New York's Chaotic Cannabis Launch Is a Cluster Bomb for Licensees

Unlucky licensees are now in cannabis purgatory.

While the New York Office of Cannabis Management and the Cannabis Control Board are the direct targets of numerous lawsuits, licensees feel as if they are collateral damage.

Retail operators that received licenses in the first round and managed to open fairly quickly are untouched. But the groups and individuals who got licenses later are now in cannabis purgatory.

These unlucky licensees are stuck on the sidelines anxiously waiting on the courts to decide if they will get a pass to move forward or will have to begin the process again from scratch. The OCM attempted to address the issues for this group, some of whom were just weeks away from opening, but the judge turned down the OCM’s request for waivers, suggesting that the list hadn’t been properly vetted.

The OCM submitted a smaller list, and the judge once again criticized the OCM and shot down that request as well. Green Market Report asked some of these licensees how they were strategizing and operating in such a difficult environment.

Jeremy Rivera, Terp Bros

Jeremy Rivera

Jeremy Rivera, a 36-year-old justice-involved and Conditional Adult-Use Retail Dispensaries (CAURD) provisional license awardee, planned to open a dispensary in Queens. The store had been slated to open on Aug. 15, but the program was frozen on Aug. 7.

He and his business partner Al Cottone have invested over $300,000 of their own money in the business to date.

“Prior to the injunction, Terp Bros was preparing to open its doors at the end of August. We held a successful hiring event where I recruited 23 individuals who were all planning their lives and finances around starting a new job in the immediate future. Now I’ve had to contact everyone with the upsetting news. These people can’t just sit around waiting,” Rivera said.

While the physical store hadn’t stocked any inventory yet, the pair have CBD products that they hope to make available on their website soon.

“This will hopefully help generate some revenue because I have to start paying rent on Oct. 1,” he said. “We are facing hard financial difficulties and are continuously budgeting and planning to determine far out we are from the red zone.”

Howard Libron, Orange County Cannabis Co.

Howard Libron planned to open his store in the mid-Hudson Valley on Aug. 25, assuming the floors were ready. He and his daughter held a job fair that attracted more than 100 interested workers in the first hour.

But now, the floors are now the least of his worries.

“We are currently making rent payments to the landlord on a finished space without any benefit of revenue to offset the costs,” Libron told Green Market Report. “Along with the rent, we have essential employees on payroll.”

He noted that “people upstate are excited and ready to join the cannabis labor market now,” but because of the delays, many of those hired at his job fair had to find other employment.

“The detrimental impact to our financial position is magnified by the fact that we are ready to open now upon approval of our application, which has been submitted in its entirety,” he added.

Vladimir Bautista, CEO Happy Munkey

Vladimir Bautista

Vlad Bautista is truly an OG of the New York cannabis scene. He started out selling on the corners in Washington Heights. Then he and his business partner Ramon Reyes opened the popular cannabis speakeasy Happy Munkey.  They closed the lounge in anticipation of applying for a license.

Bautista was one of the first applicants for a retail CAURD license, but he wasn’t awarded one until the third round. He said he could be open in as little as 60 days – but the freeze put all his plans in jeopardy.

“Because of all these institutions going after each other, people like me have become collateral damage,” Baustista said. “I commend the OCM for allowing people like me to do this, but the reality is we’re already in it for $500,000-$600,000. If this drags on too long, we’re likely to go bankrupt.”

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.

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