The move will allow existing medical marijuana companies and large multi-state operators to enter a market that was supposed to favor small businesses and social equity applicants.
Since Colorado and Washington became the first two states to legalize recreational marijuana for adults 21 and older, the struggle to achieve a measure of economic equality within the legal and regulated industry has been a top priority for lawmakers, advocates and progressive-minded stakeholders.
New York, which legalized adult-use cannabis in 2021, has tried to create a licensing system prioritizing minority and social equity applicants over larger, well-funded, powerful multi-state operators (MSOs). Regulators established the Conditional Adult-Use Retail Dispensary (CAURD) license program to that end.
Under that system, retail licenses are only available to individuals who have been “justice-involved”---directly impacted by a cannabis-related conviction. In addition, prospective applicants must also have some experience running a profitable business. Along with the retail side, regulators granted cultivation licenses to farmers participating in the state’s pilot hemp program.
However, according to multiple local and national media outlets, New York officials have decided to renege on the stipulations established under CAURD. They will now allow big companies and existing medical marijuana businesses to begin receiving operating licenses for the state’s marijuana market starting next month.
On Tuesday, the New York State Cannabis Control Board (CCB) passed a handful of resolutions, including new rules enabling the state’s current medicinal marijuana dispensaries to move to the recreational sector quicker than initially planned.
When the provisions for the opening rollout of the retail market were initially approved, medical cannabis companies were prohibited from competing with new businesses for three years. Tuesday’s action will effectively cut that period down to roughly one year.
The surprising and aggressive decision to broaden licensing eligibility participation in New York’s adult-use cannabis industry is seen as a move to increase the speed of legal retail dispensary openings during a time when unlicensed and illegal operators have proliferated almost entirely unchecked. Since the state assembly approved recreational marijuana sales to individuals 21 and older, only around two dozen retail businesses have opened for business.
Following the meeting, Chris Alexander, executive director of the Office of Cannabis Management (OCM), said in a statement, “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 (to) access safer, regulated cannabis across the state. 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.”
"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 (to) access safer, regulated cannabis across the state. 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.”
- Chris Alexander, Executive Dir. of the Office of Cannabis Management (OCM)
Other changes passed by the Board include allowing license applications for more medical marijuana companies (known as Registered Organizations (ROs) in New York) and opening up applications for new research licenses.
Not surprisingly, the policy change came as delightfully welcome news to many advocates and stakeholders in the medical cannabis community. The New York Medical Cannabis Industry Association, which represents several powerful ROs, said in a statement, “The CCB’s approval of adult-use regulations demonstrates positive forward momentum. 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.”
"The CCB’s approval of adult-use regulations demonstrates positive forward momentum. 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.”
- The New York Medical Cannabis Industry Association
However, the change has ignited an outcry among smaller growers and social equity applicants. They argue that if larger MSOs can overrun the market, the unfair competition will significantly undermine the state’s ambitious and forward-thinking plan to prop up small businesses and social equity applicants.
In its statement following Tuesday’s meeting, the Cannabis Association of New York, which advocates for small and midsized businesses, blasted the CCB’s decision, saying it “opened the door for big cannabis to come in and compete with New York-based businesses. Regulations must be immediately fixed.”
The group called for changes that would provide smaller, local cultivators with the same canopy grow space as ROs, lower taxes and more effective policing against illicit operators.
In response to the criticism, CCB chair Tremaine Wright issued his own statement, calling the change a “defining moment for New York State’s commitment to entrepreneurship and fostering a truly diverse cannabis marketplace.” He said, “Our pledge to social and economic equity will continue to take center stage, ensuring that individuals and communities from all backgrounds have a fair shot at success in this burgeoning industry.”
"Our pledge to social and economic equity will continue to take center stage, ensuring that individuals and communities from all backgrounds have a fair shot at success in this burgeoning industry.”
- CCB chair Tremaine Wright
However, for small business owners and growers, all the political posturing, nice words and pats on the back are meaningless regarding the stark economic and social reality created by the Board’s decision on Tuesday.
The founder and CEO of Freshly Baked NYC put it best during the public comments portion of the meeting, declaring, “MSOs are looking to seize the market opportunities that we were promised and that we have worked hard for. If unchecked, they will unfairly dominate the industry, nullifying our efforts and our investments.”
"MSOs are looking to seize the market opportunities that we were promised and that we have worked hard for. If unchecked, they will unfairly dominate the industry, nullifying our efforts and our investments.”
- Founder and CEO of Freshly Baked NYC
New York is a unique and challenging case study for implementing a massive new and regulated adult-use cannabis market with a sincere commitment to social equity and economic fairness for the hard-working small business owner. However, the people of New York want their marijuana, regardless of whether it is legally regulated or not.
Alas, all the best intentions in the world must sometimes give way to market forces. Now, it appears the Empire State will serve as a cautionary tale for other states hoping to build a more equitable and fair system.
