Two Years Later And Retailers Are No Closer To Cannabis Licenses In New York State

The delays keep coming for New York’s recreational cannabis market. In late January, a federal court upheld an injunction blocking the state’s cannabis dispensary rollout. In the interim, the state’s gray market continues to thrive.

To say the process is frustrating for potential retailers is an understatement. This month marks two years for some teams pursuing the conditional retail license – and there’s still no end in sight. Let’s look at what’s happening on the ground.

The Story So Far

It’s been a long and winding road to get to this point. Speculation has swirled for several years that New York was moving ahead with recreational cannabis licenses. So, prospective retailers have worked hard with business partners and lawyers to get their ducks in a row.

In the early summer of last year, details finally started to emerge from the New York State Office of Cannabis Management (OCM). The first retail dispensaries to open for legal cannabis sales in the state would be under Conditional Adult-Use Retail Dispensary (CAURD) licenses. This initiative intends to give those convicted of a marijuana-related offense in the state the first opportunity to join the soon-to-be-regulated legal cannabis market. Then, regular recreational retail licenses would follow. At least that was the plan.

In November, a federal judge blocked five regions from opening dispensaries. This is because an applicant from Michigan alleges they’re unconstitutionally disadvantaged in obtaining a CAURD license since state cannabis regulations “favor” New York residents ahead of those from out-of-state. The five regions are Central New York, Western New York, Mid-Hudson, Brooklyn and the Finger Lakes.

Legal Limbo For Conditional Licenses

Now the process is in stasis. Despite the processing of some conditional cultivating and processing licenses, there’s nothing but radio silence from the OCM regarding conditional retail. 

For some retailers, the delay is a blessing in disguise. Due to ongoing legal drama, no conditional licenses are currently being granted in the five regions, leaving a level playing field for prospective stores. Additionally, if conditional licenses are revoked altogether, businesses would not be bound by the restrictive rules of the conditional retail license.

For example, the CAURD license restricts retailers from selecting a specific address or neighborhood for their dispensary. Moreover, if a location is approved, the applicant cannot relocate during the four-year conditional period. Essentially, conditional licenses come with significant restrictions. Retailers hope the regular licenses will not. 

What’s Next For Retail Cannabis

The state should step up and try to iron out the kinks. For example, while the industry waits on the legal battle facing conditional licenses, New York should prepare the public for regular retail licensing. Right now, there’s no online portal for licenses other than conditional. It’s in the best interest of all stakeholders to release this information as soon as possible.

Importantly, the state should also confirm its plan of action against the gray market. There are currently scores of illicit cannabis stores across the state, posing a competitive threat to the regulated industry.

For the regulated industry to thrive, especially given the established tax rates and comparatively higher prices, there needs to be consistent enforcement. This will give customers a compelling reason to shift away from the black and gray markets.

It’s worth noting that regulating cannabis was always a tall order in New York. It’s by no means easy to untangle decades of lawmaking and policing. Likewise, the intention of the conditional license – to have justice-involved individuals at the bedrock of the state’s legal cannabis market – is ostensibly good. Unfortunately, for the OCM and the retailers, legal roadblocks have only increased the degree of difficulty. 

Despite the problems, we should be optimistic about the future of legal cannabis in the state. Our industry has fought for decades to get to this point and recreational legalization is finally here. Retailers must work as best they can with the authorities and hope these teething pains are short-lived.

Scott Mazza is the Chief Operating Officer and Co-Founder of Buffalo's Vitality CBD. He and his business partner are currently applying for a conditional retail license in Western New York.