New York regulators approved more than 200 conditional retail licenses at Wednesday’s Cannabis Control Board meeting.
Regulators also approved a handful of rule packages, including those for medical cannabis, cannabis research, and emergency rules for cannabinoid hemp.
One highly-anticipated item was also approved: a plan to launch cannabis grower “showcases.” Aimed at helping growers who are accumulating piles of unsold product as legal shops get up and running, the plan will allow legal sales outside of these shops. Licensed growers will instead be able to work with licensed retailers and processors on events that “showcase” cultivators.
Of the 212 Conditional Adult Use Retail Dispensary licenses that the Cannabis Control Board awarded, Manhattan and Brooklyn received the most with 46 and 44 respectively. Meeting attendees reacted with loud applause and some shouted “thank you.”
This, the bright spot in the meeting, brings the total CAURD licenses in the state to 463, though the number of retailers open is just 20. The latest to open was a Buffalo licensee called Dank, on Tuesday.
Only the first 150 CAURD licensees have access to a public-private equity fund that was established to help them secure and develop storefronts. A year after Gov. Kathy Hochul first announced the state fund, Chicago Atlantic Group “invested up to” $150 million, Hochul announced in late June. The Dormitory Authority of the State of New York is responsible for contributing another $50 million.
“There’s no guarantee beyond that first 150,” said Chris Alexander, the executive director of the Office of Cannabis Management, on Wednesday. He added that some licensees “passed” on funding, which allowed regulators “extend support” to others, though regulators will have to “wait and see how things play out” when it comes to allocating funds to additional licensees.
OCM director of policy John Kagia gave an overview of the forthcoming grower showcase, which he said is a “new program intended to expand retail access and stimulate sales of legal cannabis across the state of New York.” The program will require at least three conditional cultivators and a CAURD licensee to “facilitate the sales of cannabis” at these events, Kagia said.
“We’ve certainly heard from our cultivators the urgency of a program like this, to expand their retail sales opportunities. And, critically, I think this is one of the novel aspects of this program, it will give a chance for the consumers to meet the producers who are manufacturing the cannabis products and growing the cannabis that they are consuming,” Kagia said.
The showcases are subject to local approval, meaning they cannot happen in localities that have opted out of cannabis sales. For context, roughly half of local jurisdictions have said “no” to cannabis sales.
Board member Jennifer Gilbert Jenkins said she had “a lot of concerns” about the showcase proposal.
“We need to make sure that we have as much going to the farmers as possible, so that all that we’re hearing about, this backlog of biomass that hasn’t been sold, can actually make it to the public,” Gilbert Jenkins said. The item was briefly tabled before it was approved.
A package of emergency cannabinoid hemp rules was also approved. The rules include some sweeping changes, including limits on the total milligrams of THC permitted for some cannabinoid hemp products. Going forward, the ratio of allowable CBD to THC in a product will be 15:1, with a limit of 10 mg of THC per package, and one mg of THC per serving for food and beverage products.
The products on the cannabinoid hemp market exist separately from those on the adult use market. Several aspects of these cannabinoid hemp rules are aimed at harm reduction for minors, including packaging, labeling, and marketing provisions, as well as a .5% THC cap on products for people under the age of 21.
It’s “not necessarily that New York is against intoxicating products,” said Patrick McKeage, first deputy director for OCM.
“However, our hemp framework does not really have the provisions in place in order to safeguard against sales to the youth and minors. And those high THC products are better regulated in the adult use or medical cannabis markets,” McKeage said.
Gilbert Jenkins said that regulators have, with the emergency rules, “shrunk the loophole,” but said that more is needed.
“I want to make sure that we can fully close off that loophole. And so as it is right now, let’s pass it and then come back to that space where you said we have the ability to write more,” she added.
Board Chair Tremaine Wright sought confirmation that all forms of CBD were allowed in New York State, because it’s a question that has come up multiple times.
“All forms of CBD are, but not all cannabinoids derived from hemp are,” McKeage said, referencing delta-8 THC or THCA products. “There’s so many different kinds of synthetic and artificial derived cannabinoids now. So our regulation does prohibit that.”
Alexander gave an executive director report, during which he addressed “ongoing and expanded” enforcement against unlicensed cannabis operators. New York law enforcement officials estimate that more than 1,000 exist in New York City alone.
“These are significant steps towards eradicating unlawful cannabis operators that jeopardize public health, consumer well-being and the integrity of New York State’s cannabis legal market,” Alexander said. “The people in this room, we’re trying to make space for you.”
Alexander later gave several updates, including a bit of foreshadowing for the September meeting: the finalization of adult use rules and the presentation of the universal application to the board to open up additional licenses. Alexander also said that regulators are “very close” to finalizing rules for the Registered Organization expansion, at which point the existing medical cannabis operators (mostly well-capitalized multistate operators) can serve adult consumers.
Kagia gave a “state of play” of sorts, covering sales data. New Yorkers have purchased more than $33 million worth of cannabis so far this year, for example. Kagia also touched upon efforts to “simplify” the process of finding sites to “ease” various “challenges.”
The Board went into executive session to discuss potential litigation.
The meeting wrapped up with a public comment period, during which the mood shifted from boisterous to desperate. Many commenters thanked regulators for their work so far, but expressed deep anxiety about the need for financial help.
Assemblymember Harvey Epstein, who represents the Lower East Side of Manhattan, also spoke during the public comment period. Epstein has legal shops in his district, and also many unlicensed shops.
“They’re having a hard time competing against all of the illegal shops,” Epstein said, calling for increased enforcement and better, more consistent communication, perhaps through monthly updates from regulators to community members about enforcement actions. “Whatever we can collectively do to increase enforcement, further, on the illegal shops, too, so the legal market can really thrive, is really critical.”
Dasheeda Dawson, founding director of Cannabis NYC, also spoke during the public comment period, explaining that the newly announced New York City cannabis loan fund, which strives to uplift equity-owned cannabis businesses, is just a “first step.” The city has invested $8 million in the effort, and now officials are seeking private partners who want to further invest.
Jay Moskowitz, CEO of Bimble Beverages and board member of the Hemp Beverage Alliance, spoke about how the emergency cannabinoid hemp rules would affect hemp business owners.
“Unfortunately, for the hemp industry, it’s not a day of celebration,” Moskowitz said, adding that if regulators pass “rational, logical” rules, it will encourage good actors in the space. On the other hand, if regulators issue “incredibly stringent regulations that no one is going to abide by,” they will “invite bad actors into the industry.”
“Unfortunately, that’s what happened today under the dark of night. The board issued emergency regulations without consulting stakeholders, and they’re just going to push all the responsible brands out of the market,” Moskowitz said.
Naiomy Guerrero, a CAURD licensee, spoke about the need for funding in a more expedited manner.
“It’s amazing to get the license. It’s even more amazing to get open. We’ve had a really, really hard time in this process after we got our license. We really need the promises that were made to us in terms of funding to come through,” Guerrero said. “We’re getting hit up for predatory deals where people are coming in asking us for 50%. And I’m not giving nothing to nobody that wasn’t helping me put money on books for my family.”