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A new report filed with the New York legislature by state cannabis regulators on Oct. 1 paints a picture of a continually growing legal market that has reached nearly $654 million in sales, but which has also apparently left more than 200 “justice-involved” retail license holders in limbo.
The wide-ranging report, authored by the Office of Cannabis Management and the Cannabis Control Board, touched on a host of issues facing the state’s nascent marijuana trade, including ongoing enforcement against unlicensed businesses, the need for more funding for social equity companies, and gaps in the regulatory system that still need to be addressed.
“There is much work to be done, and we remain undaunted by the task ahead,” OCM Acting Executive Director Felicia Reid wrote in an introduction to the report.
The numbers
The OCM and CCB have approved 1,704 business permits, including full licenses and provisional permits, but still have 5,698 applications pending. According to the report, the regulators have formally denied 1,012 applications. In addition, there are 24 medical dispensaries operational, including 10 that are dual medical-recreational.
The total number of fully approved licenses includes 205 Conditional Adult Use Retail Dispensary (CAURD) permits that were awarded last year to “justice-involved” applicants that had criminal cannabis records; a total of 463 CAURD applications had been tentatively approved.
Of the 205 fully approved CAURDs, only 150 were operational as of Sept. 15, according to the report. As of Sept. 27, there were just 202 legal recreational marijuana shops in the entire state.
“OCM has reviewed and scored every CAURD application received. OCM is nearing the completion of issuing a final license determination on every initial CAURD application received,” the report stated.
Sources previously told Green Market Report that many of the CAURD licensees have faced serious difficulty both raising money with which to obtain retail locations and finding compliant sites that aren’t too close to other existing licensed shops. The stores must be at least 1,000 feet away from their nearest legal competitor.
The report also noted that the Cannabis Social Equity Investment Fund, which was originally supposed to inject $200 million into the dispensary buildout process on behalf of CAURD licensees, has only been utilized by 20 of the 463 CAURDs.
The 10 companies licensed to grow and sell medical marijuana in the state have also been slow to move into the recreational retail side of the industry, the report found, with just four of the companies opening dual medical-recreational dispensaries thus far. The other six have either simply not opened recreational sales or not even applied for permission to do so, according to the report.
Licensed medical cannabis companies – which the state refers to as registered organizations, or R.O.s – Curaleaf, Etain and Fiorello Pharmaceuticals have each opened with the maximum of three adult-use shops apiece; PharmaCann has opened just one.
Still, the OCM is moving to expand the number of licensed medical marijuana companies, which means there will be more vertically integrated permits handed out at some point in the not-too-distant future.
“OCM received 10 applications and the CCB will identify new R.O.s in fall 2024,” the report stated, noting that an application period ran from October to December last year.
Legal cannabis sales also steadily increased as more shops opened and as New York City continued its crackdown on the unlicensed market, with August sales hitting a new monthly high of $97.4 million, up from the previous high in June when sales reached $74.3 million.
September sales were on pace to surpass August when the report was finalized, with sales having reached $63.5 million by the middle of the month.
Policy recommendations
The OCM said it’s also not ready to rest on the existing rules for the industry.
“The MRTA will require changes over time to meet evolving conditions and needs,” the report stated, before launching into several pages of specific policy changes it suggested for lawmakers. “More work will need to be done to maintain and continue this progress.”
Among the laundry list of recommendations:
Reduce “regulatory-related costs for licensees,” with a specific callout to those involved in cultivation.
Expand the Compliance Trade Practices Unit to support enforcement efforts around business structure rules, “specifically around true parties of interest rules and rules regarding undue influence and control between licensees in different tiers of the market.”
Increase staff to monitor “licensee compliance with legal and regulatory requirements.”
Offer “additional programing and support” to social equity, particularly around capital needs. The report calls for “low interest loans or grants.”
Continue “collaborative efforts with state and local partners to shut down unlicensed cannabis distribution channels.”
Expand enforcement efforts to include “non-storefront distributors” such as online delivery services.
Reevaluate child-resistant packaging requirements “in favor of environmentally sustainable practices.”
“}]] [[{“value”:”The newly released implementation report also calls on regulators to make changes to the existing rules.
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