneurs and small and minority-owned businesses waiting on the sidelines, NYMCIA is eager to prevent any more delays in moving forward with this program. The regulated industry’s biggest threat is the illicit market, which is flourishing in the absence of a robust, statewide legal cannabis market. This devalues and undercuts the promise of New York’s cannabis opportunity.
When the ROs enter the market, they will help compete with — and hopefully drive out — unlicensed operators, creating more opportunity for all legal entrants while also assisting with funding social equity through transition fees.
Notably, under the MRTA, the state was supposed to review the market on the second anniversary of the first adult-use sale to determine if “market domination” by any license class had occurred. This was intended as an explicit check on the ability of the ROs to dominate the marketplace, as is the limitation that ROs may only serve adult-use consumers at a maximum of three of its retail dispensaries.
This means that the existing 11 ROs can, under the law, provide no more than 33 total retail outlets in a state contemplating — by its own calculations — up to 2,000 retailers. It was also an explicit signal that ROs were supposed to be participating in the market within two years of the first adult-use sale. For CANY to suggest that ROs will take over the market with a total of 33 stores, (22 of which can’t even open until next summer at the earliest) is simply a falsehood.
More Importantly, even if the RO licensing application and transition process moves forward as contemplated in the draft adult-use regulations, each RO would only be permitted one adult-use retail store each until next summer – and each RO must pay a $5 million fee earmarked for social equity before a single retail store opens.
ROs are then eligible for up to two additional adult-use retail stores, but only after paying additional multi-million-dollar fees earmarked for social equity. This investment in social equity by the ROs is far and away the most significant in the country, notwithstanding CANY’s false narrative that ROs want to overrun the industry at the expense of all others.
“They [RO’s] have already made the first step by attempting to be a part of the lawsuit that brought us this devastating court order. While we denounce their actions, we are not at all surprised. This type of ‘profit over people’ mentality is the exact thing we have been fighting so hard to stave off.”
FALSE: First and foremost, NYMCIA is not a party to either lawsuit, which was brought by a newly formed coalition in which some, but not all, association members chose to participate. It is false and inappropriate to impute the actions of a few members to all ROs.
Moreover, for nearly a decade, ROs have for years been contributing to the New York economy, employing thousands of unionized workers statewide, and generating millions in local and state tax revenue that directly funds public safety, small business incubation, social equity, and criminal justice reform initiatives. Any claim that ROs prioritize “profits over people” ignores the clear facts and insults our workers and medical patients.
“CANY will continue to fight for an accessible, fair, and successful cannabis industry in New York. We are committed to supporting the CAURD program and all conditional licensees including cultivators and processors who have invested everything they have to stand this market up safely and sustainably based on the promises of the very program that the plaintiffs seek to destroy.”
FALSE: NYMCIA has been fighting for an inclusive, fair, and successful cannabis industry in New York from the beginning of the medical program nearly a decade ago, and it continues to do so today. Indeed, NYMCIA was an ardent supporter of Senator Jeremy Cooney’s CAUTA proposal, to avert many of the challenges that have arisen this summer, including the codification of the CAURD program. Remarkably, both OCM and CANY vehemently opposed this bill, which would have given the CAURD program the legal foundation necessary to avoid this current constitutional challenge.
This error on the part of the OCM belies the agency’s strategic capability.
Counterpoints to the recent op-ed by CANY’s Hal McCabe
“…Because Wall Street Big Cannabis is about to run the table and get everything they want, leaving our small farms and Main Street small businesses to wither on the vine.”
FALSE: CANY is fond of hysterical rhetoric like the phrase “Wall Street Big Cannabis” to refer to the ROs and imply that ROs are bottomless pools of capital set on domination. As public financial reporting shows, that is simply not true.
For nearly a decade, ROs have been encumbered by the lowest patient population, per capita, of any medical cannabis program. Moreover, if the adult-use program is halted due to litigation challenges and OCM’s continued delays, the ROs have no path to transition into adult-use. So, everyone loses, except the illicit market. As already pointed out, each RO may only join the adult-use market upon final adoption of regulations and review and approval of a transition application by the CCB and payment of a $5 million fee earmarked for social equity with another $15 million due over time.
“The OCM is speeding up the entrance of corporate cannabis companies into the New York State legal cannabis market. Behemoth billion-dollar corporations that operate in 10-20 other states are on the doorstep of operating here. That will just create another economic disadvantage for those who played by the state’s rules, those who were supposed to be prioritized, those who are true social equity operators, and New York-based small business owners in the legal cannabis market.”
FALSE: It is laughable to suggest OCM is speeding up the transition of the RO medical operators into the adult use market. Two-and-a-half years after passage of the MRTA, ROs are still unable to participate in the adult-use market and have artificially been held out of the market they were supposed to help fund through transition fees. The MRTA did not contemplate a delayed entry for ROs, or any other license type. Indeed, the MRTA’s plan to use RO transition fees to help fund social equity In New York implies that entry should have been immediate. This has not happened, so to claim ROs are now being expedited into the adult-use market Is disingenuous at best.
As noted above, CANY is fond of using extreme rhetoric like “billion-dollar corporations that operate in 10-20 other states.” Few of the association’s members meet either threshold, and some members operate only in New York.
Moreover, the implication that ROs don’t “play by the state’s rules” to the detriment of others is completely unfounded, and borderline defamatory. The ROs have built New York’s strictly regulated medical market for nearly a decade and have certainly played by the rules to do so. Any suggestion to the contrary is irresponsible.
“First, we need to press pause on the entrance of Wall Street Big Cannabis companies into New York until further notice, and if this means the regulations need to be revised, then revise them. The Cannabis Control Board should have its own emergency meeting and pass the emergency regulations. They gave the ROs an inch by moving up their entry into the market, and naturally, these giant corporate cannabis operations are trying to take a mile, suing New York State twice at the same time, to ensure they get their way and block entry into the market for everyone but themselves, while our legislators and governor sit back and do nothing.”
FALSE: After two-and-a-half years of legalization, thousands of illicit commercial operators, and tons of conditional cultivator and processor products rotting on shelves for want of retail outlets, CANY’s solution is to slow things down and choke off access to what would be at most a single adult-use retail store for each RO by the end of this year.
Setting aside this self-interested rhetoric, CANY continues to miss the mark factually. OCM determines when and how ROs enter the adult-use market and nothing in the proposed regulations changed that fact.
Furthermore, the association must continue to correct CANY’s false narrative about the ongoing litigation against OCM. NYMCIA and many of Its member organizations are NOT party to either litigation. Any injunction or court-ordered halt on the adult-use rollout will impact the ROs entry into the market the same as any other licensee.
“Our elected officials must be loyal to the people of New York State, not rich Wall Street Big Cannabis companies chomping at the bit to stomp all over our social and economic equity owners.”
FALSE: The fact is that the ROs must pay an enormous special licensing fee ($20 million each over time), which the MRTA specifically earmarked to fund the MRTA’s mandated social and economic equity programs. The sum total of this investment into social equity can thus reach up to $220 million dollars based on the existing 11 ROs, which is significant by any measure. The NYMCIA whole-heartedly supported and advocated for the passage of the MRTA, recognizing the important role association members could play in creating an equitable and accessible adult-use cannabis program. Beyond that, the association is full of New York-based companies and organizations that have, for nearly ten years, consistently served tens of thousands of medical patients while employing nearly a thousand proud union workers throughout the state. CANY’s suggestion that the ROs are “chomping at the bit to stomp all over our social and economic equity owners” is both offensive and remarkably untrue.
“CANY is offering solutions to avoid any further nationwide embarrassment to this program.”
FALSE: CANY opposed Senator Cooney’s CAUTA legislation which DID present solutions to all the problems playing out now, while the NYMCIA worked tirelessly to support the bill. In fact, the NYMCIA has offered one solution after another, only to have them shot down by CANY and OCM for the last two years. We remain ready to work with all stakeholders to move New York’s cannabis industry forward. Instead of pointing the finger of blame at the ROs, CANY and others should hold the governor, the CCB, and the OCM accountable for missteps and ignoring stakeholder feedback throughout this process, and work collaboratively on a solution that addresses longstanding problems.