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Since New York marijuana regulators last met earlier this month, a small firestorm has cropped up among the Empire State’s cannabis trade organizations and business license applicants, after one of the leading trade associations appeared to call for a slow-down in the marijuana permitting process or a cap on the number of businesses allowed.

The episode erupted quickly into anger on social media, with critics of the trade group asserting that it was undermining its own membership in order to protect the relatively small number of companies that have landed state marijuana business permits to date.

Internal divide or miscommunication?

The conflict arose when the Cannabis Association of New York penned a letter to marijuana regulators, asking for a “stakeholder meeting” if the agency planned to “dramatically” increase the number of business permits. The letter asserted that “flooding” the New York market with new operators could have “disastrous consequences” for existing companies.

The letter was sent in the days following the April 11 meeting of the state’s Cannabis Control Board and was signed by CANY President Damien Cornwell, the owner and operator of Just Breathe, a licensed dispensary in Binghamton.

When the New York Post ran a story the following Sunday, proclaiming that CANY had asked the state to slow down license expansion, it was quickly applauded by some social equity advocates online. That included Shaleen Title, a former Massachusetts cannabis regulator and founder of the Parabola Center for Law and Policy, who wrote on X, “Don’t flood the market.”

But that New York Post story was also the first that many of CANY’s roughly 700 members had heard about the policy suggestion of slow-walking licensing in order to avoid market saturation – and a lot of them didn’t like it.

“I had to reread that letter like four times. I just couldn’t believe that they were speaking out against something I was fighting for. I’m one of the applicants that’s paying rent and just in limbo, not knowing what’s going on,” said Pete Longo, a dues-paying CANY member and one of thousands of business license applicants waiting to hear if he’ll receive a permit or not.

Longo applied in November for a microbusiness license and locked down a retail site in Westchester that’s been costing him $9,000 per month in rent, which was supposed to give him priority consideration in the pool.

Now, Longo said he’s considering leaving CANY, because its position is in direct contrast to his own business success.

“This was something that just came out of nowhere. And I think it only benefits the people who already have their licenses,” Longo said of the CANY letter. “And that’s a very small amount compared to the entire (pool of) applicants.”

Christian Talgo, the CEO of microbusiness applicant Pure Cannabis, wrote in an email to Green Market Report that his “immediate reaction was downright bewilderment” after he read the New York Post story.

“After reading the Post article a few times, I became angry as it was clear the intent was to stall licensing,” Talgo said.

Another dues-paying CANY member from Buffalo also waiting on a state license, Roaring 420s Lounge owner John Averill, said the letter made him feel like “I am paying for the right to be part of my own firing squad.”

“Everyone I speak to at CANY who doesn’t currently hold a cannabis license is up in arms,” Averill said, who also called it “self-serving” by Cornwell, since he owns an already-operational dispensary in Binghamton.

Other members who have won permits downplayed the letter from CANY, which Averill said translates to little empathy for those in his and Longo’s situation.

“The response we’re getting from these other people is basically, ‘You’re making a mountain out of a molehill.’ … It’s like, you don’t understand. We’re all going bankrupt here, and you’re telling them to take more time,” Averill said.

CANY’s government relations director, Jesse Campoamor, said the blame for the situation lies with the New York Post and its mischaracterization of CANY’s position.

“The suggestion that CANY is asking for a full stop in the market is categorically not our position,” Campoamor said.

“If the (governor) and the control board are considering adding more licenses than what’s already been allotted – meaning, they’ve told us they’re going to award 200 or some in the November queue and another 450 in the December queue – if they’re thinking of going beyond what they’ve already announced, all we’re asking for is a public conversation, some type of public engagement, to talk about how to do that,” Campoamor said.

“If I can be clear to anyone, CANY supports expanding licensing, especially with market participants,” he said.

CANY also wrote on Instagram that its board of directors fully supports the issuance of 1,500 business permits this year by New York regulators, an estimate that the agency provided last fall. That includes 500-1,000 dispensaries and another 220 microbusinesses in 2024. The OCM also disclosed in court filings last year that it envisions a statewide market of about 2,000 retailers to meet demand.

“Internal discussion in the industry is circulating about the expansion of the licensing pool beyond that number,” CANY wrote on Instagram. “Based on the current pace of licensing to date, we are suggesting that any new expansion should be based on data driven research and at a minimum, should have input from our members, industry operators and stakeholders.”

CANY members were not the only ones in the New York marijuana trade upset by the suggested slowdown in the pace of licensing.

Last week, the Cannabis Farmers Alliance issued its own open letter to CANY to express its “strong disagreement.”

“Your suggestion to slow down the issuance of retail licenses, presumably to prevent market flooding, does not align with the needs of the industry,” CFA President Joseph Calderone wrote. “This stance inadvertently supports the proliferation of the illicit market – a direct competitor that undermines our regulated system.”

Estimates of unlicensed marijuana sellers in New York range from 2,000 to 8,000, depending on the source.

CFA_Open_Letter_to_CANY_Retail_04_16_24_Proofread_1 2

Yet another parallel letter with a similar take was sent to Gov. Kathy Hochul, legislative leaders, and the Office of Cannabis Management and CCB by the New York Cannabis Retailers Association, the Association of New York Cannabis Processors, and the Black Cannabis Industry Association. The letter opposed CANY’s original missive “in the strongest possible terms,” and said more retail permits should be issued “without restrictions or further delay.”

“As long as the flow of new licenses remains at a trickle, the illegal industry will keep expanding because consumers don’t have a legal option,” the letter states. “Consumers need many more legal retail options if illegal operators are to be eliminated.”

Cannabis industry licensing memo 4-18-24

The numbers

As of Friday, only 112 legal adult-use cannabis shops have opened for business in New York, according to an OCM press release. Those establishments are likely part of the conditional adult use retail dispensary cohort of 463 “justice-involved” entrepreneurs granted retail permits last year.

Another 118 retail permits and 79 microbusiness licenses have been awarded thus far this year, for a possible total of 660 legal retailers that could eventually open. And regulators are not done awarding permits.

Last year during the general application window between October and December, the state received 6,875 business license applications, of which 4,303 were retail applications with another 1,320 for microbusinesses.

Thus far, the CCB and OCM have proceeded cautiously, issuing only a handful of new permits each month. The state earlier this year said that it only expects to issue 250 retail permits and 110 microbusiness licenses from the applications submitted last year.

But the word through the grapevine was that Hochul – who has been infuriated by the achingly slow market rollout – has been pushing the OCM and CCB to ramp up their pace of licensing, possibly even by granting initial permits to everyone who put in a business license application last year.

Formally, the New York state law that legalized adult-use marijuana doesn’t cap the number of cannabis companies allowed; that’s up to regulators to decide.

That was the backdrop for CANY’s letter, according to sources. But even the possibility of actual market flooding in such a way hasn’t mitigated the discord.

Averill said he and many other CANY members simply disagreed with the trade organization’s leaders on a policy level, and said they’d prefer to be licensed and allowed to compete in an open market for their survival instead of being left out completely of a limited-license market structure.

“As one of those applicants, I think that CANY’s only stance on that should be, ‘Yes, please, absolutely do that, and do that as quickly as possible,’” Averill said when asked about the possible addition of thousands of new licenses.

“The idea that we would hear that they’re finally seriously contemplating the kind of sweeping change that could have a real impact on the industry, and then to immediately advise them to pump the brakes, is deeply offensive to me,” Averill said.

But to Campoamor, the real issue that CANY was trying to bring to the forefront was transparency and a say in the process for industry.

“This is a real opportunity to ask for more staff for the licensing unit, so that we can expedite these licenses getting out. … It’s an opportunity to ask for legal and technical funding support,” he said. “For the life of me, I can’t fathom why somebody in this market that wants New York state to be successful would oppose that.”

The OCM did not respond to a request for comment for this story.

The post ‘Don’t flood the market:’ Fault lines emerge among New York cannabis stakeholders over licensing appeared first on Green Market Report.

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John Schroyer, KahliBuds, 420GrowLife