New York Cannabis retailers find roadblocks in obtaining licenses and opening shops
Some entrepreneurs in the first round of licensing have found it difficult to navigate applications, find retail space.
Bronx resident Jesus Fontanez was 18 years old when he began taking care of his younger brother after their mother’s passing. It was the late 1990s and Fontanez was living on his own. While he had a job and was attending college, he could barely pay his bills. So he began selling marijuana.
For many teenagers in his neighborhood, selling cannabis was a way to make a quick buck; but for Fontanez, it was a way to survive. He said selling cannabis helped him during that time.
“Not everybody’s trying to be the Pablo Escobar of cannabis — they’re just trying to make ends meet,” he said.
Fontanez’s high school friend Eyasser Noboa also sold cannabis from a young age. He was arrested three times. On one occasion, he recalls being arrested outside his building in Manhattan because another man nearby was found to be in possession of cannabis.
“I was doing nothing and (the police) said, ‘Well, he bought it and you’re the only one we see so we’re going to send you (to the police station).’ As simple as that,” Noboa said.
He was fined $150, but he decided not to challenge the arrest since he “probably would’ve spent more money on a lawyer trying to fight it.”
In their 20s, Fontanez and Noboa said they left drug dealing behind, found stable jobs and started families. Now, they run their own businesses in the Bronx: Noboa has an online retail business; Fontanez is the proprietor of a birthday-party venue for children.
But another opportunity arose for the two friends following New York’s legalization of recreational marijuana in April 2021: opening their own cannabis shop. The more they talked, the more they agreed it was the right time to embark on this business endeavor.
“We just wanted to take the opportunity and do something different, give our family a different chance,” Fontanez said. “They’re talking about the money that’s supposed to be made in this business … we felt like we wanted to be a part of it and we were comfortable enough to execute it.”
Fontanez, Noboa and their business partner Dipak Patel are among the first in the state to receive licenses that will allow them to open a marijuana shop. But since the state Office of Cannabis Management opened the application period last September, the process has been competitive, and the rollout of the industry has been slow. That has left entrepreneurs to navigate myriad roadblocks to obtaining licenses and opening shops.
Fontanez, Noboa and Patel’s license, which they were granted in April, was one of the first 26 that the Office of Cannabis Management issued to applicants in the Mid-Hudson region. Statewide, regulators have issued 463 licenses, but only 21 retail cannabis stores have opened.
All licensees so far include at least one justice-involved applicant — an individual whose life was impacted by a prior cannabis conviction — or nonprofit organizations whose services include support for people formerly incarcerated due to the prohibition of marijuana. All applicants must also have prior business experience, undergo background checks and provide a record of previous drug-related criminal cases and proof of a New York presence. They also cannot owe any taxes or fines to the state and have to pay a $2,000 application fee.
“If they have an open case or a warrant or child support, it just shows up,” Fontanez said. “Anyone who wanted to apply, they might want to go, if they’ve ever been arrested, and see if they owe the court a dollar and just start clearing those things up now. It’s something you should probably do anyway, but it’s definitely one step to be prepared for that.”
Because of Noboa’s marijuana-related arrests, his application with Fontanez and Patel qualified for the first round of license approvals.
While Fontanez and Noboa say the Office of Cannabis Management was helpful throughout the application process, for further assistance they turned to the Cannabis Company of New York, a consulting firm that helps entrepreneurs with license applications.
Fontanez and Noboa’s license was delayed at one point because officials confused Fontanez with another individual with the same name who owed child support. “Because they matched his name, he had to show up in court and settle it,” Noboa said.
But their biggest challenge has been finding a location. Among the difficulties were being offered predatory leases and being rejected in at least two retail spaces that weren’t properly set up for cannabis shops. Under the marijuana legalization law, licensed premises have to be approved by the state and cannot be near schools, places of worship or community facilities, and locations have to comply with local zoning.
Would-be shop owners don’t have the entire state to search, either. New York gave every municipality the option to “opt out” of dispensaries and cannabis lounges in their communities when cannabis was legalized. That reduced the available real estate for companies to open their dispensaries.
Temporary pause on licensing
The slow rollout of legal cannabis in New York got even slower this month when four military veterans filed a lawsuit accusing regulators of unlawfully prioritizing applicants with prior drug convictions while excluding others. Cannabis licensing has been paused temporarily following a court-ordered extension of a restraining order pending a second hearing in the case.
It is at least the second lawsuit accusing the state of violating provisions of the marijuana legalization that has led to a delay in licensing in at least parts of New York. Last November, a federal judge in Albany issued a temporary injunction blocking retail licenses in five regions of the state — including the Mid-Hudson region — due to a lawsuit filed by a company whose application to operate a store failed to qualify because one of its owners lacked “a significant New York state presence.” That injunction was fully rescinded three months ago when the case settled.
But in the case filed recently by the military veterans who have been unable to secure retail licenses, those who have received conditional marijuana licenses argue the latest restraining order is delaying the process and harming their businesses. Last week, four companies with conditional retail licenses filed a motion to intervene in the case. They say they have collectively invested significant money and time to establish their stores, some of which had been scheduled to open within a week when the restraining order was issued.
Noboa said their licensing process was delayed due to the first injunction.
“We were told that we had a high score on the license, but due to the injunction, there was nothing they could do for us,” he said.
The cannabis retail license process will open for all applicants on Oct. 4, state authorities disclosed in a court filing last week.
Support for cannabis license applicants
Some advocates have criticized the state for what they call a lack of clarity about eligibility for the first round of applications.
“We believe if (regulators) were open about that process, there would have probably been 3,000 applications because those who qualified … not everybody knew where to go or what to do,” said Jayson Tantalo, a Rochester-based applicant who co-founded the New York CAURD Coalition last year to help marijuana retailers navigate the process of obtaining a license and starting their businesses.
Jayson Tantalo co-founded the New York CAURD Coalition in 2022 to help marijuana retailers with information, training and resources. The coalition now has more than 170 members, 95 percent of them have obtained their retail licenses, Tantalo said.
Provided by Jayson Tantalo
The coalition provides information, support, networking opportunities and training through a Discord channel to other marijuana retailers. While it is still awaiting nonprofit status, so far it has 170 members, 95 percent of whom have obtained their cannabis licenses, Tantalo said.
“We submitted our application and we found, like hundreds of others, that there was no communication between regulators and the applicants. We’re still wanting our questions to be answered,” Tantalo said.
Recently, the coalition has hired a lobbyist and created partnerships with credit unions, ATM companies and security firms and is trying to align with insurance and real estate interests. It has also shared business plans and information about legal agreements and standard operating procedures, among other materials, so that members “can take that information and they don’t have to spend thousands of dollars,” Tantalo said.
Fontanez and Noboa said the coalition has supported them with information and networking opportunities.
“We can’t really blame OCM in its entirety. I commend them for trying, changing some of the rules and really working hard to stabilize the bottlenecking,” Tantalo said. “But on the negative side is communication with investor stakeholders in understanding the constraints and the trials and tribulations that we face.”
In July, two years after they decided to try and open a cannabis shop, Fontanez, Noboa and Patel finally found a location at 475 Central Ave. in White Plains. It’s under construction and they plan to open Cannabis Realm of New York by the end of the year.
They hope their business will help support their families while also providing employment and educational opportunities to the community, especially those who were previously affected by marijuana convictions like Noboa.
“I’ve seen a lot of people that I grew up with get arrested. I have family members and friends who have been deported on weed charges, and now it’s kind of bittersweet … if you would’ve told me 20 years ago this was going to happen, I would’ve thought that you were probably lying or making it up,” Noboa said. “But it also provides this opportunity. I got kids; hopefully, with this opportunity, I can provide a better future for them than the one I was provided when I was growing up.”
