New York marijuana regulators award 109 business licenses while feuding over numbers, process

New York state cannabis regulators formally awarded 109 new cannabis business licenses on Friday, even as infighting spilled out into the public forum over how many retailers would be given permits and when.

With a unanimous vote, the state Cannabis Control Board gave the thumbs up to 24 cultivators, nine distributors, 12 processors, 26 microbusinesses and 38 retailers – although 13 of the retail store permits are provisional, meaning they don’t yet have approved locations.

The new 38 retailers join the 463 conditional adult use retail dispensary (CAURD) licenses awarded last year by the CCB, of which thus far 70 are operational, CCB Chairwoman Tremaine Wright said during the Friday meeting.

“This moment has been a long time in the making,” Wright said, noting that Friday’s issuance included the first permanent, non-conditional cannabis business licenses. “It only represents the beginning.”

But, the chairwoman was quick to acknowledge at the hearing’s outset, “It has been a rocky start to 2024 for cannabis in New York State. We’ve read your letters and we’ve heard your concerns.”

After the board quickly and easily approved the 109 new permits – and also gave the thumbs up to several other motions, including two medical marijuana research licenses, new adult-use industry regulations, home grow rules for consumers – it delved more into what exactly will happen next with the market rollout.

For the near future, there will be at least 10 more CAURD shops opening in February, said Chris Alexander, the executive director of the Office of Cannabis Management. There are more coming after that, he promised, and the CCB will also continue approving more business applications in the months ahead.

The OCM took in nearly 7,000 license applications last year while the permit window was open from Oct. 4 to Dec. 18, including 4,300 for retailers and 1,300 for microbusinesses (which are also allowed to sell marijuana), and released a randomized queue of the applications in January.

But OCM officials wound up angering a lot of the applicants when it was then announced last month that only 250 retail permits and 110 microbusiness licenses would be given out for the first cohort of applicants, which all got their paperwork in by mid-November and either owned or leased retail sites for dispensaries. In court documents, it later emerged the OCM was planning to issue another 450 retail permits for those who applied by Dec. 18 without locations.

Anyone who doesn’t receive a permit in this round will have to wait for another window to open and re-apply at that point, along with re-paying the $1,000 application fee. It’s also not clear yet when the next license application window will open, meaning those with monthly leases may be stuck paying rent indefinitely.

One applicant told the board during the public comment period Friday that he had already invested over $400,000 into a dispensary in hopes of getting a license, but that he wasn’t sure if he yet had a chance, given how many applied for so few licenses.

“My request is to review everyone in the queue, and if they deserve a license, give them one,” he said.

Board member Dr. Jennifer Gilbert Jenkins said the suggested license caps had sent a confusing signal to many stakeholders, and wanted to clarify that regulators weren’t going to stop at an arbitrary number of stores.

“There are too many people that I’ve been told that if they didn’t get a number that was low enough, that their application was denied, and I want to be clear that that’s not the case. That there is no application top number,” Gilbert Jenkins said. “We have a whole lot of applications here, and to tell a thousand people that they’re not going to get licenses, I think we need to address this now.”

But OCM Executive Director Chris Alexander disagreed with Gilbert Jenkins, and asserted that New York is a “limited license” marijuana market, even though the 2021 state law didn’t include permit caps.

“The truth of the matter is, yes, we want to license as many people as we can, but of course, not everybody is going to be able to receive a license. We also, despite not having license caps, are a limited license market. And so no, not everybody is going to get a license,” Alexander told Gilbert Jenkins.

“We have 7,000 retail applications. The state cannot support 7,000 dispensaries. And I think that dispensary operators would not want to step into a business in which there are 7,000 dispensaries that are not viable,” he said. “In order to make sure this equity experiment works, we have to both prioritize and ensure that the businesses … have an opportunity that’s not going to be wasted because the business isn’t viable.”

Gilbert Jenkins immediately retorted, “I will continue to push back, because I think we have more than 7,000 liquor stores in this state, and I think we probably have more than 7,000 illegal (cannabis) stores in this state… The issue isn’t that there isn’t enough market for us to have all these legal stores. The issue is we still haven’t closed down all the illegal stores.”

The issue was left unresolved, but multiple industry stakeholders and license applicants also took up the debate during the comment period. Some sided with Alexander and a carefully balanced rollout, while others dismissed the caution as unnecessary.

One applicant noted that the New York illicit market was already comprised of several thousand unlicensed smoke shops, bodegas and dealers.

“The New York market can handle 2,000-3,000 dispensary licenses. Your own research has shown this,” she told the CCB. “I appreciate the desire to balance supply and demand, but I believe this is possible without being paternalistic.”

Another industry member, however, said he’d helped launch cannabis businesses in five other states, and argued that New York’s cautious approach was the right way to avoid over-saturation.

“This balancing technique, if we don’t do this, we’re going to be like Colorado,” he said. “People are out of jobs. People don’t have money there in the cannabis industry.”

OCM Policy Director John Kagia also informed the CCB at Friday’s meeting that the state sold a total of $150 million in sales last year, and is up to roughly $183 million in legal recreational cannabis sales to date since the market launched in December 2022.