NY, NJ compare experiences at MJ Unpacked.
Office of Cannabis Management executive director Chris Alexander was scheduled to speak on Wednesday with Wesley McWhite III,New Jersey Cannabis Regulatory Commission director of diversity and inclusion, at the industry event MJ Unpacked at the Hilton Midtown. But, Alexander was called away last-minute for a meeting with Gov. Kathy Hochul. Damian Fagon, OCM’s chief equity officer, took his place. Forbes reporter Will Yakowicz moderated.
The discussion was far-ranging, but focused on topics like interstate commerce and how New York and New Jersey can best position themselves when it arrives, cannabis banking, taxes, municipality opt-outs, and, of course, unregulated sales.
McWhite clarified the distinction between legacy operators, meaning, for example, an unlicensed entity that has been delivering cannabis around New York City for years, and the “gray market,” which includes the CBD shops that are selling hemp-derived cannabinoid products that can sometimes include high-THC ones.
McWhite said that while New Jersey only has a “few” unregulated cannabis shops, “we’re still trying to solve for some of the same problems. How do you transition folks” that have been impacted by the war on drugs and get them into the regulated market?
“We want to make sure that folks that are not selling legal and safe products eventually are shut down because it’s going to affect the entire market and the entire industry,” McWhite said. “Our goal always is safety and equity. Those are our twin values over in New Jersey,” McWhite continued.
The topic of unlicensed sales seemed to be a hornet nest for Fagon.
“Oof,” Fagon said, sharing with the audience that an unlicensed shop opened across from his office.
“It’s like flipping me off every day when I go to work,” Fagon said. “This is the cost of living in New York City.”
Fagon added that some New Yorkers will jump when they see an opportunity to get ahead and find some side income, even if it’s short-term.
“There’s a lot of opportunists in the gray market right now,” Fagon said. “A lot of people who understand that this is a temporary situation. They’re going to try to make as much cash as they can until we figure this thing out.”
Hochul announced last month her plan to rein in unregulated cannabis operators, which far outnumber legal, licensed operators. That proposal emphasizes civil penalties, including for landlords and lessors that knowingly rent to businesses who are selling unregulated cannabis.
“The bill we’re negotiating now would have some teeth and it wouldn’t send anyone to prison,” Fagon said. “It would be enough to disincentivize the operations.”
Fagon talked about decades of disproportionate enforcement of cannabis laws, especially in communities of color.
“When it comes to enforcement, the reason it’s been taking awhile is because of what I mentioned before,” Fagon said, referencing disproportionate enforcement. There’s “careful intention and deliberation” in Albany, he said, because of this.
But, Fagon said, “it’s really scary” that there’s the “potential for backsliding” when it comes to walking a tightrope on enforcement.
“I think, increasingly, in the language we use in talking about these illicit shops, I can see how easy it is to slip into those familiar narratives of just like crime, danger to kids, all of it,” Fagon said.
The banking hurdles that cannabis operators face came up, too. Fagon said that state regulators are “doing a lot of outreach with banks,” including with local community banks and credit unions. Fagon added that at least a dozen banks are working with cannabis businesses in New York. Meanwhile, lawmakers see the need for more education and outreach on cannabis banking, and have scheduled a New York State Assembly hearing on cannabis banking in May.
“More will come because this is a significant opportunity,” Fagon continued. “I think there’s going to be an acceleration of banking services in the coming years in anticipation of federal legalization.”
+ More: Curaleaf remains a third rail in New Jersey. When Curaleaf came up, the crowd booed and hissed.
“Absolutely not,” McWhite said, when prompted to talk about regulators’ recent decision not to renew the MSO’s adult use license in the state. Regulators then quickly reinstated their license.
Fagon had his own “no comment” moment when the Dormitory Authority of the State of New York equity fund came up. As a refresher, Hochul announced a $200 million public-private equity fund in early 2022, of which DASNY would seed the first $50 million. Since then, it’s been mostly crickets when regulators have been prompted for updates on how much the fund has raised.
“A lot of people in this room have probably had trouble raising money over the last six months. It’s a tough capital market right now. And it’s a big check. But yeah, I’m confident over the over the coming years, we’re going to have hundreds of millions of dollars going to equity programs,” Fagon said. “And it probably won’t come from outside investors.”
Clinical trial: NIDA collaboration will examine cannabis prevention through use of apps.
A new clinical trial has University of Michigan as the sponsor and the National Institute on Drug Abuse (NIDA) as a collaborator.
The trial aims to explore pilot prevention methods to “promote wellness and reduce risky behaviors, including the use of substances such as cannabis.”
The notice outlines that this study will help researchers “learn about ways of delivering this information that is both appealing and helpful to young adults who use mobile apps.”