The state Office of Cannabis Management granted 99 licenses in April and an additional 50 in May, and opened four dispensaries in the last month, the agency told Crain’s. That boosts the number of granted licenses to 215 and the number of open dispensaries to 12 across New York.
Sales of recreational adult-use cannabis were legalized in New York in November 2021, and Gov. Kathy Hochul has since invested $46 million into the growing business, with an original expectation that 20 dispensaries would be open by the end of 2022. As of mid-February, however, only two dispensaries were open in the state.
Seemingly in the face of mounting questions about why the local legal cannabis industry has been so slow to get off the ground, the cannabis office has stepped up its efforts to issue licenses. John Kagia, the office’s director of policy, attributes the ramp-up to the recent lifting of a court injunction that prevented it from issuing licenses in five New York regions.
The injunction, lifted in March by a federal appeals court, was the result of a lawsuit filed in September by Variscite NY One, a cannabis company owned by a Michigan resident that opposed the conditional adult-use retail dispensary license requirement that applicants have experience owning and operating a qualifying business in New York for approval. In addition, only applicants with cannabis-related criminal offenses that occurred prior to the passage of the Marijuana Regulation and Tax Act on March 31, 2021, or who had a parent, guardian, child, spouse or dependent with an offense, can currently be approved for a CAURD license.
The lifting of the injunction in March allowed cannabis licenses to be issued in Brooklyn, central New York, western New York and the mid-Hudson region. The Finger Lakes region, however, where Variscite NY One’s lawsuit is being heard, remains blocked for the time being. Kagia said his office just received news that the court case will be settled, opening up that region in the near future as well. Following the lifting of the injunction, 99 licenses were approved in April, a surge from the previous 66 licenses awarded total.
In the last month, the cannabis office has granted 16 licenses in Brooklyn, three in Manhattan, eight in central New York, 10 in western New York, two on Long Island and 11 in the mid-Hudson region. Some of these new license holders include Exotic Herbals and YMRM Dispensary of Brooklyn and LORDS of Manhattan.
The cannabis office initially planned to accept a max of 150 justice-related applicants, but the overwhelming number of qualified applicants led it to update this number to 300, Kagia said.
Kagia said that, on average, it takes about six months to open a shop after a license is issued, with some speeding up the process to two or three months. Housing Works Cannabis Dispensary set a record by opening its shop within three weeks of licensure, Kagia said.
Illicit sales
As the agency takes steps to grow the legal industry, the state is working to curb the illicit market. The governor signed legislation that goes into effect today to take action against unlicensed dispensaries. The penalties establish illegal cannabis sales as a class A misdemeanor subject to fines of up to $20,000 per day for illegal sellers. It also allows the cannabis office to identify unlicensed operators, seize illegal products and seek store closures.
“With the strengthened penalties and unified enforcement measures in place, we are actively working toward our goal of a regulated market that fosters consumer trust and supports licensed operators,” Chris Alexander, executive director of the Office of Cannabis Management, said in a statement.
At a meeting in Queens about the illicit market Tuesday, Borough President Donovan Richards noted that many illegal shop owners have been difficult to find, with many of them unresponsive to government inquiries and a large portion living in Florida.This has been a problem for holding the owners accountable, he said. He also noted that some shops have closed and quickly reopened.
“I don’t want to see people put in jail over this,” Richards said. “One of the things we wanted to do was not criminalize folks over cannabis. But the illicit business hurt the folks who we fought to legalize cannabis for in the first place.”
The Office of Cannabis Management started out with 21 employees in the fall of 2021 and now has 150 staff members, said Kagia. Additionally, the governor revised legislation in May to allow other agencies, including the attorney general’s office, to assist the office in crackdowns.
Now that the cannabis office has more power to shut down illicit cannabis sales, Kagia said, the agency will continue to grow. In the fall, he added, the office expects to receive thousands of applicants as it starts looking beyond justice-related individuals.
“As we get to the end of 2024, there’s a good chance that we will be a significantly larger agency than we are right now.” Kagia said.
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