State of the New York Cannabis Market

What is the state of the New York cannabis market? Earlier this week, the Office of Cannabis Management (OCM) approved regulations to boost the New York cannabis market. When New York first legalized cannabis in 2021, analysts expected a $4 billion market. Two years later, they’re generating a measly $12 million with only 20 legal stores. Compared to neighboring states, it’s clear the New York cannabis market is underperforming. But now the rules have changed. Regulators are now allowing multi-state […]

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Military Veterans File Suit Against New York’s Cannabis Licensing Rules

A group of four military veterans last week filed suit against New York’s Office of Cannabis Management (OCM), claiming that the agency’s rules that prioritize applicants with prior marijuana convictions for cannabis dispensary licenses violate the state’s 2021 marijuana legalization statute. In a complaint filed in the New York State Supreme Court, the four plaintiffs argue that state regulators failed to follow the Marijuana Regulation and Taxation Act (MRTA) when it did not issue cannabis retail licenses to disabled veterans and members of other minority groups. The lawsuit seeks a temporary restraining order barring the state from issuing further licenses under the Conditional Adult-Use Retail Dispensary (CAURD) program, which have been reserved for applicants with a marijuana-related criminal conviction.

The MRTA included provisions that set a goal of awarding at least half of the state’s recreational marijuana dispensaries to social and economic equity applicants. Under an initiative spearheaded by New York Governor Kathy Hochul last year, the state’s first licenses for retail cannabis shops have been reserved for “individuals most impacted by the unjust enforcement of the prohibition of cannabis or nonprofit organizations whose services include support for the formerly incarcerated.” 

To be eligible for a CAURD license, applicants are required to either have had a cannabis conviction or be the family member of someone with a cannabis conviction, among other criteria. Nonprofits with a history of serving formerly incarcerated or currently incarcerated individuals were eligible to apply for a CAURD license. So far, the OCM has issued 463 CAURD licenses, although less than two dozen dispensaries have opened across the state so far.

“The MRTA had already established a goal to award 50% of all adult-use licenses to social and economic equity applicants. But instead of following the law, OCM and CCB created their own version of ‘social equity’ and determined for themselves which individuals would get priority to enter New York’s nascent adult-use cannabis market,” reads a statement on behalf of the veterans bringing the legal action.

Lawsuit Argues OCM Rules Unconstitutional

The lawsuit was filed by four U.S. veterans who have served a combined more than two decades in various branches of the military. They argue that restricting retail licenses to those with cannabis convictions was not approved by the legislature and violates the state Constitution.

“It’s out of character for a veteran to sue the state to uphold a law,” William Norgard, one of the plaintiffs in the case and a U.S. Army veteran, said in a statement quoted by the Olean Times Herald. “We take oaths to defend the laws of our nation, and trust — maybe naively — that government officials will faithfully and legally execute those laws. What the Office of Cannabis Management is doing right now is in complete breach of that trust. As veterans, we know that someone has to hold the line.”

“Service-disabled veterans are the only social equity group in the law not born into priority status, but a group to which anyone could belong,” said Carmine Fiore, who served eight years in the U.S. Army and New York Army National Guard and is also one of the four plaintiffs in the case. “We are also the only priority group in the (law) that achieved its status by helping communities.” 

“It feels like we were used to get a law passed — a good law, one that helps a lot of people, as well as the state,” Fiore added. “Then, once it was passed, we were cast aside for another agenda.”

The other plaintiffs are Steve Mejia and Dominic Spaccio, who both served six years in the U.S. Air Force.

Lucas McCann, co-founder and chief scientific officer at cannabis compliance consulting firm CannDelta Inc., notes that there is no mention of the CAURD program in the MRTA. When the program was created, the definition of social equity was defined to exclusively include those with previous cannabis-related convictions and previous business experience. But a broader definition of social equity may be appropriate, and future rounds of licensing could include members of other groups, McCann says.

“The grievances brought forward by the four military veterans highlight another facet of the ‘social equity’ conversation that cannot be ignored. Veterans, particularly disabled ones, face their own set of challenges and hurdles,” he wrote in an email. “Their dedicated service to the nation warrants recognition and inclusion in the emerging industry, especially when considering the potential therapeutic benefits of cannabis for a myriad of health issues commonly faced by veterans.”

Michelle Bodian, a partner at the leading cannabis and psychedelics law firm Vicente LLP, said that is too early to determine how the lawsuit will affect the continuing rollout of New York’s regulated marijuana industry. 

“There is always a chance the lawsuit will succeed, and the CAURD program will be halted; however, it’s equally as likely the state will settle with the plaintiffs and award them a license,” Bodian said in a statement to High Times. “As the TRO hearing is scheduled for later this week, we should know in short order whether the CAURD program is frozen in place or whether new provisional or final licenses can be awarded.”

When asked about the legal action, an OCM spokesperson told local media outlets that the agency does not comment on pending litigation.

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New York Cannabis Farmers’ Markets

New York cannabis farmers’ markets are now a thing. The State’s Office of Cannabis Management (OCM) has created a category called “Cannabis Growers Showcase.” This will allow farmers to sell their crops at cannabis-centric farmers’ markets. The OCM’s control board passed the measure on Wednesday. They also approved 212 new retail licenses and banned the sale of synthetic cannabinoids, including hemp-derived delta-8 THC. The rationale for New York cannabis farmers’ markets is three-fold. Growers have a supply glut, consumers want […]

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New York Cracking Down on Unlicensed Weed Dealers

With legal sales of recreational cannabis in New York still months away, state regulators are cracking down on unlicensed businesses that have jumped the gun and are already selling weed. Last week, officials with the New York Office of Cannabis Management (OCM) publicly identified 52 businesses that have been sent cease-and-desist orders directing the shops to stop all illicit cannabis sales.

“You are hereby directed to cease any, and all, illegal activity immediately,”  read the cease-and-desist letters quoted by The Gothamist. “Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk.”

The OCM added that the identified retailers were falsely depicting their businesses as licensed cannabis dispensaries. OCM Chair Tremaine Wright said in a press release that unlicensed sales, including via businesses that provide ostensibly free marijuana products with the purchase of other merchandise, are illegal and pose a health risk to the community.

“There are no businesses currently licensed to sell adult-use cannabis in New York State. Selling any item or taking a donation, and then gifting a customer a bag of untested cannabis does indeed count as a sale under New York’s Cannabis Law,” Wright said in a statement from the agency. “You need a license to sell cannabis in New York. Licensed sales and a regulated market are the only way New York’s customers will be assured that the cannabis products they are purchasing have been tested and tracked from seed to sale. Sale of untested products put lives at risk.”

The cease-and-desist letters sent by the OCM note that continued illicit sales of marijuana by the identified retailers will make the businesses ineligible to receive a cannabis business license from the agency in the future. If the business storefronts named by the agency fail to end operations immediately, they will be referred to Cannabis Control Board “for permanent barring from receiving any cannabis licenses in New York State,” the agency stated.

“These stores are masquerading as licensed, regulated businesses, but they are nothing of the sort. They aren’t creating opportunity, they are creating confusion – New Yorkers think they’re buying a high-quality, tested product when they aren’t,” said Chris Alexander, executive director of the Office of Cannabis Management. “Not only are these stores operating in violation of New York’s Cannabis Law, but they also are breaking state tax and several municipal laws. I look forward to working with other regulatory bodies across the state to hold these stores accountable for their flagrant violations of the law.”

The identified businesses were originally sent cease-and-desist orders in February, advising them that their operations were illegal under the Marijuana Regulation and Taxation Act (MRTA), which was passed by New York lawmakers last year. The OCM announced the regulatory action at the time but declined to publicly identify the affected retailers. But after pressure from local media, the OCM made the list of storefronts that had been warned by the agency available last week.

“We have an obligation to protect New Yorkers from known risks and to strengthen the foundation of the legal, regulated market we are building. We will meet the goals of the MRTA to build an inclusive, equitable and safe industry,” Wright said in February. “Therefore, these violators must stop their activity immediately, or face the consequences.”

More Retailers Being Investigated

The OCM also noted last week that it has received information from law enforcement and the general public about additional retailers who may be selling cannabis in violation of the law and will be reviewing the tips for possible additional regulatory action. The agency added that until sales of adult-use begin at licensed retailers, which is expected to happen later this year, the only legal way to procure safe, lab-tested cannabis is through the state’s regulated medical marijuana program.

“New York is building the most equitable cannabis industry in the nation, one that prioritizes those communities most harmed under cannabis prohibition. Stores selling unregulated cannabis products without licenses undercut those efforts. Plain and simple,” said Damian Fagon, OCM chief equity officer. “Illicit stores don’t contribute to our communities, they don’t support our public schools and they don’t protect consumers. That’s why we’re working with partners across [the] government to investigate these operations and hold them accountable.”

One of the operations identified last week by the OCM is the Empire Cannabis Club, which has two locations in Manhattan. At Empire, customers purchase a daily or monthly membership to the club and receive cannabis as a free gift. Steve Zissou, a lawyer representing Empire, said that the company is confident that its operation is legal under the MRTA, which defines what constitutes a “sale” of cannabis and specifically allows the transfer of up to three ounces of cannabis “without compensation.”

“Empire’s business model is based on that,” said Zissou. “It’s a non-charitable, not-for-profit cannabis dispensary that does not receive compensation for the transfer of cannabis.”

The attorney added that Empire is prepared to defend its position in court if necessary.

“There’s an old saying: If you want peace, prepare for war,” Zissou said. “And so Empire wants peace, but they’re prepared for war if and when it comes.”

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New York Senate Passes Gray Market Cannabis Bill

The New York Senate voted this week to approve a bill to crack down on the state’s cannabis gray market, giving regulators the authority to seize illicit weed and increasing fines for unlicensed operators. State Senator Liz Krueger introduced the measure on Sunday and by Wednesday, the Senate had voted to approve the bill, offering an indication of the legislature’s interest in addressing New York’s unregulated pot market before legal sales of recreational cannabis begin later this year.

Justin Flagg, a spokesperson for Krueger, said that the bill is designed to empower the New York Office of Cannabis Management (OCM) and the Department of Taxation and Finance to address unregulated cannabis retailers, which have become brazenly ubiquitous in Manhattan and other areas since state lawmakers legalized adult-use cannabis last year. The OCM is currently working to establish rules for the regulated market, which should begin licensed recreational cannabis sales by the end of 2022.

“This bill is aimed at gray market operators such as retail cannabis stores that have emerged during the period after legalization but before licensed businesses begin operating,” Flagg said in an email quoted by 

Flagg added that Krueger drafted the legislation with cooperation from OCM and the tax and finance department, noting that their action was “prompted by the difficulty of enforcement against several illegal cannabis stores that have been hard to shut down under the existing statute.”

The bill gives the OCM the authority to seize illicit cannabis and expands the authority of the Taxation and Finance Department to assess fines against unlicensed cannabis operators. The measure also doubles civil penalties for anyone who knowingly possesses illicit pot, which is defined as taxable cannabis products for which no tax has been paid. Flagg clarified that the legislation applies to any cannabis product that was not grown by or purchased from a cannabis business licensed by the state.

Fines for Illicit Weed Doubled in New York

Fines for illicit cannabis would be increased from $200 per ounce of flower to $400 per ounce. Fines for other cannabis products would also be doubled, with edibles rising to $10 per milligram of THC and concentrates to $100 per gram, while the fine for each illicit cannabis plant would jump to $1,000. The bill also allows the Taxation and Finance Department to revoke certificates of registration for businesses that sell or possess illicit cannabis.

Flagg said that restraining the illicit market is in part a safety issue because unlicensed operators do not follow packaging rules and other regulations designed to curtail cannabis use by children.

“Addressing these illegal operators will help ensure that licensed equity operators have the opportunity to succeed and also help ensure that cannabis products are sold in a responsible way,” Flagg said.

Joshua Waterman, a cannabis grower and the co-founder of the Legacy Growers Association, told local media that Krueger’s bill was drafted with good intentions, but he does not support the legislation.

“Although the idea of shutting down dispensaries that are flooding the market with … products from other states is something we would support, we just don’t see that in this bill,” he said. “I’m afraid this will end up being another way for the state to fine and penalize lower-class individuals, especially minorities.”

Waterman added that the bill will strengthen legacy growers’ mistrust of legalization and make them less likely to join the ranks of the regulated market, which has been a goal advanced by lawmakers and regulators.

“The state and the OCM keep saying they want to include and incentivize legacy people to enter the legal market,” Waterman said. “Putting out a bill to stop legacy operations before releasing applications for licensing is disgraceful, and truly shows where lawmakers stand when it comes to the legends that created the cannabis industry without ever asking for their support.”

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New York Expands Medical Marijuana Eligibility

This week, New York expanded eligibility for the state’s medical cannabis program to include more patients, according to an announcement from state regulators. New York’s Office of Cannabis Management said on Monday that the state had launched a new medical marijuana certification and registration system that is “easier to use and expands the eligibility criteria for patients who can benefit from medical cannabis.”

Under the new eligibility criteria, practitioners will be allowed to issue medical marijuana certifications to any patient they believe may benefit from the medicinal use of cannabis. Previously, the use of medical cannabis was restricted to patients with one or more qualifying medical conditions. The Office of Cannabis Management (OCM) noted that the change is consistent with the Marijuana Regulation and Taxation Act (MRTA) passed by lawmakers last year.

In addition to legalizing the recreational use of marijuana and establishing a framework for adult-use cannabis sales, the MRTA shifted the regulation of New York’s medical marijuana program from the state Department of Health to the OCM. Tremaine Wright, the chair of the state Cannabis Control Board, applauded the progress made by state marijuana regulators.

“It is terrific to see the Medical Cannabis Program expand so vastly with the launch of the new certification and registration program and the ability of practitioners to determine qualifying conditions as included in the MRTA,” Wright said in a statement from the OCM. 

Previously, the OCM announced additional changes to the state’s medical marijuana program, including allowing the sale of cannabis flower and a permanent waiver of registration fees for patients and caregivers. Regulators also expanded the list of caregivers qualified to certify patients for medical marijuana to include any practitioner who is licensed to prescribe controlled substances in New York, such as dentists, podiatrists and midwives. 

Other changes to New York’s medical marijuana program made by the OCM include increasing the amount of cannabis that may be dispensed at one time from a 30-day supply to a 60-day supply and streamlining the approval for institutions such as hospitals, residential facilities and schools to become designated caregiver facilities to hold and dispense products for patients. Additionally, the state Cannabis Control Board has accepted public comments on proposed regulations to govern the home cultivation of cannabis by medical cannabis patients and is currently completing an assessment of the comments submitted for publication in the state register.

“The new cannabis industry is taking shape as we continue to implement the MRTA and provide greater access for New Yorkers to a medicine that we’re learning more about every day,” Wright said. “We’re continuing to move forward swiftly and today’s system launch follows our achievements that already include adding whole flower medical product sales, permanently waiving $50 patient fees, and advancing home cultivation regulations, among others.”

Patients certified through the new certification and registration system will be issued their certification from the OCM. Certifications previously issued by the Department of Health will continue to remain valid through their expiration date, when new certifications will be issued by the OCM.

Cannabis Community Applauds Expansion of Medical Marijuana Program

Dr. Rebecca Siegel, a clinical psychiatrist and the author of The Brain on Cannabis: What You Should Know About Recreational and Medical Marijuana, said that expanding access to medical cannabis is appropriate, because cannabis can be beneficial for a wide range of medical conditions.

“I think this gives practitioners in all types of medicine just one more tool to add to their belt in order to effectively treat patients,” Siegal wrote in an email to High Times. “Most importantly, I think this broadens the opportunity for more patients to have access to cannabis from their own personal trusted physicians who can better monitor their conditions and use of marijuana. This is way better than patients trying to manage it on their own.”

Sharon Ali, the Mid-Atlantic regional general manager for cannabis multi-state operator Acreage Holdings, said that expanding access to medical marijuana is a significant advancement for New York, where the company operates four The Botanist retail locations.

“New York has the opportunity to implement lessons learned from earlier adopters of legalization, and we’ve seen from other states that one of the most important foundations for a successful adult-use program is a robust medical program,” Ali wrote in an email, adding that it is “an exciting time for New York as the cannabis program continues to evolve in a positive direction.”

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