Long road ahead for legal cannabis market in New York

After over two long years of waiting, the state Office of Cannabis Management finally opened up license applications to all businesses interested in entering the legal pot marketplace. But for New Yorkers hoping that the move by cannabis officials will open the proverbial floodgates for recreational marijuana after a problem-plagued rollout, a long road still awaits those looking to light up more easily. 

On Oct. 4, the Office of Cannabis Management officially opened up a roughly two-month window for businesses interested in opening retail pot shots to apply for a state license to operate. Up until now, the agency had only issued conditional retail licenses to certain social equity applicants. But under regulations approved last month, New York is taking steps to finally get its permanent cannabis market up and running. “We’re excited to have these applications open,” the office’s  executive director Chris Alexander told City & State. “Now the focus is on educating as many people as possible to make sure everybody can take advantage of this opportunity.” 

This will undoubtedly lead to growth beyond what the state has seen in the past two years, but cannabis attorney Lauren Rudick warned pot aficionados to temper their immediate expectations. She said that officials expect to issue only 1500 to 2000 licenses in this first wave of applications and approvals – a significant increase compared to the less than 500 conditional retail license holders now, but still a drop in the enormous bucket that a fully-realized legal market promises to be. And even after the state awards licenses, most businesses will likely take several more months to actually open their doors. “Make no mistake, this is a long process,” Rudick said. “I think government officials are going to do everything they can to speed it up and to roll out these licenses as quickly as possible, but the process is vulnerable to litigation.”

The rollout of adult-use pot and the state’s licensing process has already been subject to multiple lawsuits, including one that prompted a state judge to issue an injunction that stopped licensed businesses from opening up their retail stores. “If there’s one thing we’ve learned, it’s that New Yorkers are litigious,” Rudick said, adding that expected lawsuits will likely further bog down the already lengthy process.  

Alexander said that his agency is trying to closely follow the 2021 state law that legalized recreational cannabis and set up the framework for the legal market. But he acknowledged that New York’s licensing program isn’t immune to the legal struggles that cannabis marketplaces across the country have faced. “What we use as our guiding light and our north star is the law, and as long as we hang tightly to what the law dictates that we do in creating this opportunity, that’s all we can do,” Alexander said.

Right now, there are fewer than two dozen legal retail cannabis stores open in the state, even as unlicensed businesses continue to proliferate the market. In addition to announcing the new application window last week, Gov. Kathy Hochul announced new enforcement efforts to crack down on the illicit market. But Rudick said that resources should shift away from enforcement and towards lowering the barrier to entry for small businesses and equity applicants looking to open a storefront in New York as more legal competition will naturally drive down illicit sales. “They just need to make good on all of the provisions in the (Marijuana Regulation and Taxation Act) and the regulations that allow them to lower the barrier to entry,” Rudick said. 

The law legalizing cannabis gave priority application consideration to social equity applicants, including women- and minority-owned businesses, distressed farmers, veterans and people who have been impacted by marijuana enforcement in the past. The law set a goal that 50% of licenses go to such applicants and established a number of different programs meant to help them successfully apply and finance their operations starting out. Alexander said that the Office of Cannabis Management is hyperfocused right now providing that kind of assistance now that the application window has opened. “In order to achieve an effort like this, it can't just be that we give people from one community or another license,” Alexander said. “We've really got to support folks from the application process – from the education process – through the application, through fees and then after licensure to opening. So we're doing all of that at the same time.”