When will New York start legal cannabis sales? Don’t hold your breath
The New York City Bureau of Cannabis Management has dismissed claims that it is pushing back opening day. But it’s still not clear if adult sales will start before the end of 2022 as promised.
Syracuse.com reported on it this week “New York’s timeline for legal cannabis sales has fundamentally shifted.” A spokesman for the State Cannabis Bureau replied online:
“I reject this claim that there have been major shifts in the timeline for cannabis sales in New York… Proposed regulations for future license types will come out in the next few months, applicants can apply for them from 2023, but this headline speaks of sales yet to come.” to take place in 2022.”
– Aaron Ghitelman, New York Bureau of Cannabis Management via twitter
The report was based on public comments from Chris Alexander, Executive Director of the State Cannabis Board. Alexander said unlicensed growers shouldn’t harvest their next crop just yet, as they have plans to sell them to New York’s incoming retailers.
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“By the middle of next year, these applications will be open for the cultivation, processing, and activities that you just identified,” Alexander said at an event celebrating the opening of the application window for the New York City Conditional Adult Retail Pharmacy ( CAURD) licenses.
Here’s why some think his response contradicts previous statements by fellow board members and why it might suggest out-of-state companies will have a head start on New York’s social justice applicants.
Adult cultivation and processing licenses will be available in mid-2023
In October 2021, Cannabis Control Board Chair Tremaine Wright said the state’s cannabis market would open within 18 months. But nearly a year later, it’s clear that many of the pharmacy and processing licenses needed for a full commercial launch won’t be available until mid-2023.
New Yorkers affected by the drug war are still submitting applications, and the board hasn’t started reviewing them yet. Current medical providers are reportedly shying away from a proposed $20 million fee to expand into the adult market. And illegal operators simply sell openly, hoping to avoid slapping the state or its cannabis regulators, which could jeopardize their ability to obtain a license in the future.
So the question remains: where are New Yorkers going to get all that weed that Mayor Eric Adams wants everyone to “light up and spend some money on”?
The state has only approved 242 conditional cultivation licenses and 15 conditional processing licenses so far. These conditional licenses are limited to a very select segment of the population, and many conditional license holders also struggle to stay afloat within state guidelines without a clear start date by which to plan to exhale.
The Office of Cannabis Management has not set a date
Leafly contacted the New York Office of Cannabis Management (OCM) on September 8 for further clarification. But things are still up in the air.
There is no expected adult sale date. They are accepting CAURD applications for now (here’s how to apply). And they will soon start reviewing applications. The OCM hopes to have things up and running by early 2023. However, it added that first stores could open before the end of 2022. The bureau has not made clear which license holders are on the 2022 schedule.
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New York smokes more weed than any other city in the world. So the state can’t afford to screw up the start of this multi-billion dollar market because of a lack of supply. This is where Multi-State Operators (MSOs) like Curaleaf and Columbia Care come in.
Should MSOs be able to pay to skip the line?
There are already 10 MSOs operating in New York’s medical cannabis industry. They obviously want to enter the adult market and are able to expand quickly and meet the new demand. There’s only one problem.
New York wants them to pay a $20 million royalty to join its adult entertainment market.
It appears the state intends to use MSOs to solve two problems: meeting immediate needs on day one and funding the launch of the country’s most ambitious social justice program. However, MSOs like Columbia Care want to see financial justification for the number before agreeing to pay it. The subsequent back and forth could also delay things.
“It has to be based on the economic realities of the market,” Ngiste Abebe, an executive at Columbia Care, told the New York Times. Abebe said the operators are “excited” to support social justice but would “like to see the economic analysis that justifies $20 million.” The Times reports that some operators have been pushing for a $3 million annual fee instead.
The Bluntness reported last month that OCM’s Alexander said, “The only real guide [for the licensing fee] Our requirement is that it is an amount sufficient to fund the share program or at least the upfront payments.”
Learn from other MSO-led markets
In April, New Jersey gave MSOs their first look at their legal industry to mixed reviews. Businesses were allowed to expand operations into separate supply and customer flows for medical and adult purposes.
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So far, some pharmacies have been fined for failing to comply with strict patient-first laws, such as: B. medical hours and express check-out options. But the process has been largely drama-free, though regulators feared they would be short of projected demand by 100 tons of legal weed just before launch in March.
The first Social Justice applicants in NJ have recently started receiving licenses, some of which are expected to open by the end of 2022. If New York wants to outdo its neighbors across the Hudson River, closing the gap between Day 1 of MSO and Day 1 of everyone else would be a boss move.
While allowing MSOs to expand into adult use, it solves potential supply and demand issues, but it still raises questions about the priorities of the state-led social justice program. East Coast states like NJ, Pennsylvania, and Florida can attest to price and quality issues that can accompany MSO-dominated markets.
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Not to mention that some MSO executives have expressed doubts about the sustainability of social justice models. So using your money to fund businesses that you hope and believe will fail doesn’t seem like a recipe for success.
Is a $20 million fee enough to fund social justice in New York?
Taking $20 million from MSOs and investing it in companies owned by New Yorkers harmed by the drug war sounds great. However, it is unclear whether it will have the intended effect of supporting these small businesses in the long term.
Even if all ten MSOs pay $20 million, Curaleaf’s market cap of nearly $5 billion still dwarfs the proposed $200 million seed fund. With a $6 billion state market at stake, that seems like a small fee for ambitious companies that can afford to take the short-term hit.
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Because of this, regulators must be very cautious about handing over another limited-license market to foreign companies without considering how the potential oligopoly will affect patients, customers, and small businesses.
How the unclear schedule is affecting New Yorkers
The lack of clarity of the OCM leaves potential business owners in the dark, while MSO executives help draft the laws behind the scenes. It has prompted some New Yorkers to spend millions on real estate and operating expenses in anticipation of an opening date that won’t stick.
“I knew it was going to take time, and I knew I was kind of hasty here…but I didn’t expect it to take this long,” Mike Flynn told New York cannabis insider Sean Teehan. “It’s going to be quite difficult with the expense of just keeping this building afloat… for another full year before we can open,” Flynn added.
Flynn has already spent $3.3 million to secure a retail space in Syracuse, including renovations and point-of-sale systems. He pays up to $5,000 a month for utilities and doesn’t want to borrow for more until the OCM has clear rules and a timetable out.
With so many conflicting interests in the pot, New York regulators will have their hands full juggling the unique needs of MSOs, small business owners, and consumers. With little room for error, regulators’ actions and timing will determine how smoothly the state’s projected $6 billion legal cannabis industry is ultimately rolled out.
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