Experiences in other states can be used to build up NYC’s cannabis industry

Dasheeda Dawson was appointed by Mayor Eric Adams as New York City’s first cannabis czar in October 2022 to help budding entrepreneurs navigate state regulations and educate the public about the industry. The Princeton University alum has spent her career in business development and previously oversaw retail licensing, compliance and education in Portland, Oregon, as the city’s cannabis program manager. She works within New York’s Department of Small Business Services.

How well is New York’s adult-use cannabis program working?

I come into the industry with a lot of experience. I’m nearly 10 years in the legal space. I often like to start more globally. A program feels more minor when we’re developing a new industry from the ground up. When I look at New York’s cannabis industry overall, including the illegal component, which is still a big factor, it’s clear since we legalized there’s been a more outward cultural shift in how we see people consume. New York was home to the cannabis consumer. We’re reported to have the most cannabis consumers in the country. We have, in my opinion, one of the most sensible public use laws in the country.

A lot of industry, despite its growth, is still hidden. Our goal is to demonstrate excellence and the state’s initial rollout of the program, despite challenges, has been a good place to tack on and also advocate for constituents in New York City.

What’s working well and what are you encouraged by?

I’m encouraged by a government trying to take accountability. Coming from a more mature market in Portland, Oregon, the city is moving faster than Oregon state. I’m very much supportive of the training program that they’ve created, and incubated, specifically for people transitioning from legacy or the preexisting unregulated market – the markets we don’t see. We’re not talking about the stores.

We’re giving them an opportunity to tell their story. The cannabis compliance and training program was a good way for them to tell the story and get formal training so you can check a box to some degree. Put an application in and say, ‘Hey, I’ve done this.’ For the government to really qualify what the underground experience looks like in the legal market, I’ve been impressed by OCM’s consistency in trying to support the transition.

Having issued over 700 licenses in a two-year time frame is ahead of the curve, despite what it looks like. I’m proud of them building the supply chain and having homegrown New York flower and products available. The cannabis showcase can show that a regulatory industry can be innovative when running into challenges. Having temporary retailers move products through the supply chain while there’s an injunction happening, they rolled out a program as quickly as I’ve seen the government roll out the program.

What, if anything, needs to be improved? 

I think the injunction is a demonstration of what is happening across the country, with equity put on trial. The injunction, which went away through a settlement, could have been done many months ago. These are many of the same claims we saw in other jurisdictions get dismissed.

The defense of the law itself and the intentions behind the regulations to support the law weren’t really there. In other jurisdictions, the attorney general’s office has handled these types of suits a lot better. In earlier days, we saw some things happen where it would hold up the Detroit, Michigan, area around social equity, but it was outside the scope of where the city is doing the licensing priority.

I feel like we should have defended it better, and it should have been dismissed. The attorney was not prepared to give a defense. You can tell the judge was slightly reluctant to tear it down. I believe there was an ulterior motive to mess up the CAURD program and change OCM as well.

These are the tactics where Big Cannabis is not afforded fast tracks to dominate the market, so they wanted to thwart our efforts. There’s a notion that everyone is for social equity and it’s part of people’s marketing, but they’re bringing lawsuits on it. Behind closed doors, it’s the exact opposite.

What issues need to be addressed surrounding enforcement?

New York City has been active in attempting to enforce illicit shops within the letter of the law since proliferation has started. The sheriff’s office has been the lead of a joint task force. We’re talking about tens of millions of dollars in fines and hundreds of thousands of dollars in product confiscated in New York City. There’s more of a shift focused on the landlord, not the tenant, for being responsible for knowing what goes on in the space that they own and more targets where the money may be. I believe a lot of landlords are part of trying to capitalize in an incorrect way on the legalization of cannabis.

There’s definitely some movement in the City Council for having more immediate closures with nuisance abatements. One thing that makes a difference between a legal and illegal store is the nicotine, vapes, and snacks and foods – those aren’t allowed in a legal cannabis dispensary. Those things are still under our jurisdiction, consumer worker protection. We’re trying to lean in where there’s an overlap.

That is the more direct, but some is indirect. We’re currently on a five borough listening tour. One thing we’ve learned is people don’t know the difference between legal and illegal stores; Cannabis NYC is working to close that gap. A lot of community members are angry. These things are being sold in gas stations and kids under 18 are seeing it at a higher rate in schools. I think we have a community that feels undereducated. An educated consumer is the best consumer and they will pay it forward – that’s part of our tour.

What issues need to be addressed surrounding social equity?

I am definitely still not very happy with the financial scenario with most of our industry right now. The vast majority of business will be small businesses – minority- and migrant-owned. The industry is heavily regulated, which requires a lot of capital. There’s a gap that still exists.

We’re working on a Cannabis NYC loan fund and, of course, we support entrepreneurs with free services through partnerships with our Division of Business Services at SBS. We created a social equity fund, but not a lot of people have been able to access it yet. I don’t want us to create generational debt as opposed to generational wealth. We’ve heard from licensees that these aren’t great terms.

If we look at an average retail dispensary, they spent time incarcerated and were able to overcome that, but in their small-business experience, they haven’t been negotiating the real estate deals and build-out that they’re currently in. So there’s a lot of pressure to sign for the purpose of opening on time. I feel that it is lopsided and predatory, and the money conversation will not go away. 

I feel the state and city have a responsibility to provide as many resources and direct financing to historically excluded businesses interested in being in the cannabis space. How do we make sure it is implemented right now?

Are there enough resources in place to run the program effectively and, if not, where should they be allocated?

The state has a very clear mandate around the review and OCM budget. I saw they already launched their hub. We’ve been part of it as a partner to close gaps.

I do feel that there is more that could be done in the city. We’ve started and have $8 million allocated for the cannabis loan fund, but there’s more that can be had. The state has already indicated their run rate is $4.5 million to $5 million a week. It will only continue to grow with more stores coming down the pike. There’s an opportunity for the city to be more declarative, and to put its tax budget into it. 

I do think we have the mindset of how we implement this first with the loan fund, but also how we use other resources. We’re looking at municipal bonds, and my experience with the government says that we can leverage this against the cannabis tax revenue. We’re in a very exploratory phase.

We’re the financial capital of the world. I believe we’ll be the cannabis capital of the world too, and that means pioneering things that aren’t in other jurisdictions. We do have the resources, and resources will go back to communities.

Are there successful models that can be followed to improve the program, in other states or in New York?

In Portland, there was a 3% local excise tax that was strategically reinvested back in communities. I helped run the grant program that was funded by the cannabis tax revenue, and we expanded it to use emergency relief funds. I have my own direct experience launching concepts to leverage cannabis tax revenue for the betterment of the entire industry. I feel at the same time, we’re looking at other industries and the capital markets that help drive them. There has to be things applicable here. We still have a lot of potential deal flow now that New York is back moving. 

I still feel like Oakland, Portland and parts of Illinois’ program have set really good precedents on cannabis tax revenue reinvestment, loan programs and grant programs. Colorado launched its first loan program. We’re learning from what other jurisdictions are doing. New York City wants to be a leader and a pioneer on some concepts that we haven’t seen as well.