When New York legalized adult-use cannabis in early 2021, the excitement around the jobs it could create was palpable. But nearly two years in, the industry is still trying to get its feet under itself – and the state is still waiting for the flood of jobs.
New York Gov. Kathy Hochul raved about the potential in Jul 2022 when she announced $5 million in funding for New York community colleges SUNY and CUNY to provide resources for new and existing cannabis job training credential programs.
“New York’s new cannabis industry is creating exciting opportunities, and we will ensure that New Yorkers who want careers in this growing sector have the quality training they need to be successful,” she said at the time.
According to the Leafly 2022 Jobs Report, the state’s medical cannabis market – which the report called “constricted” and “underserved” – has the potential to support up to 6,000 jobs itself, even though it had only 2,300 employees in 2021.
“As New York policymakers approach the opening of the state’s adult-use market in 2023, it’s critically important to recognize that consumers want to purchase legal, licensed, lab-tested products. Data from the state’s medical market show that dramatically constricting supply doesn’t lessen demand. Instead, it sends that demand into the illicit market, where patients are exposed to sketchy products, legal risk, and physical danger,” the report said.
So, as Manhattan’s first retail cannabis dispensary opened on Dec 29, just in time for the ball to drop on 2023, industry pundits and prognosticators have warily observed developments leading up to the long-awaited start of adult-use cannabis sales in New York state – a roll-out that was plagued with delays and competition from an already formidable illegal market.
“The NY market rapidly fell from the market that everyone seemed most excited about to the market that many no longer want to touch. Illegal businesses are a concern, especially if they are carrying sought after branded products from the (largely California) legal market at discounted pricing, but the rules and regs currently set forth by the OCM (New York’s Office of Cannabis Management) are of equal or even greater concern to brands and operators alike who are uncomfortable with the stage that is currently set,” said Bryan Passman, co-founder of cannabis talent recruiting firm Hunter + Esquire.
A native of Brooklyn and recent transplant to Boulder, Colorado, Passman said he hopes that regulators and operators in New York learn from the mistakes made in earlier markets, such as California and Oregon, where burdensome regulation, overtaxation, and competition from illicit vendors have created considerable constraints on legal cannabis businesses.
He added, for small cannabis operators lucky enough to be awarded one of the New York’s conditional adult-use retail dispensary (CAURD) licenses, opening the doors of a storefront location will require deep pockets and a careful, long-term strategy.
Passman expects employment opportunities for New York cannabis retailers to be measured – not the Green Rush that some have anticipated.
“I think there’s going to be some hiring here and there, most certainly, but it won’t be the excited wave of hiring that everyone was ramping up to ride all together,” he said.
Part of the challenge is in how licenses are being issued. New York’s social equity-based process, heralded as “first-of-its-kind,” awarded its first round of licenses to those affected by the War on Drugs, including residents with prior cannabis convictions on record, in November.
Capital is often challenging for member of that group to come by, and landlords aren’t always willing to lease space to the cannabis industry because it remains federally illegal.
To combat this, the Dormitory Authority of the State of New York (DASNY) planned to lease and build out locations that could then be subleased to the CAURD license recipients. That plan failed to come to fruition in a timely manner, and DASNY changed course in December.
Passman noted that a $200 million fund that was touted to provide resources for the state’s first 150 CAURD licensees also has yet to materialize. Without venture capital and educational resources to get operations off the ground, he said, social equity start-ups will be the most negatively affected by the fund’s apparent mismanagement.
The Social Equity Cannabis Investment Fund failed to meet a Sept. 1 deadline to raise $150 million from private investors. As such, Passman said he thinks 2023 will be a year of challenging transition for New York’s newest consumer market.
“MSO and cannabis brand clients excitedly hired us in 2021 and early 2022 to help them hire more operations and commercial leadership horsepower in New York to establish a presence and scale their operations,” he said. “Most of those people hired have since been let go or saw their role change dramatically due to the current situation there.
“The rules do not make sense for many established operators currently or flat out work against their business model, and it’s an unreasonable amount of risk for notable brands seeking national expansion to take on,” Passman continued. “We’re seeing news outlets report that many retail license winners do not have the capital nor expertise to begin to operationalize anytime soon, so I do not predict a strong demand for retail hires coming soon.
“There will certainly be some need to hire retail operations personnel, but not at the level most of us had been anticipating.”