New York’s ongoing struggle to launch Cannabis companies
Broken state promises and legal delays have conspired to keep licensees from opening.
The New York Office of Cannabis Management (OCM) does an excellent job informing the public about the number of licenses issued, but its record is less stellar when it comes to getting new dispensaries opened in order to replace the huge illicit market that authorities have been targeting.
Green Market Report wrote in June that New York’s regulators added roughly 100 new business permits at the regular meeting of the Cannabis Control Board, approving 105 new adult-use retailers, growers, distributors, microbusinesses, and processors.
The new licenses brought the total number of permits awarded to 1,117. That included the 463 social equity retail permits issued last year and the 654 adult-use licenses given out so far in 2024. While the number of licenses awarded keeps growing, the spread between the issued and actual operating licenses continues to grow.
Licensed, but not open
Cannabiz Media’s data shows 44 active social equity licenses and roughly 187 pending social equity licenses. The OCM says that there are currently 141 operational dispensaries in the state, but doesn’t specify which of those are social equity licensees.
Further complicating the effort to measure the success of the social equity program is that there are two versions of these licenses:
- Conditional Adult-Use Retail Dispensary (CAURD) – These are justice-involved applicants harmed by the war on drugs, such as incarceration. The CAURD applicants were promised assistance in funding, securing locations, and enjoying first-to-market status.
- Social Economic and Equity applicants (SEE) – These are individuals or individuals from a community disproportionately impacted by cannabis prohibition, a minority-owned business, a women-owned business, distressed farmers, and service-disabled veterans.
At the June OCM meeting the agency said that 55% of the adult-use licenses across the supply chain were SEE-owned. However, the statistics on CAURD applicants are scant. The data on open and operating licensees is equally difficult to determine. Indeed, Cannabiz Media seems to have easier access to this information than the state itself.
Unlicensed and operating
The number of licensed but unopened is in stark contrast to the estimated 3,000 unlicensed cannabis shops that are operating currently in New York City, a figure that CBS reported on Monday.
The numbers also raise questions about how and when Gov. Kathy Hochul’s administration will replace the illicit market with a fully legal one, particularly since the governor recently replaced the executive director of the OCM with a mandate to crack down on those selling marijuana without state authorization.
New York City leaders, including Mayor Eric Adams, who last month celebrated the closures of more than 500 such shops, including 400 in New York City, but it’s far from clear whether the enforcement push will be enough, or how quickly it may work.
Licensed and no money
There’s an old adage in the stoner world: Would you rather have money and no weed, or weed and no money?
In New York, it seems the licensees have no money and the people with money have no licenses. Britni Tantalo, President of the New York Cannabis Retail Association, said that most of the CAURD applicants didn’t pursue funding or scout for locations as they trusted the state to assist in these areas. Plus, numerous lawsuits bogged down the system causing further unintended delays. Having given up on that promised assistance, many of the CAURD permitholders are far behind in opening their businesses, she said.
Tantalo also pointed out that CAURD applicants mostly come from humble circumstances and don’t have access to capital to fund their operations beyond applying for licenses. These are also provisional licenses which also make investors nervous, plus there are restrictions on selling these licenses. The intent behind that restriction was to avoid a secondary market in social equity licenses that would harm the goal of equalizing ownership.
The SEE applicants though have the opportunity to sell their licenses if they want and since they had lower expectations of state assistance, look to have moved forward faster.
Ultimately, the success of the program can’t be measured by only counting the licenses issued. The success will be measured by those who can take a pending license and turn it into an active one.
