New York Nearly Doubles Legal Cannabis Retailers, Approves Farmers Market Rules

The New York Cannabis Control Board meeting Wednesday morning was full of laughter and celebratory tears as over 200 more marijuana entrepreneurs received conditional permits for dispensaries and the state’s legal cannabis growers got the first regulatory layout of how proposed farmers markets will work.

The board gave a unanimous thumbs up to 212 new dispensary permits, bringing the total retail licenses to 463. One license recipient, Vladimir Bautista of Happy Munkey, called the day a “full-circle moment” for himself and other justice-involved individuals who received permits.

Regulators also approved a new testing lab and four sections of new regulations for various parts of the cannabis industry. In addition, the board said legal cannabis sales this year in New York have hit $33.4 million, with $10.8 million sold in June.

The new retail permits are “a significant expansion” of the conditional adult use retail dispensary (CAURD) program, said Office of Cannabis Management Executive Director Chris Alexander, who added that his office thought it a necessary step to get the legal market fully functional as soon as possible.

“This expansion is necessary to help prepare New York’s market for the next phase of adult-use cannabis,” Alexander said. “The decision to further expand the CAURD program will help ensure the retail market is robust enough to sell the cannabis grown by New York farmers, and accelerate the transition of New York consumers from the illicit to the legal market.”

Alexander also carefully noted that the OCM is not through with CAURD licensing, but said that may conclude at the board’s September meeting.

He also noted that due to an overwhelming demand for dispensary locations in Manhattan, not all of the retail applications will be able to be granted; some will have to settle for their second choice region.

Alexander further noted that funding assistance through the Dormitory Authority of the State of New York to help social equity dispensaries find locations and open was only guaranteed for the first 150 license recipients. However, many of those have been passing on loans from DASNY, so financing may be available for other licensees.

Non-social equity entrepreneurs who hope to get into the New York market also got good news, with the the OCM preparing to release a universal cannabis business application as soon as this fall.

“At the September board meeting, should the general adult-use regulations be approved and go final, we will be presenting the universal (application) to the board, to open up licensing” for the general public, Alexander said.

Alexander also said the OCM is “very close” to finalizing the long-awaited expansion of the medical marijuana market, with several new registered organization licenses that will be available for vertically integrated companies. Currently, there are only 10 such businesses licensed in New York.

Cannabis Farmers Markets

Though OCM staff is calling them “Cannabis Growers Showcases,” the newly approved sales events are intended to operate quite similarly to farmers markets, where licensed marijuana growers will be allowed to sell directly to consumers with the logistical help of at least one legal retailer.

The farmers markets concept was first unveiled in May, but has been slow to get off the ground.

OCM Director of Policy John Kagia said that for a showcase to get the green light from the state, farmers will have to team up in groups of three or more, along with one licensed retailer, and obtain permission from whichever municipality they hope to hold a public event in.

The showcases won’t be allowed in localities that have formally opted out of commercial cannabis sales.

In addition, Kagia said, for every three farmers at a showcase, organizers could add a licensed processor to provide even more cannabis goods for sale.

“We’ve certainly heard from our cultivators the urgency of a program like this to expand their retail sell-through opportunities,” Kagia said.

However, farmers will only be allowed to sell straight cannabis flower and pre-rolls for now – no edibles, concentrates, or other types of products. Processors will be able to sell “value-added” products, by contrast, but not flower or pre-rolls.

That was a crucial point that Joann Kudrewicz, a licensed farmer and activist with the Cannabis Association of New York, said many farmers have already converted their crops from last year into biomass, which would make those harvests ineligible for sale at farmers markets.

“What I hear from them… is that processors are not calling them back. They can’t move what they’ve already done,” Kudrewicz said. “Think about that whole sector of cultivators who may be left out if we don’t allow them to sell their value-added products.”

Four New Sets of Rules

The board on Wednesday also gave formal approval to rules in four areas of the cannabis industry:

• Medical marijuana regulations
• Cannabis research rules
• Hemp industry regulations
• Emergency hearing, violation, and enforcement rules

At least two hemp farmers spoke in opposition to the new emergency rules, which include a prohibition on hemp-based products that have more than 0.5 milligrams total THC or a larger ratio than 15:1 for CBD:THC.

“For the hemp industry, it’s not a day of celebration,” one hemp farmer said. “The board issued emergency regulations without consulting stakeholders, and they’re going to push all the responsible brands out of the market. And you know what’s going to happen? There’s going to be unsafe drinks manufactured in unsafe facilities with 50, 75 milligrams of THC rather than a low dose of 2-5 milligrams.”

Several other industry stakeholders also pushed back again on the OCM’s plan to allow the current registered organizations – almost all of which are large multistate operators – to enter the recreational side of the industry in December, instead of the original plan of requiring them to wait several more years.

Market and Enforcement Updates

To date, OCM staff has inspected 53 unlicensed shops selling marijuana, and Alexander said raids and citations will only continue as time goes on. Kagia said that of the first 25 shops inspected, about $11 million in illicit cannabis was seized.

“Enforcement actions are expanding and ongoing,” Alexander said. “These are significant steps towards eradicating unlawful cannabis operators.”

So far, there are only 20 legal stores open across New York, Kagia said, but there are more than 40 getting close to opening. To ensure the success of legal retailers the state must force unlicensed ones out, Alexander added.

“You made the decision to wait, to commit to this process, to give it a go,” Alexander said, addressing stakeholders and licensees at the CCB meeting. “We are committed to your success, which requires that we take this action against folks who decided they don’t care about the broader principles of this movement.”

Kagia added that most licensees to date have been able to get open for business in an average of four months, but some retailers have taken up to six months so far.

“We will see a great deal more retail stores as we look ahead through the second half of the year,” Kagia predicted. “This is a brave new world.”