Editor’s Note: Today’s post comes from contributing editor Bob Beach. Beach is a PhD candidate in history at the University of Albany, SUNY.
In March, the former Governor of New York signed legislation legalizing adult-use cannabis in New York. In a previous post, I introduced the Marijuana Regulation and Taxation Act (MRTA), and I discussed some of the important points in the legislation regarding the issues of equity and reinvestment in those communities overpoliced in the war on drugs (full details can be found on the state’s website).
Indeed, if the provisions of the MRTA are fully implemented as written, half of available retail licenses will be granted to specific targeted communities, including over-policed neighborhoods, women-led businesses, and disabled veterans. The dynamics discussed in this short post, however, demonstrate that many of these targeted groups will face an uphill battle to compete with other, more established license holders.
In the months following signing of the MRTA, Andrew Cuomo’s efforts to dodge sexual harassment allegations and to gaslight New Yorkers about those allegations ground the already slow-moving political process in Albany to a virtual halt. Filling the positions in the Office of Cannabis Management, the body tasked with writing the regulations for enforcement of the MRTA, were delayed significantly as a result.
Since her swearing in as Cuomo’s successor, new Governor Kathy Hochul has quickly moved to fill these positions and to jumpstart New York’s adult-use retail sales market which is expected to generate hundreds of millions in tax revenue for the state. The first appointments were Tremaine S. Wright who was named chair of the Cannabis Control Board (CCB), and Christopher Alexander who was appointed Director of the Office of Cannabis Management.
Wright is a former member of the New York State Assembly, where she represented District 56 in Brooklyn. While her inexperience with the pot industry has led to criticism of her appointment, her record on social equity work—as an assembly person and as a lawyer—makes her an ideal selection to chair the Board. Alexander, a native of Queens, is an industry insider who works as a Government Relations and Policy Manager for a Black-owned cannabis company. He led SMART NY (a pro-legalization organization) and was a lead drafter of the MRTA.
The State legislature has made two appointments. The Senate chose former State Senator Jen Metzger, while the Assembly appointed Adam W. Perry. Both Metzger (from the Hudson Valley) and Perry (from Buffalo) were strongly supported by the Senate and Assembly sponsors of the MRTA. On September 22, Governor Hochul rounded out the final two appointments: Reuben McDaniel, an expert in finance and the President and Chief Executive Officer of the State’s Dormitory Authority, and Jessica Garcia, an assistant to the President of the Retail, Wholesale Department Store Union who has experience working in labor advocacy.
The first meeting of the CCB took place on October 5. During the virtual meeting, the board approved immediate changes to waive registration fees and provide access to cannabis flower through medical retailers for approved patients. The board also appointed Jason Starr as its Chief equity officer. Starr has worked for civil rights organizations like the New York Civil Liberties Union and the Human Rights Campaign.
And so it seems that the newly appointed members of the Cannabis Control Board are setting up New York’s Office of Cannabis Management to carry out the stated equity and reinvestment goals central to the MRTA’s bold vision. But the effects of the long delays in implementation have exacerbated the gap between those already in the (medicinal) retail markets in New York and those who are not. For her part, Governor Hochul was hesitant to make any clear promises on a timeline for retail sales—even following the CCB’s first meeting, which further dampened the enthusiasm for her quick restart on cannabis.
Make no mistake about it; cannabis producers and sellers in New York are ready for the state’s regulatory board to hammer out the details for the adult-use retail market. Established in-state medical dispensary operators and established out-of-state companies trying to enter the market might certainly be in the dark about the particulars of the coming regulatory landscape, but they are still in a unique position to corner the market before licensing is even available.
A recent Business Insider story, for example, highlights the steps being taken by Curaleaf, a major cannabis retail operator with medical and adult-use dispensaries in 17 states (including four medical dispensaries in New York State). Curaleaf and other large retail companies are scrambling to buy up retail space in Manhattan, much of it vacated during the pandemic. The article focuses more on the difficulties that these companies face due to the current regulatory uncertainty.
But Business Insider conspicuously does not quote any aspiring retail operators from those communities targeted for reinvestment by the MRTA. These folks usually lack the resources to buy properties in volatile real-estate markets on the off-chance that they will be able to get in on the ground floor of the coming legal retail market.
Some such aspiring licensees are nevertheless taking proactive steps to enter the market. Provisions in the law target business operators with experience in the illicit cannabis market, many of whom have long faced competition from outside the state. Illicit shipments from California and Colorado routinely find their way to New York, and now neighboring states are establishing legal markets. Massachusetts has had legal sales for several years now, while Vermont and New Jersey will both start adult-use retail sales in 2022. These dynamics are unfolding in New York’s illicit/gray markets all while the Cannabis Control Board is completing and implementing its long delayed work.
Some operators are finding alternative ways to enter these confusing markets by skirting the implementation delays of state regulators altogether. Bartholomew Miller, owner of B Millz in Elmira NY, directly exploits the lack of regulations at his three Western New York locations by “gifting” free cannabis to club members who purchase perfectly legal stickers ranging in price from $10–$220. In parts of New York City, unlicensed small time independent sellers are, for the time being, being allowed to directly sell items containing THC on the street, since police have opted against targeting these operations.
The evidence of this weird pre-regulatory system is everywhere. One of my last “refills” came elegantly sealed in quarter-ounce packaging with a simple brand label featuring the name of the strain (White Cherry Gelato) surrounded by the outline of the state. Unsurprisingly, there was no warning or product information labelling of any kind. Operating outside the law with the expectation of legitimate market entry in the future, all of these businesses face the ever-present potential of police enforcement and, in the process, the possibility of undermining their bid for legitimacy.
Meanwhile, those unwilling (or unable) to take such legally and economically risky proactive measures will have to simply wait in line for the CCB’s work to conclude so that the line for licensing applications can begin to move. Cuomo’s delays are yet another example of the larger systemic issues in American politics (like misogyny) indirectly (but profoundly) reinforcing the equity problems that the MRTA (and other points of Cuomo’s so-called Justice Agenda) were designed to combat.
We’ll need to continue to monitor the situation in New York. The chaotic evolution of legal cannabis in the state carries equal opportunities for success or for failure. It is vital to recognize that the achieving MRTA’s stated goals of equity and reinvestment are not guaranteed. Concerned citizens in New York and across the nation should bring pressure to bear on the newly constituted Cannabis Control Board and on Governor Kathy Hochul to deliver on the promised equitable adult-use cannabis system in New York.