It’s been 99 days since NYS senators met about Cannabis, but what’s the plan?

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It’s been 99 days since NYS senators met about Cannabis, but what’s the plan?

New York Senators Grapple with Cannabis Industry Challenges: Insights from the October Hearing.

On Oct. 30, New York State senators heard over 10 hours of testimony from government officials, policy advisors, law enforcement personnel and business owners about the Empire State’s tumultuous rollout of its legal marijuana market.

Sen. Jeremy Cooney organized the conference after a judge ordered an injunction that temporarily prevented regulators from greenlighting any new dispensaries, and amid long-running issues such as an oversupply of flower among farmers and problems competing with the illicit market.

“Two years after legalizing adult-use recreational cannabis, New Yorkers are frustrated and disappointed in the State’s ability to launch a safe and legal marketplace,” Cooney said when he announced the hearing.

It’s been a little over three months since the subcommittee met, and cannabis regulators are now under fire for issues that existed before the hearing as well as others that have popped up since.

The Office of Cannabis Management has been sued several times for issues associated with its general licensing process, as people continue to complain about perceived goalpost shifting and a lack of transparency from OCM officials.

Gov. Kathy Hochul has become the most high-profile critic of the OCM in recent days, describing the state’s legal cannabis rollout as a “disaster,” and saying she’s “very fed up” with the Cannabis Control Board’s performance.

NY Cannabis Insider wanted to get an idea of what practical steps senators who attended the hearing are taking – or plan on taking – to improve the state’s legal cannabis industry. So we reached out to all 14 senators who participated, and asked four questions:

  • What do you think were the most important facts that came out of the Oct. 30 hearing?
  • Have you taken any actions to alleviate problems that people identified during the hearing?
  • Are there any cannabis-related bills that have been filed so far this session that you plan on supporting?
  • What actions do you plan to take to solve problems in New York’s legal cannabis industry that were identified during the hearing?

Five senators sent us answers – some answered questions individually while others provided a single statement – and another three signed onto a Feb. 2 letter to CCB Chair Tremaine Wright, which notes their concerns with the current general license application process.

Below are the senators’ responses.

Sen. Jeremy Cooney:

“I came away from the legislative hearings with two key takeaways: first, the need to repeal the potency tax to allow legal retail businesses to compete, and second, the need for better communication between applicants and OCM as businesses navigate this process.

“I was pleased that Governor Hochul’s budget proposal included the potency tax repeal, continuing the work I began when I introduced S.4831 last year—but, it needs to go further. I introduced state legislation last year that would replace the current potency tax with a flat rate 7 percent excise tax, contrary to the Governor’s proposed wholesale tax of 9 percent. This flat rate would help keep prices down for retail vendors and suppliers, increasing their ability to ramp up their overall sales volume and compete with the growing illicit market.

“I’ve had discussions on the best mechanisms in place to combat the illicit market, but ultimately the repeal of the potency tax will create the best opportunities to allow our licensed dispensaries to best compete in the marketplace.

“In this budget cycle, I will also be prioritizing finding ways to help medical cannabis dispensaries as the adult-use marketplace expands and assisting the farmers that have been harmed by the program’s slow rollout.”

Sen. Rob Rolison:

What do you think were the most important facts that came out of the Oct. 30 hearing?

My colleagues and I listened to candid testimony from stakeholders frustrated with an overly bureaucratic process to obtain a license to sell adult-use cannabis in the state. In addition to these concerns, questions of what legal enforcement measures exist and where such authority rests remain insufficiently answered to deal with the proliferation of illegal storefront sellers.

Have you taken any actions to alleviate problems that people identified during the hearing?

Last year I toured a cannabis cultivation facility and processor in my district and listened to the economic struggles of law-abiding New Yorkers attempting to navigate Albany’s red tape. I continue to meet with program applicants expressing similar concerns. Since October’s hearing I have solicited feedback from current and potential license holders and relayed this information to the subcommittee chairman. As a former police officer for 26 years, I am constantly in contact with law enforcement personnel who continue to express frustration about the state’s lack of coordinated efforts to shutter illegal retailers.

Are there any cannabis-related bills that have been filed so far this session that you plan on supporting?

I am eager to discuss with my Senate colleagues what actions can be taken through budget negotiations to address the immediate and pressing problems faced by the adult-use cannabis market in New York.

What actions do you plan to take to solve problems in New York’s legal cannabis industry that were identified during the hearing?

I’m encouraged thus far that all of our constituents’ concerns have been received by the subcommittee’s members with respect and seriousness. In the new legislative session, my commitments remain what they’ve been since I was appointed to this panel. First, legal adult-use dispensaries must have local support and acknowledge local decision-making, too. Second, impose tough penalties on those who target minors with cannabis sales. A legal market can coexist alongside a safe one for our children. Next, I agree with the governor that the potency tax must be addressed: small startups with limited capital cannot afford to pay this costly, and arbitrary, fee. It acts as a barrier to entry for local small businesses who invariably will have to compete with larger, out-of-state firms on an unequal playing field. Finally, Albany’s rollout of priority licenses is slowed by unnecessary red tape and staffing issues at OCM. And changing the rules in the middle of the rollout has thrown uncertainty into an already complicated process. These and other matters will need to be addressed in order to ensure the safe, legal, and profitable market New Yorkers were promised.

Sen. Sean Ryan:

What do you think were the most important facts that came out of the Oct. 30 hearing?

  1. The details of the proliferation of illegitimate businesses that undercut our licensed businesses and the fact that there were little to no enforcement mechanisms in place to stop them.
  2. The injunctions caused a backlog of unprocessed product and left farmers in the lurch.

Are there any cannabis-related bills that have been filed so far this session that you plan on supporting?

I’m taking a look at Senator Krueger’s bill that gives OCM explicit enforcement authority to see if that would help businesses in my district stay competitive and keep kids in the district safe.

What actions do you plan to take to solve problems in New York’s legal cannabis industry that were identified during the hearing?

I’ll continue to have conversations with farmers and local businesses in the industry to better understand how I can help them with the individual challenges they are facing.

Sen. John Mannion:

I support cannabis entrepreneurs and believe that strong enforcement against bad actors – including significant fines - needs to be coupled with more license approvals for businesses that have played by the rules and are ready to open.

Through the budget and legislative process, and in consultation with District Attorneys and the police, I am advocating for additional enforcement tools and resources.

Ending the proliferation of illegal operations is critical to steadying the rollout of adult-use cannabis in New York.

Sen. Brad Hoylman-Sigal:

What do you think were the most important facts that came out of the Oct. 30 hearing?

The hearing on October 30th made it clear that the illicit cannabis market in New York City is out of control. The illegal shops not only make it more difficult for the legal cannabis stores to do business, they create a public health threat, particularly for young people. As was made clear in the hearing, the cannabis products sold in the unlicensed shops are not tested in New York State labs, do not have to adhere to New York’s safety standards, and can be marketed toward minors in a way that the state’s licensed cannabis retailers do not allow. The hearings also made clear that even when the NYPD or the Office of Cannabis Management want to shut down illegal shops they are often unable to do so due to the complicated and time consuming nature of the investigative process. We need to do more to put a stop to the illicit cannabis industry and keep our children safe by ensuring that the legal industry, which supplies New Yorkers of legal age with safe and regulated cannabis products, can thrive.

Have you taken any actions to alleviate problems that people identified during the hearing?

After compiling a roster of potentially illicit cannabis shops in my district, I sent a letter to the landlords of 33 illicit stores on the west side of Manhattan, warning them that they may be legally responsible for the unlicensed sale of cannabis products by their tenants. In my letter I made clear that the landlords could face an injunction and penalties of up to $20,000 a day for the illegal activity happening on their properties. My office has received several responses from lawyers representing these landlords informing us that they will be taking action on this matter.

Are there any cannabis-related bills that have been filed so far this session that you plan on supporting?

I will support any legislation that empowers the Office of Cannabis Management and the City of New York to expedite the process of shutting down illegal cannabis shops. The Governor included a new proposal in her Executive Budget that I will be reviewing with my colleagues.

What actions do you plan to take to solve problems in New York’s legal cannabis industry that were identified during the hearing?

To address the problems in New York’s legal cannabis industry we need to focus on speeding up two important processes: (1) investigating and closing down illegal cannabis shops and (2) granting licenses for legal dispensaries. The NYPD does not have the authority to padlock stores that they identify as illegally selling cannabis. Instead, the Office of Cannabis Management must undergo a potentially months-long process involving the District Attorney’s office, the Attorney General’s office, and the courts. To me, a clear first step is allowing the NYPD to identify and padlock stores that they know are selling cannabis illegally. This will speed up the process of shutting down these shops and allow the Office of Cannabis Management to dedicate more of their resources elsewhere. For example, those resources could be used to help us with our second area of focus, accelerating the process of granting licenses to get more legal stores open. If New Yorkers have the option to buy safe and legal cannabis as conveniently as they can currently buy illegal cannabis they will not have to resort to using the illegal market.

Letter from members of the Senate subcommittee on cannabis to Tremaine Wright:

February 2, 2024

Hon. Tremaine Wright

Cannabis Control Board

Dear Chair Wright:

As members of the New York Senate’s Cannabis Subcommittee, we write to express our concern with the timeline for licensing of adult-use cannabis dispensaries.

As of the time of this letter—nearly three years since the historic passage of the MRTA—there are only 59 adult-use dispensaries open across the state. The consistent delays in licensing due to legal and bureaucratic challenges have resulted in a backlogged supply chain, financial and mental distress among applicants, and a thriving illicit market.

Noting the above, we are deeply concerned by the decision to cancel this month’s meeting of the Cannabis Control Board. The published January 24 agenda had only 3 new adult-use dispensaries set to be approved, an unacceptable change from the stated goal of 250 retailers for this meeting. Many of these applicants are currently paying rent and have hired a workforce for readiness. Now, they have to wait another month until the board reconvenes, creating financial hardship and continued frustration.

Approximately 1,500 individuals applied by the November 17, 2023, deadline for a retail license. As you know, many of these applicants are social equity candidates, including previous CAURD applicants. We encourage the CCB to issue licenses to as many of these ready and qualified applicants as soon as possible. Additionally, we encourage OCM to better communicate with stakeholders and set a more aggressive roadmap for 2024 retail licensing. State regulator credibility is critical to a successful market launch, and it needs to be re-established as soon as possible.

According to Flowhub’s 2024 Marijuana Industry Statistics & Data Insights report, the cannabis industry is projected to reach $40B in the U.S. this year. New York must capitalize on this economic opportunity. Just look to our neighbor, New Jersey. Despite having half the population of New York, their first year of adult-use cannabis sales realized $320 million compared to New York’s $150 million. They are projected to close out 2024 with a billion dollars in sales; we can and should be beyond that—investing collected tax revenues back in the communities hardest hit by the war on drugs, public education, substance abuse programming, and law enforcement training. We owe it to New Yorkers to do better.

We believe an adult-use cannabis program turnaround is fully possible, but there must be a more aggressive licensing timeline, increased agency transparency, and consistent communication with applicants and licensees. Working together, we can create the most equitable cannabis marketplace in the nation.

Sincerely,

Jeremy A. Cooney: NYS Senate, District 56

Nathalia Fernandez: NYS Senate, District 34

Pamela A. Helming: NYS Senate, District 54

Michelle Hinchey: NYS Senate, District 41

John W. Mannion: NYS Senate, District 50

Robert G. Rolison: NYS Senate, District 39

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