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This guest column is from Thomas Spanos, a cannabis attorney and advisor based in Buffalo. He began working in the New York market as soon as the MRTA was passed, and has worked with conditional cannabis licensees, hemp licensees, and hopeful applicants since. His work has also included consulting for local governments, helping to shape local laws, and he has consistently spoken out about his belief in an open, accessible, and fair cannabis market for all. 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.
People might see the headlines, articles, and interviews about New York’s botched cannabis rollout and wonder how things got so bad: millions of dollars of product rotting in storage; most cannabis licensees struggling, facing bankruptcy, or not open at all; and a rampant unlicensed (read: illegal) marketplace.
As a cannabis attorney, it is my job to follow all the twists and turns of how we got here. So, in this article I explain how the top brass at the Office of Cannabis Management (OCM) have repeatedly misled the public, how these actions set New York cannabis businesses up to fail, and what actions our state should take to right the course.
Over a year ago, when the Conditional Adult-Use Retail Dispensary (CAURD) program was announced, I saw the executive director of OCM, Chris Alexander, tell qualified individuals who already had locations NOT to apply to the program.
OCM said the program was only for those who would take a state-built location. Less than six months later, due to failures at New York’s Dormitory Authority (DASNY) that have been widely reported, OCM allowed CAURD licensees to find their own store rather than wait for a state-built one. But finding real estate for cannabis businesses is very hard, and people who had already cleared that hurdle were now sidelined for more than a year. The idea of reopening applications to bring in those with real estate was never even discussed.
This, despite the fact that OCM often said more licensing windows would open “soon.” OCM’s Alexander constantly reassured the public that CAURD was “just the first step” and other licensing windows would come up “soon.”
Always “soon” but never “at the next Control Board meeting.” In truth, there was never another step. Not for justice-involved individuals who wanted to do production, nor for ANY other social equity applicants: minority owned, woman-owned, distressed farmers, disabled veterans, or communities disproportionately impacted.
For more than two years now, everyone else has now had to wait for “universal licensing,” while the CAURD program was expanded to over three times its initial size.
OCM said CAURD was only a limited and conditional program, not the full “retail dispensary” licenses that were considered under the MRTA. Cannabis Control Board members were quick to dispel those illusions, stating plainly how happy they were to give the first dispensary licenses to their special program.
Then the program was expanded from 150 to 300 licenses, and then to over 460 licenses before it was ruled illegal and potentially unconstitutional in court. As it turns out, the law wasn’t ambiguous about dispensary licenses, and OCM was required to “open applications for retail dispensaries to everyone at the same time.”
OCM’s desperate push to hand out improper licenses didn’t even benefit the recipients, with less than 5% of them managing to open before the program was indefinitely put on hold.
At the end of 2022, Gov. Kathy Hochul declared, and OCM echoed, that the CAURD program would open 20 dispensaries per month, giving Adult-Use Conditional Cultivators and Adult-Use Conditional Processors places to sell their products. But OCM (and DASNY) dropped the ball completely. Dispensary rollout wasn’t 20 per month, it wasn’t even 20 total in over nine months (there are currently 18 brick-and-mortar dispensaries and five delivery-only licensees). Conditional cultivators and processors are going bankrupt while sitting on their products because there are barely any legal stores.
More dispensaries could potentially fix this problem, and Cannabis Control Board Chair Tremaine Wright has been consistent in her tenure from the start saying that “there will be no caps on licenses.” But now, in a guidance document released just three business days before “universal licensing” opens, OCM has introduced exactly that: caps on nearly every category of license. Dispensary licenses could be as low as 500, which would barely be enough to transition over all the CAURD licensees.
At the CCB meeting that authorized the application window, there was no discussion of any limits on the “universal licensing” that was about to open, but sadly, OCM will only be issuing limited types and tiers of licenses, and limited numbers of each of those license types.
OCM falls over itself trying to insist that the estimated caps “… are only estimates.” That may be true, but that’s only because OCM hasn’t decided what the real cap will be. The only license type with no cap is Type 3 processing for packaging, labeling, and branding. All other license types “will have a limited number of licenses available during this application window.” This type of artificial scarcity will simply provoke more lawsuits from people who don’t get in.
As another slap in the public’s face, OCM has decided they do not have to follow the regulations they passed less than a month ago. Instead, they want to give special carve outs, in violation of those regulations, to people who went through OCM’s Cannabis Compliance Training & Mentorship Program program. OCM has no authority under the Cannabis Law or regulations to give this group special priority, and these people were not even required to be Social and Economic Equity applicants (who ARE entitled to priority under the law).
This farce of a rollout needs to stop and OCM Executive Director Chris Alexander and Control Board Chair Tremaine Wright should step down. They’ve lied to the public repeatedly, hampered this rollout at every turn, shot the New York cannabis market in both feet, allowed the illegal market to run rampant, and have violated the Cannabis Law to give special preference to programs and applicants of their choosing.
OCM should commit to following the law; OCM should commit to taking applications on an open, rolling basis; OCM should commit to public, transparent meetings where any “queuing,” “randomization,” or “lotteries” of applications take place.
No more illegal carve-outs. No more back room deals. No more last-minute, improper guidance. Give people clear expectations, clear goalposts, and clear, fair rules, and maybe, just maybe, we can turn this market around.