The state cannabis agency approved regulations on Tuesday that will expand the adult-use market from distressed farmers and justice-impacted individuals to the broader public. Applications will open October 4.
The new rules come at a tense time for New York’s market as farmers across the state are sitting on hundreds of thousands of pounds of unsold cannabis and new, licensed stores remain blocked from opening by a court injunction. Only 23 legal stores are open across the state while illegal stores remain widespread.
Chris Alexander, executive director of the Office of Cannabis Management, acknowledged those concerns at the meeting.
“I acknowledge our licensees who are working diligently to get open and I just want to express on behalf of the office our continued commitment to the success of those licensees,” Alexander said.
He said the agency is “building the fairest, most competitive cannabis industry in the nation.”
The regulations, passed by the state’s Cannabis Control Board at an often-turbulent Albany meeting, will also allow new companies to enter the medical market for a $200,000 registration fee. They would then have to apply again to enter the general adult market.
The entry of the state’s current medical marijuana companies into the broader market, approved as expected at the meeting, generated many of the most heated comments. Many are well-capitalized corporations with operations across a number of states that smaller businesses view as a threat to their ability to gain traction in the legal market.
In advance of the final regulations passing, the state’s Office of Cannabis Management had awarded hundreds of temporary licenses over the past year to cultivators, processors and retailers from social equity groups to help jumpstart the legal market.
But that effort has largely fallen short so far as 440 people who have been awarded conditional retail licenses — or “CAURDs” — remain blocked from opening by a court injunction after a group of veterans sued the state for not opening applications to all social equity groups at once that were enumerated in the marijuana legalization law.
Forty people stood before the state Cannabis Control Board to give public comments on the regulations at the Albany meeting. Nearly all of them criticized the state for allowing medical operators to enter the adult-use market.
In a draft of the adult-use regulations released last November, the state proposed that medical operators would have to wait three years from the first retail sale in order to enter the market. That was cut down to one year when a new version of the regulations was released in May.
“The process is a little disappointing,” Nicole Ricci, the President of NY Small Farma Ltd., an advocacy group, said while addressing the room. “Just passing it immediately and taking testimony after the fact makes it all seem like we’re just barking at the wall.”
Ricci represents one of several groups that sent a letter to the agency on Monday calling for the state to reconsider some of its regulations.
“The entire point of the conditional program was to attempt to assist small players in NYS before out-of-state corporate players moved in and perverted cannabis cultivation to solely focus on profit over quality and community,” said the letter reviewed by THE CITY.
Cannabis farmers — many who are in their second season of growing cannabis and have few places to sell their product — have also been left stranded by the shortage of open shops.
“We don’t have the ability to hold tight while the government figures things out,” Jillian Dragutsky said to the agency board. “We put everything into this — we are hurting and by no fault of our own.”
Dragutsky was awarded one of the conditional retail licenses in July, but cannot move forward.
“I wore a noose around my neck today because I feel like I’m gonna hang myself,” said Jeannette Miller, a grower and co-founder of the Cannabis Farmers Alliance, which advocates on behalf of cannabis cultivators. “We’re tired, we’re struggling, we need help.”
Some held up signs throughout the three-hour meeting calling on the state to convene a special legislative session in order to pass a law that would codify the CAURD program.
Such a step would prevent a judge from dissolving the program, argued Jeffrey Hoffman, a cannabis lawyer.
“The solution is to not wait for this lawsuit to have CAURD found unconstitutional,” said Hoffman, one of the people holding a sign. “We can’t have regulations that are so susceptible to legal challenges.”
Matt Darin, the CEO of Curaleaf, which has a medical license in New York and is the largest cannabis company in the country, told THE CITY in an earlier interview that the fears of smaller businesses are unfounded.
The concern that medical operators “will be able to flood the market with product is just not the case,” Darin said. “There is, without question, enough room and enough business to be done for all participants here.”
The next hearing in the court case that has stopped licensees from moving forward with their plans is scheduled for Friday.
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