New York Readies Retail Licenses For Adult-Use Cannabis Sales

The New York Cannabis Control Board (CCB) approved rules on Thursday to establish retail applications for the sale of adult-use cannabis. The state could open up these applications as soon as August, which could potentially set the stage for sales happening before the end of the year. This has been the goal of the CCB, but it seemed like it miss that target.

“Today’s vote confirms New York’s commitment to prioritizing equity, and keeps us on track to have the first sales before the end of 2022,” Tremaine Wright, chair of the Cannabis Control Board, said in a statement.

The first round of licenses, however, will be doled out to those who were disproportionately impacted by the drug war. According to the report, license applicants must have a cannabis conviction or a close family member with a conviction, but they also have to have some experience running a profitable business. These initial licensees are part of the Office of Cannabis Management’s “Seeding Opportunity Initiative”. The state created the social equity program using $50 million in public funds and $150 million in private funds to support social equity applicants seeking to build their businesses. The fund was approved by the state Legislature as part of New York’s 2023 budget and will be administered in partnership with the Dormitory Authority of the State, which will help applicants with real estate searches.

Axel Bernabe, chief of staff at the Office of Cannabis Management (OCM) said that the recreational sales regulations that went before the board are “really the cornerstone of [OCM’s] Seeding Opportunity Initiative, and it’s truly exciting to see that initiative finally take shape.”

In addition to the news on applications, the CCB also approved another 20 conditional cultivation licenses for New York farmers to begin growing cannabis for adult-use sales, bringing the total number of conditionally licensed farms to 223.

“Thanks to the tremendous effort to advance the Seeding Opportunity Imitative, we’re succeeding in a way that has never been seen before,” Wright added. “New York is launching its legal, regulated industry with business savvy entrepreneurs who have been directly harmed by the prohibition of cannabis.”

The move to advance the licenses towards social equity applicants hasn’t been popular with the established medical cannabis operators. They have been losing millions of dollars for years in anticipation of being first in line for the retail licenses. Had these operators been given the green light for adult-use sales, the program would have been operating much sooner. There has also been criticism that the licenses will be given to groups that won’t have the experience to handle the complex challenges of running a compliant cannabis operation.

Also, the social equity program is not a grant program, but instead a loan program. This will put added pressure on these operators to be able to pay these loans back. In addition to the money it will take to create a dispensary, the operators will also have the challenge of finding an acceptable location. The OCM recently created a group to assist these applicants in finding and securing an appropriate space once it realized these applicants were already finding the first step to be a difficult one.

Many New York medical operators are torn with the decision to put social equity applicants first. Morally, they agree with the move, but from a financial perspective are angry at having to wait even longer to recoup their investments in the New York market. They also know the difficulties and complexities of running these businesses and fear these unseasoned operators will struggle. They also worry that consumers will be subjected to long lines, poor product selections, and high taxes that will further drive the consumers back to the illicit markets. The illicit market is thriving in the state in the absence of any laws around the program.

 

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


Agrify

One comment

  • MCLAUGHLIN MICHAEL

    July 18, 2022 at 10:29 pm

    I doubt NY can have a crop in 4 months starting today in seed. The cold can come early to New York. Only inside growers have a better chance. It will take hundreds of pounds daily to supply all of NY. It takes 5 months to do it right from plant to smoke.

    Reply

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