New York cannabis regulators passed several resolutions during their meeting on Tuesday that aim to bolster the state’s legal industry as a licensing push gets underway.
Tuesday’s meeting was much shorter and less charged than the last one, during which a stream of public commenters pleaded with regulators to hold off on licensing bigger cannabis operators a little longer to give justice-involved license holders a shot at gaining a foothold.
Regulators opened the window for several adult use license types on October 4, and have since fielded a high volume of inquiries, said Chris Alexander, the executive director for the Office of Cannabis Management. Until early October, the state offered early “conditional” licenses to the state’s existing hemp farmers and justice-involved New Yorkers.
“Over the last two weeks, since we’ve opened the application window, we’ve received a significant amount of interest from New Yorkers and from interested applicants across the country, who are trying to get into New York’s market,” Alexander said.
Regulators passed a resolution on Tuesday to add two weeks to the end of the application windows to “just give more folks opportunity to apply,” Alexander said.
Alexander reiterated during an executive director’s report that applicants have time.
“This is again, not a first come, first serve opportunity. So, as long as you get your application in before the close of the window, you will be considered equally,” Alexander said.
While more than two dozen adult use shops owned by justice-involved license holders, known as Conditional Adult Use Retail Dispensary (CAURD) licensees, have opened, there remain an estimated 1,400 unlicensed shops across the state, concentrated in New York City.
Linda Baldwin, general counsel for OCM, gave an overview of a resolution related to enforcement. One of the provisions will “provide additional authority” to regulators by essentially shifting some of the paperwork burden to unlicensed businesses. Unregulated operators who receive a notice of violation to cease unlicensed sales will now need to submit a “certificate of compliance” within five days of receiving it, confirming that they have “ceased the unlicensed activity that they were issued a violation for,” Baldwin said. And if they don’t, regulators are left to assume that unlicensed activity is still ongoing.
“The reason why this is important is because the statute permits us,” Baldwin said, fines “up to $20,000 per day for every day after issuance of the order to cease. And the burden on us to go back every single day in order to prove noncompliance is far too great.”
Tremaine Wright, chair of the Cannabis Control Board, which sits within OCM, said that she thinks the resolution will “help.”
“I think people were waiting for more force,” Wright said, referencing unlicensed cannabis businesses reopening despite enforcement. “Hopefully we’ll be able to attack some of our unlicensed players with this, at this moment.”
John Kagia, director of policy for OCM, gave an overview of increasing sales in the legal market, including that New York has sold $83 million worth of cannabis products this year.
Kagia also covered the Cannabis Growers Showcases, which have been running for 142 days and have generated roughly $1.5 million in sales. These showcases have been one answer to the slow opening of retail locations, and pair licensed retailers and processors on events that “showcase” cultivators. There is, Kagia said, a “very strong demand for edibles,” which have accounted for roughly 20% of showcase sales.
“I think it was a good decision to allow access to both of those products as we’re finding different consumers are coming into the showcases looking for a range of options,” Kagia said, adding that the state is “looking at a very strong end to the program through the final couple of months of the year.”
Board member Jennifer Gilbert Jenkins flagged that she believes regulators plan to issue too few new cultivation licenses in this forthcoming application window. OCM has outlined a plan to focus on issuing more than 1,000 retail licenses to help displace the unlicensed operators, as retail shops take time to open, and to roll out cultivation licenses more slowly to avoid oversupply. OCM has issued 270 conditional cultivation licenses, and these licensees will now be allowed to convert to non-conditional status.
“I understand the want to have some control over supply in the market, but in most of our industries we have a free marketplace and people are allowed to come in and some of them fail and some of them do well,” Gilbert Jenkins said. “I’m just very concerned that when you get a thousand or many thousand applications, to only pick 40 of them to get a license, how do you know that you’re getting the best growers? How do you know that you’re getting the strongest that are set to succeed?”
Another resolution will allow Fiorello Pharmaceuticals Incorporated, a Registered Organization, to open their fourth location, which would be in Nassau County.
Ongoing litigation has largely paused the CAURD rollout, and the frustration felt by CAURD licensees was expressed more than once during the public comment period on Tuesday.
David Nicponski, founder of Freshly Baked NYC, a CAURD license holder, said that he and other licensees have been “bombarded with advice” from the state that is “simultaneously conflicting and incomplete, causing feelings of abandonment and betrayal.”
“The state appears to have shifted focus to program expansion at the expense of existing licensees, despite the private assurances we individually hear,” Nicponski said. “We’re on the brink of not just business failure, but devastating family impact. We trusted the state’s promises. We followed guidance, and we need your support and prioritization to prevent a complete and widespread disaster.”