State of the New York Cannabis Market – Cannabis | weed | marijuana

What is the state of the New York cannabis market?

Earlier this week, the Office of Cannabis Management (OCM) approved regulations to boost New York’s cannabis market.

When New York first legalized cannabis in 2021, analysts expected a $4 billion market. Two years later, they are generating a meager $12 million from just 20 legal stores.

When compared to neighboring states, it is clear that the New York cannabis market is underperforming.

But now the rules have changed. Regulators are now allowing operators from several states to apply for adult-use retail licenses. Small and medium-sized businesses feel like they are being thrown under the bus. And they’re not wrong if they think that way.

CLN caught up with Naturae co-founder Nicolas Guarino to discuss the state of the New York cannabis market.

Is this license extension good news or bad news? What is the current state of the New York cannabis market?

State of the New York cannabis market. What has changed?

“Given how late we are in 2023 and how much product is in inventory and ready to go into stores and hit the market,” Nick says, “I really think it’s kind of the only option was that the OCM had left in front of them.”

In fact, operators in several states have filed suit against New York. This regulatory change to open licensing to all applicants could put an end to the lawsuits.

“In general, I think it will be good news to be able to develop New York to the potential that it has,” says Nick. But it is not without harm.

Nick worries that New York could end up like California, where “the large, publicly funded companies have been able to wrestle with the size of their corporate umbrella.” [and] massively increase their production and make it impossible for small and medium-sized companies.”

“A similar story is playing out here in New York,” says Nick, where OCM bureaucracy has created uncertainty in the market. And “that big MSOs immediately took advantage of the chaos,” says Nick.

So does this rule change add to the chaos? “This is what they wanted and this is the result,” says Nick. The New York cannabis market will get a boost at the expense of others.

What about social equity licensing?

When New York legalized cannabis prohibition, authorities said they would give priority to applicants affected by cannabis prohibition, as well as applicants who are minorities, female or veterans with disabilities.

This process was anything but quick.

“We should have 150 of these stores open by June,” says Nick.

And that would have been a big boost for the New York Market Social Equity program in general for the market. That didn’t happen, and in June we actually only had about ten stores open. And with only ten stores open in June, much of the harvest produced was still in storage. A lot of people are really struggling with the retail shortage.

Nick adds that applicants received good news this summer. Yet everything the OCM does falls outside the original laws and mandates. The New York cannabis market is “prone to lawsuits,” says Nick.

However, there is a feeling that applicants will be able to reapply and open their businesses by the end of November.

The structure that they [OCM] was put forward was vulnerable; it did not work. It failed due to lack of funding and very bad timing. And now this is the only solution they can offer, which is to open the entire market.

Many New York cannabis entrepreneurs have invested hundreds of thousands (even millions) of dollars in their businesses. Opening up licensing to everyone gives them the opportunity to recover.

But doesn’t this bring the original social justice claimants to their knees? Don’t they have the right to feel betrayed by the OCM?

“Yes, absolutely,” says Nick. He hopes the OCM will waive application fees and allow reapplication so these operators can “get back on track.”

“Otherwise there will just be a bunch of additional lawsuits directly from these licensees,” Nick says.

State of the New York cannabis market

The idea behind the New York cannabis market was to provide a level playing field for all applicants. “There would be an opportunity for small and medium-sized companies,” says Nick.

Retail and production licenses would be separate. There would be no massive consolidation of large corporations like in California. At least that was the idea.

The planned cannabis market in New York would “provide small and medium-sized businesses with the opportunity to establish themselves,” says Nick.

The result, however, was a slow bureaucratic rollout that did not undermine illicit markets. Instead, conditions were created in which people invested millions in stores that were not allowed to open legally. It also encouraged the filing of lawsuits against the state.

In the end, the OCM decided to open the floodgates. Nick expects this decision to accelerate the maturity of the New York market by three years.

However, he adds, at the expense of small and medium-sized companies.

“We will see how much it develops, but within 12 months it will be a very competitive market. So in some ways it sounds like small businesses may have been taken under the bus here. As at every level of the supply chain. From the retail card licensees to all producers and growers.”

How consolidated will the New York cannabis market become?

“We’ll just have to wait and see,” says Nick.