Social equity has been the biggest success of New York’s cannabis rollout

Tremaine Wright is a former member of the Assembly from Brooklyn who was appointed by Gov. Kathy Hochul in 2021 as the first chair of the state Cannabis Control Board. She has overseen the state’s rollout of its recreational marijuana program by establishing the regulatory framework for licensing, cultivation and production. She’s also responsible for ensuring the social equity portion of the state’s cannabis law is followed so that communities affected by the war on drugs can participate in the industry. She spoke with City & State in late 2023 about how the program is working and where there’s still room for improvement.

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

Currently I’m very excited that we have gone from almost a standstill to mega-speed. We have had a lot of momentum growing in New York since our last meeting. We were able to resolve the injunction, so people are moving full steam ahead. I think we’ll see about a dozen dispensaries opening before the end of the year, bringing us to a total of 40 adult-use dispensaries in the state. That’s driving excitement around the growth that we’re expecting in the last quarter and we can look forward to 2024. (Editor’s note: There are now 51 dispensaries open in New York.)

We are rolling out our adult-use licenses. The original rollout was limited to people who have qualified for conditional adult-use dispensaries. That pool of applicants was limited to those who had an arrest and who operated a business previously. The current application window is open to any and everyone. It’s nonconditional.

This is straight general adult-use applications submitted to our office. We had one window that closed a month ago for those who secured their locations for dispensaries and microbusinesses. The remaining 30 days was for everybody else to get their applications in, and it’s not required for them to secure the location. 

What’s working well? 

Our biggest success is probably social equity. We’ve been able to make tremendous strides in that space. At the beginning of this year, a report was issued that indicated there were only 20 Black-owned dispensaries in the country. Here in New York, we’re at 20% of dispensaries that are majority Black-owned.

Second, we have sustainable growth. We rolled out conditional adult-grow licenses to dispensaries growing hemp, and we required them to grow adult-use cannabis outdoors. It reminds people in the industry of what could be done. We’ve been proud of the ability to do an outdoor grow and that’s leading our cannabis program.

And the third thing is our sales are strong. All our dispensaries are having pretty good returns, but some have indicated they’re making $1 million a week in revenue. That’s tremendous. I’m hopeful the momentum continues.

What needs to be improved? 

The obvious thing is while we’re super excited, 40 stores is not enough to open the state. Getting our retail outlets open has been a true challenge in part because of litigation, and new businesses take time to open up. We really have to see a continuous push to help our entrepreneurs move forward and access the resources necessary to open their facilities and get the supply chain of our product moving. We’re seeing some success right now and I’m hopeful for what’s to come. We should see many more stores opening in the first quarter of 2024, but that is a challenge.

Then, without a doubt, we have the challenge of unlicensed dispensaries. It’s been a thorn in our side. This spring, Gov. Kathy Hochul, along with the Legislature, increased the enforcement tools of the Office of Cannabis Management so they could go after these illicit shops, which are now subject to seizure and fines. Our enforcement staff has been going throughout the state and seized 11,000 pounds of unlicensed cannabis. They’re reeling them in and shutting them down. We’ve had great success in state courts; we’ve been able to padlock a number of buildings operating these facilities. We’re issuing fines, doing inspections and working with local municipalities so our efforts are enhanced by their efforts.

What issues need to be addressed surrounding enforcement?

Any increases in driving while under the influence of cannabis. We have not seen any increases in that. The number of youth that use cannabis under legalization is lower than the number of youth who used it pre-legalization. I think we’re in a good place with traffic enforcement. We have a trained traffic task force with the state, so we have enforcement agents who can identify drug impairment. When they make stops they are able to enforce the law and make sure that roads are safe. We have not seen an uptick in driving under the influence.

What issues need to be addressed surrounding social equity?

Our laws are currently set up to allow people who have had an interaction with law enforcement to come in and participate in the adult-use market. The Marijuana Regulation and Taxation Act prioritizes persons with arrest records and they have an access point that is eligible for any license types. To augment the work we’re doing in equity, we’re offering technical assistance, cannabis compliance training and a mentorship program. We had 200 participants and that gave folks the tools they needed to operate strong businesses in a compliance space.

We have a 50% goal of issuing licenses to social equity applicants. We’re on the right track and seeing participation for those who identify as such in their applications.

As the office develops loan programs and other sources, we’ll be able to meet the needs of more people. We’re discussing offering additional loan funds, which the governor and Legislature support. As soon as that has taken shape, we’ll be excited to roll that out. That and technical assistance are the two things we need most at that moment to reach our social equity goals.

Are there enough resources in place to run the program effectively?

The MRTA has been set up so that revenue for the industry goes back into support equity programs as well as reinvestment funds and to communities that have been disproportionately impacted. Due to the strength of our marketplace, there are about $5 million in community reinvestment funds, based on our projections of fall sales of dispensary. We’re already planning and our advisory board is taking initial steps on how those funds will be invested into our community. Those funds support the Office of Cannabis Management. The law prescribes that licensed sales will have a percentage of their revenue for reinvestment.

We have never counted illicit illegal shops to the reinvestment fund. We are not trying to roll that into our collective thought. We are trying to stymie their progress, limit their sales and shut them down. We have seen 300 inspections over the last six months and seizure of millions of dollars of product. Yes, they are operating, and their presence is at odds with our mission and goal, but their presence does not stop our progress. We will continue to proceed down the road of equity and innovation of our industry – and simultaneously we will tackle the illicit market.

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

Every state that has passed adult use, even if they did not have equity provisions in their initial legislation, has rolled it back into their programs. I believe New York is a leader in that space. We’re offering opportunities to communities harmed by divestment and overpolicing. We have a measurable impact considering 20% of our dispensary owners are majority Black-owned already.

New York modeled Washington state’s two-tiered program. They were very deliberate in making sure the operators on the grow and manufacturing side of the businesses were not involved in retail and consumption. That model married almost exactly. New York is going down the right road. We’re able to offer independent and sometimes new businesses throughout our supply chain, and we think it will create greater competition. As New York is planning to be one of the largest cannabis markets in the world, we’re making sure we give opportunity to a diversity of operators. This is bringing in a diversity of operators in every region across the state – not just in demographics of race and gender, it’s business type and business opportunities. Many operators want New York to be home base to their businesses, and we will accommodate those brands and those companies.