On Friday, New York state regulators managed to approve another 74 adult-use permits despite an ongoing court injunction barring action on every type of marijuana license type in existence in New York State, along with proposing new potential regulations regulating where dispensaries will be able to set up shop.
16 retailers, three conditional retailers, 10 microbusinesses and six distributors
Patrick McKeage, Chief Operating Office for the state Office of Cannabis Management (OCM), informed board members at this meeting that OCM has issued more than 240 final conditional adult use retail dispensary (CAURD) permits thus far; leaving 300 more processors still searching for sites to open stores.
McKeage stated that OCM has reached number 2000 from all applications received for review since 2023 in what’s referred to as the November queue of would-be retailers; with approximately 150 left still waiting.
He stated that once they finish with those applying for licenses of all sorts in December, his office would move onto accepting roughly 5,000 license applications from that group.
Tremaine Wright of CCB raised concerns with regards to why OCM did not include any new cultivators this month.
“Our office has met its initial licensing targets that it publicly communicated,” McKeage responded before Wright cut him off and disallowed further response. The OCM had approved 200 adult-use growers.
Wright pointed out that no licensing targets had ever been conveyed from the board and agreed that we would evaluate its implementation to make decisions, before questioning why no additional growers had been added into February’s licensing package.
“We need more direction from the board,” McKeage noted, noting that CCB had previously expressed its intent not to oversaturate New York marijuana market. McKeage did not want any mistakes to happen before getting more clarity regarding number of applications that need reviewing by review panel.
On Friday, the CCB also approved several new oversight and enforcement powers for OCM staff, such as unanimous support of its new Trade Practice Bureau as well as subpoena powers to pursue rulebreakers in the market.
Felicia Reid, OCM Executive Director stated that the Trade Practice Bureau will focus on white collar violations such as product inversion, predatory lending and illegal license stacking.
Reid reported that the Trade Practice Bureau would take an “iron fist and velvet glove approach” in protecting “the integrity of our market”. She further commented that their new strategy came about due to “alarm bells across industry”.
OCM will utilize its subpoena powers to assist with enforcement action by permitting investigators to “hold hearings, subpoena witnesses, force attendance of witnesses or administer oaths”, according to Reid.
One proposed set of rule changes advanced by the Cannabis Control Board was related to variances for retail applicants who wish to bypass state zoning setback requirements set into state law, specifically via variations for variance applications from retailers seeking formal permission for them to bypass these setbacks. These alterations involved “public convenience and advantage,” or PCA regulations which permit both municipalities and CCB exempt retailers who apply from meeting this requirement that no two dispensaries be within either 2,000 feet in smaller towns, or within 1,000 feet each other in major cities like New York.
Proposed rule changes would:
Bar any retailer from even considering asking for a PCA change unless the distance in question exceeds 500 feet within cities with less than 20,000 residents or 1,000 feet within cities with over 20,000.
Prohibit a PCA request where there are already two or more cannabis businesses with similar license types operating within a geographic area, placing the burden of proof upon business applicants that New York has an “economic interest” in allowing their establishment where requested.
Implement a procedure to notify all appropriate stakeholders – such as cannabis companies – about any PCA request.
The PCA proposal divided the Community Control Board members, with Wright criticizing what she considered an overreach “well beyond what we were meant to think about” while new member Brad Usher saw in it “an important first step toward progress. “
At its conclusion, the board split on this proposal – with Wright voting against moving it forward while other members supported it and starting a 45-day public comment period upon publication of its draft in the state register.
Sales levels plateau in January
New York cannabis sales saw some dip in January according to OCM Policy Director John Kagia’s reports from New York dispensaries after what Kagia described as an impressive December sales month, selling $110.1 million thus far this calendar year according to Kagia who noted a “slight downtick”.
Kagia predicted: “I fully anticipate this to be only temporary; we should resume very strong velocity going forward.”
“Had we simply replicated those figures over 12 months, our total sales would exceed $1 billion this year based on just our existing stores alone,” Kagia noted. “We remain optimistic about the prospects for growth of this market.”
Kagia acknowledged there has been an overall decrease in sales numbers at dispensaries over time; something which Kagia believes to be inevitable as more shops open for business. There were 307 operating adult-use dispensaries across California as of Friday; Kagia anticipated this number would grow by another 25% this year to reach 625 for 2018. He eventually has set his goal at around 2,000 dispensaries across his home state of Oregon.
Kagia reported that average revenues per store had declined significantly to around $323,000 per month since their market’s launch in January 2023, when revenues hit an all-time high of more than $2.1 million per month.
Sales figures and the ongoing competition from illegal markets remain major obstacles, according to David Nicponski of Freshly Baked NYC dispensary in Bronx.
“Enforcement across our state is woefully inadequate. For instance, more unlicensed cannabis retailers exist now than at our dispensary when we opened nine months ago; another retailer will open sometime soon,” Nicponski lamented to CCB. This wasn’t New York’s success story but rather failure that will impact retailers seriously and lead them down an unnecessary path of regulation and prohibition.
Nicponski stated that Kagia’s sales figures were disastrous and predicted that many or most businesses in Kagia’s portfolio will eventually fail based on mathematics alone.