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New York


HOCHUL’S CANNABIS CONUNDRUM: STRONGER ACTION, BUT GREATER POLITICAL RISK

New York’s governor is taking on the troubled rollout of the state’s weed
market.



Gov. Kathy Hochul has hired a new staffer to focus on cannabis and foreshadowed
further cannabis leadership and enforcement changes. | Hans Pennink/AP

By Mona Zhang and Jason Beeferman

02/15/2024 12:21 PM EST

 * 
 * 

 * * Link Copied
 * * 
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NEW YORK — New York Gov. Kathy Hochul is finally weighing in on the state’s
troubled cannabis market rollout — and she’s not happy.

In recent weeks, Hochul has criticized her own administration for the slow pace
of dispensary openings and the proliferation of the illicit market. And she
signaled changes could be coming to the state cannabis office.



“I’m not satisfied,” Hochul told reporters in Syracuse earlier this month. “I
want more enforcement. I am looking at leadership; I’m looking at opportunities
to make major changes.”



Hochul has already stepped up her involvement. The governor has hired a new
staffer to focus on cannabis, foreshadowed further cannabis leadership and
enforcement changes and pushed the Cannabis Control Board to cancel its January
meeting.

The harsh criticism from the governor’s office could portend some bigger changes
to what could be one of the largest legal recreational cannabis markets in the
country. But she also faces political risks if she can’t turn around the
troubled state agency and alleviate growing displeasure in the industry over the
slow pace of the market rollout.

While Hochul has sought to cast some of the blame on her predecessor, she
appointed the state’s top cannabis officials after former Gov Andrew Cuomo’s
resignation.

New York is already home to a multibillion dollar cannabis market, but the vast
majority of cannabis sales are illicit. Currently, 56 legal cannabis
dispensaries are open in all of New York.

That’s far different from what Hochul predicted.

In October 2022, she vowed New York would have 20 dispensaries open by the end
of that year, and then be on pace to have 20 new dispensaries open every month.

If the state stuck with Hochul’s original timeline, there would be 280
dispensaries open by now — or 220 if you factor in a three-month court-ordered
injunction on dispensary openings.

“There are promises being made that aren’t being kept,” said Kaelen Castetter,
managing director of the industry lobbying firm Castetter Cannabis Group.

New York is already home to a multibillion dollar cannabis market, but the vast
majority of cannabis sales are illicit. | Michael M. Santiago/Getty Images

While officials are quick to blame the courts for the slow rollout of regulated
stores — the state has been sued at least 10 times, and the licensing process
has twice been held up by injunctions — that’s far from the only issue.

“The advocacy efforts of different constituencies within cannabis and the local
municipalities concerned about the number of illicit stores has reached the
governor’s desk,” said state Sen. Jeremy Cooney, chair of the chamber’s cannabis
subcommittee. “She is personally now involved and invested in making sure we do
things better.”




Hochul’s office would not say what changes are coming — like who may soon be out
of a job or who could join the ranks — but the governor made her desire for new
leadership clear.

Meanwhile, municipal officials are also fed up with the boom in illicit
marijuana stores in their communities.

The number of unregulated cannabis sellers in New York City Councilmember Gail
Brewer’s district continues to grow, despite her efforts to combat the problem.
There are now about 70, including one particularly problematic one that is near
four high schools.

“It makes me crazy,” Brewer said. “The state did do a raid and put a sticker [on
the storefront].”

The next day, the store opened back up for business. Brewer called the cops to
implore them to do something, but the store is still open and serving customers
under 21. Enforcement agencies need to do three buys before escalating
enforcement.

“I’m now trying to get more buys,” Brewer said. “I’m so frustrated.”

Cannabis business owners are also feeling aggrieved.

Growers are sitting on old harvests and are struggling to sell their crops and
plan for the future amid a lack of retail dispensaries.

Processors are feeling the twinge of the state’s onerous THC potency tax. And
retailers are finding it difficult to compete with the legions of unlicensed
smoke shops that don’t have to adhere to the state’s costly regulatory
requirements.

“The news that has been coming out [about cannabis] … it’s always bad news,”
Castetter said.

Advocates and lobbyists who work with cannabis entrepreneurs have differing
opinions on how Hochul could best address the market rollout.

But there is one thing that pretty much everyone agrees on: The Office of
Cannabis Management needs to do a better job of communicating with
entrepreneurs.

A case in point: Entrepreneurs were recently confused about the date of the next
Cannabis Control Board meeting. After receiving an email from the OCM about the
February date, they were surprised to hear the executive director tell a local
news outlet that the meeting had yet to be scheduled.

The scheduling of the highly anticipated February meeting comes after Hochul
requested that the CCB cancel its January meeting.

She told reporters she was expecting 400 licenses to be up for consideration and
was unhappy that only three dispensary licenses were scheduled to be approved.
That marked the first time Hochul intervened in the implementation of the
cannabis law in such a concrete way.

> “We’ll have to find the right kind of language to be able to get these illicit
> businesses shut down.”
> 
> N.Y. Assembly Majority Leader Crystal Peoples-Stokes.

Regulators are now slated to meet Feb. 16 to approve cannabis business licenses
for entrepreneurs who applied in the state’s first general round of licensing.
More than 100 licenses are up for approval, including nearly 40 dispensaries.
Before the general application period, only entrepreneurs with a past cannabis
conviction or an immediate family member with a past conviction could have
applied for a dispensary license.


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Infighting among cannabis regulators broke into public view during a December
CCB meeting where officials became visibly heated, argued and talked over each
other.

“It was embarrassing,” Castetter said.

In December, Hochul hired Chelsea Davis as the chamber’s first-ever staffer to
focus exclusively on cannabis. Davis has a background in public health, criminal
justice policy and New York City government.

The governor is also eyeing changes to enforcement in an effort to crack down on
illegal cannabis sellers, according to Assembly Majority Leader Crystal
Peoples-Stokes, the sponsor of the original legislation to legalize cannabis in
New York.

“I won’t disagree with the governor that the legislation needs some tweaking on
a number of issues,” Peoples-Stokes, a Buffalo Democrat, said Tuesday on an
episode of WCNY’S “The Capitol Pressroom.”

“There’s going to be some recommendations this year that would add some
additional enforcement language. … We’ll have to find the right kind of language
to be able to get these illicit businesses shut down.”

Industry advocates largely agree that Hochul has an opportunity to turn the
cannabis program around. The governor has already proposed to reform the state’s
THC potency tax, which Castetter described as a “huge step.”

That reform would relieve the tax burden on processors, who turn cannabis into
products like pre-rolls or edibles, which can be upward of 60 percent depending
on the potency of the product.

Joe Rossi, who leads the cannabis practice at lobbying firm Park Strategies,
recounted a recent tour of a large processor in New York that just laid off 50
staffers.

For cultivators and processors that are struggling financially, their biggest
mistake was believing that they were told by government officials on how the
market would be rolled out.

“The regulators are just making stuff up as they go along and it’s having a
consequential effect on people’s lives,” Rossi said. "[Hochul] is the only
person in New York state that can fix it.”


 * Filed under:
 * New York,
 * Kathy Hochul


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