The most closely-watched item on Friday’s New York Cannabis Control Board agenda – a settlement in a lawsuit that has caused months of regulatory turbulence – was pulled within minutes of the meeting’s start.
The Board met to consider a handful of resolutions, of which one was consideration of a settlement agreement related to a lawsuit that challenged the state’s prioritization of justice-involved individuals for adult use retail licenses. As the suit played out in court, these licensees, known as Conditional Adult Use Retail Dispensary (CAURD) licensees, have been on hold and on shaky ground. Of the hundreds awarded, only 27 have opened their doors.
Regulators passed a resolution on cannabinoid hemp rules and another that establishes fees for licensed cannabis labs. Regulators also renewed the licenses of several existing medical cannabis operators, called Registered Organizations.
John Kagia, director of policy at the Office of Cannabis Management, gave various market updates. To date, the 27 open retailers have generated more than $108 million in cannabis revenue. A total of 54 growers showcases have generated another $3.4 million in revenue.
Kagia said that the market is “diversifying,” with legal cannabis shops now selling an average of 50 brands.
“I’m certainly not seeing a great deal of unlicensed shops that have this level of diversity of product, and we think this is one of the things that is having customers come back into the legal store,” Kagia said.
Regulators otherwise did not discuss the unregulated cannabis market, or provide any updates to enforcement efforts.
Chris Alexander, executive director of OCM, gave background on the cannabinoid hemp rules, however. Since July, the state has had emergency rules in place for cannabinoid hemp products. In August, a group of hemp companies sued regulators over the rules, which set the allowable CBD to THC ratio for these products at 15:1, with a limit of 10 mg of THC per package. This month, as Cannabis Wire reported, the judge sided with the hemp companies. How the adoption of formal rules on Friday will affect the ongoing lawsuit remains to be seen.
“This was a thoughtful effort and approach, but just like all regulations, we’ll continue to fine tune these regulations as we move forward and continue to learn more,” Alexander said. “Adoption of these regulations will help ensure that we continue to protect public health and safety and the welfare of consumers from the immediate threat posed by intoxicating cannabinoids and products currently being sold outside of our licensed dispensary framework in New York State.”
During the public comment period, many speakers expressed their disappointment in the passage of the resolution related to cannabinoid hemp regulations, with commenters asking for both revisions and more of a dialogue with the industry. While more than 218 comments were submitted on the emergency rules, regulators didn’t make any substantive changes. The rules will now take effect once they’re adopted in the State Register.
Jeff O’Neil, founder of Industrial Arts Brewing Company, a craft brewer in the state, “identified a significant demand” for hemp-derived cannabinoid craft beverages and “observed sensible, successful models” working in states like Minnesota. In New York, he said, the standards for cannabinoid hemp are “much higher” than those for alcohol.
“The OCM has issued dozens of manufacturing and distribution licenses for cannabinoid hemp, and thousands of retail licenses, collecting millions of dollars for a channel that you’re functionally closing with today’s regulatory ruling,” O’Neil said.
