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New York’s Cannabis Legalization Rollout Faces Setbacks and Delays

What’s Happening with New York’s Cannabis License Rollout?

New York State’s journey to establish a thriving Cannabis industry since its legalization two and a half years ago has been fraught with challenges and delays. Initially envisioning over 150 licensed dispensaries, the state currently has only 23 retail locations. A recent court order further complicated the situation. Justice Kevin R. Bryant of State Supreme Court in Kingston, N.Y., issued an injunction halting further approvals for cannabis retail licenses and delaying the opening of license applications to the general public until the fall. 

This injunction is the result of a lawsuit filed by a group of veterans who suffered disabilities during their military service. However, rumor has it that this lawsuit was supported by a group of multi-million dollar cannabis companies such as Curaleaf, Colombia Care, and PharmaCann. These Multi-State Operators (MSO) have cannabis businesses in many legal states across the country and up until June they were only allowed to operate medical dispensaries in New York for the first three years of the legal market to allow small cannabis businesses run by social equity individuals to have a head start and establish their businesses. This all changed in June when in light of the slow roll-out of independent dispensaries across the state, the New York Office of Cannabis Management (OCM) approved legislation to allow the MSOs already operating medical cannabis facilities in the state to enter the recreational market as early as December, 2023. This lawsuit is suspected to be part of the plan for these MSOs to further delay the roll-out of small independent cannabis businesses in NY so they will have less competition and can more easily take over the market.

In this case, the veterans group raised a legal challenge regarding the allocation of New York State’s initial dispensary licenses, the Conditional Adult-Use Retail Dispensary (CUARD) licenses. The eligibility criteria for these CUARD licenses required individuals to either have prior convictions related to marijuana offenses before its legalization or have a close relative, such as a parent or spouse, with convictions. Additionally, applicants needed to own a profitable business for a minimum of two years. Although the veterans met the business requirement, they did not have any criminal marijuana offenses. In their lawsuit, the veterans argue that the priority given to CUARD licenses is against the state constitution and as disabled veterans they qualify as social and economic applicants under the MRTA that should also be given priority to apply for cannabis retail licenses. 

The MRTA, the Marihuana Regulation and Taxation Act, that legalized recreational cannabis in New York State did not define or reference ‘Conditional Adult-Use Retail Dispensary’  or ‘CUARD.’ These were terms and programs that the NY Office of Cannabis Management (OCM) created later in an attempt to promote social equity applicants impacted by the war on drugs. However, Judge Bryant found the arguments of the veterans’ group against the OCM and their CUARD program to be consistent with the regulations of the MRTA. The OCM is now being faulted for continuing and expediting the roll-out of the CUARD program with knowledge of unresolved litigation that this program was inconsistent with the regulations of the MRTA. 

However, the judge is allowing regulators to approve a small number of pending licenses for applicants that already have fulfilled all the requirements to open their dispensaries including but not limited to obtaining site plan approval from the OCM and local municipalities where applicable. He also ordered the OCM to expedite finalizing necessary regulations consistent with the MRTA for the next application process, though the exact timeline remains uncertain. With this halt, begs the question, what happens to the current supply of cannabis waiting to be sold in the limited number or licensed dispensaries?

Rising Stockpiles

The delay puts hundreds of New York cannabis licensees, aiming to open dispensaries at risk of financial strain, potentially jeopardizing their investments and commitments. Moreover, more than 300 farmers and manufacturers are struggling with limited avenues to sell their cannabis-related products. Sales have been slow, with only around 18,000 pounds of cannabis sold in legal dispensaries since December, leaving as much as 564,000 pounds in the state’s stockpile by year-end.

Cannabis sitting in an airtight container, waiting to be stored on shelves
Cannabis sitting in an airtight container, waiting to be stored on shelves

Although this situation seems unfortunate, Fresh Alternative Farms (FreshAF) is meeting with the procurement personnel of the operating dispensaries in NY on behalf of our clients to find them shelf space and bring them revenue in this uncertain market. 

Other farmers and cannabis business owners look to New Jersey who seems to have their Recreational Cannabis Program well organized. Come September 27, 2023, New Jersey opens up their application process for three more classes of recreational, adult-use cannabis products. Those who can are working with licensing experts like FreshAF to get all their ducks in a row ahead of time, so when applications do open they’re ready!

Moving Forward

New York’s path to establishing a thriving Cannabis industry has been far from smooth. Legal battles, regulatory hurdles, and delays have cast uncertainty over the industry’s future. The coming months will be critical as regulators work to resolve these issues and fulfill the original vision of a robust and inclusive New York Cannabis market. At FreshAF we offer a complete range of resources to support your cannabusiness dreams. Explore our website https://freshalternative.farm for additional assistance in creating SOPs and obtaining guidance for the cannabis license application process. As developments continue to unfold, industry stakeholders and enthusiasts will closely monitor progress and changes in the months to come. Stay up to date with NYS cannabis news and more, via our social media accounts across all platforms and keep an eye out for our monthly Newsletter!

 

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