New York Awards More Retail Licenses, Hears Farmers Cry for Aid

Farmers noted that many of them are on the brink of failure due to lack of retail outlets.

New York cannabis regulators held one of their most sweeping meetings of 2023 on Thursday, a three-hour long hearing in which they added more retail permits and a new testing lab license, debated highlights of newly tweaked industry rules, approved a broad new social equity plan, and heard from several marijuana farmers who warned their businesses are on the brink of collapse.

The meeting swung between emotional highs and lows, with the Cannabis Control Board unanimously approving the 50 new retailers – bringing the state total of adult-use shops to 215 – and then finishing the day with seven licensed cannabis farmers who said many of the 279 cultivators are on the verge of bankruptcy because they have no way to legally sell the “mountain” of cannabis they grew last year.

New York state now has 10 operational adult-use cannabis shops, CCB Chair Tremaine Wright announced at the opening of the meeting, with “several more” anticipated in coming weeks, she said.

Among the new 50 retail permits were 45 shops located in parts of New York that had previously been stalled due to litigation, including:

  • 16 in Brooklyn
  • 8 in Central New York
  • 2 in Long Island
  • 3 in Manhattan
  • 11 in the Mid-Hudson Region
  • 10 in Western New York

The OCM is still prohibited from awarding retail permits in the Finger Lakes Region by the same lawsuit, however.

Wright and the Office of Cannabis Management’s executive director, Chris Alexander, also celebrated new enforcement powers that Gov. Kathy Hochul signed into law last week, which they said will help authorities eradicate the enormous illicit market.

“We are building something special here in New York, and if you are not in line with that effort to create a diverse and accessible and equitable marketplace, then we will shut your business down,” Alexander said.

“We have thus far focused on seizure of products. We are transitioning now to closing doors,” Alexander said. “This is of supreme importance for us as we roll out this market, and the illicit shops have been a significant inhibitor for us to build a successful market here, and we are taking these additional powers very, very seriously.”

New Rules

Alexander said his office will have new emergency regulations ready within two weeks for the board to approve so the OCM can “fully implement” its new enforcement tools.

The board also gave further approval to the 336 pages of revised industry regulations, which kicks off another 45-day comment period before the rules can perhaps be finalized. OCM policy czar Axel Bernabe said he’s hopeful that the rules can be finished before Labor Day, which would then allow the office to open cannabis licensing more broadly.

There were several points of uncertainty and contention, however, including a major update that will allow the state’s 10 multistate medical marijuana operators – identified as “registered organizations” or “R.O.’s” – to begin selling recreational cannabis in December.

Bernabe said that change was a reflection in part of what regulators heard was a need for more retail shops as quickly as possible.

“That would allow some of our brands, some of our upstate farmers, to access stores right away, which is positive. Fifty percent of their products would have to be from smaller brands and couldn’t be their own or other R.O.’s brands,” Bernabe said.

The MSOs would still have to pony up total fees of $20 million to the state for a total of three adult-use retail licenses, but the payments would be staggered over time, with $5 million due immediately before any of the 10 could start sales.

Another regulation, which Wright pushed back on, was the proposed 100-milligram-per-package potency limit for THC-infused products. She contended that would hamper the ability of small-scale manufacturers to get creative with “family-sized” products such as pancake mix, jam, syrup, and the like.

“It limits the ability of a processor to produce things that might be considered family sized or commercial. I’m thinking of butter or syrup, hot sauce,” Wright said. “It’s like having pancake mix. They’re being sold illegally, but we already know there are powdered mixes in the marketplace.  That’s not limited necessarily to 10 servings per package. I’m just saying we need to be thinking about that, as we’re giving people a road map for how they can build their business.”

Bernabe and Alexander said they weren’t sure such flexibility would be allowed under state law, but said they would consider how the rules could be further revised.

There was also debate among the board members over licensing fees and business model structures for the proposed microbusiness permit. Wright objected to the current requirement that microbusinesses would have to also be cultivators, and said that was discriminatory against entrepreneurs who didn’t have farming backgrounds.

Social and Economic Equity

The board gave a unanimous thumbs up to a new draft of the OCM’s social and economic equity plan, presented by Chief Equity Officer Damian Fagon.

But the presentation was criticized by CCB member Reuben McDaniel III, who said he was “disappointed” because there were no specific goals suggested.

“I want to understand kind of where you’re seeing the actionable part. I don’t see any goals, budgets, metrics, timeframes,” McDaniel said.

Fagon replied that was ongoing, and that the OCM didn’t want to hamstring itself in the future by “over-promising.”

“A significant mistake a lot of social equity programs have made across the country is they’ve perfectly and very carefully laid out what they’re going to do over many years, committing themselves to it, ultimately not knowing what could happen with implementing that plan, and being unable to pivot away from it when it’s clear it’s not working,” Fagon said. “That’s happened in Illinois. It’s happened in California as well.”

Before the board adopted the plan, Wright concurred with McDaniel and requested an “actionable plan as soon as possible” from Fagon.

Farmers Face Off with Board

Before the meeting adjourned, the board heard from several cultivators from the Cannabis Farmers Alliance, who all echoed that the farming community is in dire need of help.

“This is an emergency for a lot of us farmers. Without immediate relief, participants in the (adult-use conditional cultivator) program are going to fail,” one farmer told the board. “We earned a license and were promised there would be stores to sell the cannabis we grew. We held up our end of the bargain. We created a mountain of high-quality cannabis that’s ready for market.”

Several suggested measures for boosting farmer access were floated, including:

  • Allowing farmers to sell directly to consumers.
  • Permitting farmers to retain their distribution rights until the end of the conditional license period.
  • Simplifying testing standards.

Another farmer warned the board that if nothing is done quickly, “homes and farms are going to be lost to bankruptcy and repossession.”

A third pleaded openly with the CCB, “We need to open up lines of sales, and we need to do it now. This is an emergency. … Please, please help us. We beg you.”

John Schroyer

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