Let’s shift from explaining NY’s Cannabis problems to solving them
Navigating the Pitfalls: New York’s Cannabis Regulation Struggles.
New York’s implementation of the Marijuana Regulation & Taxation Act (MRTA) has been plagued by many of the same challenges states that have gone before them experienced.
Implementation complications typically begin with the delays in establishing the new regulating body, continue through the adoption of comprehensive regulations, and peak when the (inevitably delayed) license issuance faces litigation landmines.
At the heart of New York’s rejection to take what worked in other states and tweak what didn’t, is what a recent audit conducted by the New York Office of General Services characterized as, “The perceived uniqueness of the agency’s work.”
Translation: politics. It’s unfortunate that every decision-maker involved in New York’s rollout has chosen to politicize the establishment of this emerging regulated market, which has left prospective business owners, licensees, consumers, and taxpayers way behind.
The job of a regulator is to implement the law in an unbiased, consistent way. The politics were already settled with the passage of the benchmark-setting MRTA’s equity provisions. The Office of Cannabis Management did not need to over complicate its mission, just fulfill the equity vision codified in the MRTA: issuing 50% of all licenses to Social and Economic Equity (SEE) business and establishing a marketplace that maximizes tax revenue and the corresponding community reinvestment.
While OCM has made strides in licensing under-represented groups, the SEE programs and support mandated by the MRTA have not been meaningfully provided. So while a dozen or so justice-involved business owners are winning, thousands of SEE applicants are struggling to navigate an ever-shifting regulatory framework and the communities owed reinvestment from tax revenues are once again collateral damage.
While limited in scope (DASNY deserves a similar review), this report brought some much-needed transparency to license applicants. Now the focus must shift from explaining the problems to solving them.
First and foremost, OCM needs to restore regulatory credibility. The town hall tour OGS recommends is too staff-intensive for an agency that needs to prioritize serious internal reforms.
At this point OCM needs to embody consistent communications reliably backed by actions in public (and behind closed doors). Licensees and applicants should not fear “selective enforcement” from their regulator. Program changes, like this week’s news about DASNY’s loan fund ending, should come with guidance about next steps from the OCM.
Second, simplifying regulations will help streamline processes without compromising OCM’s mission. The unnecessary complexity in New York’s regulations are reflected in the hodge-podge process for license application review. Equity does not require complexity. In fact, the more needlessly byzantine programs are, the less accessible they become.
Last, and most importantly, OCM must focus on all aspects of equity programming. Licensing was only ever one piece of the puzzle. The unregulated cannabis market in New York is estimated to be $7 billion, which means New York’s failure to launch a meaningful regulated market has cost over $600 million of investment into the communities most impacted by the racist enforcement of prohibition.
The CAURD and Seeding Opportunity programs’ floundering starts are meant to support this broader approach to equity. Indeed, this community investment funding was so important that the sponsors of the MRTA held out in negotiations for years to include this historic provision in statute.
It’s time for decision-makers to recognize that the world has changed since the enactment of the MRTA – New York is now facing an enormous, and sophisticated, illicit market that new licensees need to be able to compete with.
Even more of our neighboring states have launched adult-use markets, with another expected to come online next month. It’s a good start for the OCM to review all applications in the November queue and for the Cannabis Control Board to award retail licenses to all eligible applicants with control of a location. New York needs to turn on regulated channels for consumers as soon as possible in order to focus on market conversion.
While cannabis may be a unique consumer good, the backbone of good governance is efficient bureaucracies powered by knowledgeable civil servants. Despite the current challenges, the future of New York’s cannabis industry still has promise if OCM can implement the needed changes.
