New York cannabis regulators award more permits, get earful from unhappy licensees

New York cannabis regulators further expanded the state’s legal market on Thursday with the approval of another 101 marijuana operate, but the board also got an earful from financially troubled retail permit holders who said they may go bankrupt while awaiting the green light to open for business.

The state’s Cannabis Control Board voted unanimously to approve the recommended licenses for 35 storefront dispensaries, 22 microbusinesses, 25 growers, 11 distributors, and eight processors.

New York hits a milestone

The board also celebrated the milestone of surpassing 100 operational recreational dispensaries.

“This is an incredible milestone for New York state,” CCB Chairwoman Tremaine Wright said at the opening of the meeting. “March has been our best month yet in terms of sales and new dispensary openings.”

New York now officially has 103 recreational marijuana stores serving the public, with a total of 122 approved to open their doors. That includes nine that are tentatively slated to open before the cannabis holiday of 4/20 this month, OCM Executive Director Chris Alexander said in a report to the board.

Alexander also promised that more business licenses of all stripes are on the way, and that OCM staff is working hard to process applications as quickly as possible.

“We have dramatically increased the access of New Yorkers to safe, tested, legal product, and that momentum is only continuing,” Alexander said. “We are nowhere near close to what the market will be, but we do have (retail) access in every region and across 20 counties so far at least.”

The legal New York marijuana market also continues to slowly but steadily ramp up on the sales front, topping a new sales record last month of $32 million and average regular monthly sales growth of 25%, OCM Policy Director John Kagia told the board.

“Our first quarter sales of $84 million are 10 times what they were in the first quarter of 2023, which is great to see,” Kagia said.

However, Kagia also cautioned that there could be turbulence ahead, given a recent report from Whitney Economics that found an industrywide shortfall of $3.8 billion in delinquent payments between retailers and suppliers. Kagia urged New York cannabis companies to report any delinquency that’s older than 30 days to the OCM, so regulators can track which companies are paying their bills and which aren’t.

“It’s critically important to do this early rather than waiting until the issue manifests on the scale we’ve seen in other jurisdictions, and then needs to be reigned in,” Kagia said.

The OCM is also trying to craft anti-saturation policy so as to ensure that New York cannabis shops eventually reach a steady annual revenue stream of between $7.5 million and $10 million, he said, up from the current statewide average of $5.2 million.

Roadblocks remain for operators

Following Kagia’s presentation, a swath of licensed retailers who said they’re still awaiting final approval to open for business told the regulators they’re not sure if they’re poised for success or failure, given how much money they’ve poured into their ventures while waiting for word from the OCM and CCB.

“I’m stuck in OCM hell. There’s still no license. No one can or will tell me where I stand. I email every day, call and talk to different people, all with the same answer: You’re in review,” a Staten Island cannabis shop licensee told the CCB. “I’m 74 years old, working three jobs to stay afloat. This was supposed to be my legacy to my children and grandchildren. Instead, I’m broke, broken, and running out of hope.”

Another retailer, who has a location in the SoHo neighborhood of Manhattan, said he has investors willing to put $4 million behind his shop as soon as it gets open, but he has no idea when that will be, since he can’t get a straight answer from anyone at the OCM.

“I’m about to sign a lease that will deplete my entire life savings,” he said, adding he’s worried about ending up homeless. “I’m very scared I won’t have a license by the time my renovations are finished, my investors will walk away, and all my efforts will have been in vain. I haven’t slept more than three hours at a time since March, since that’s when I anticipated I would have received my license.”

Yet another retailer, who has been paying employees at his delivery-only cannabis company since getting initial approval last summer, said he’s endured a “nightmare” and is about to lose everything if he can’t get approval to begin sales.

“I used more than $100,000 of my own money, and I’m about to go bankrupt,” he said. “My landlord’s calling me right now, looking for money.”

Yet another retail licensee who has also yet to open his shop disputed Kagia’s estimate that New York cannabis shops are pulling in an average of $5.2 million in revenue annually, and suggested that the statistics were “skewed” by more successful dispensaries in upstate New York where localities have cracked down much harder on illicit storefronts than have officials in New York City.

“I’ve been in this program for over a year now. I worked at several other licensed dispensaries in New York City just to get experience before I open my own business,” the permitholder told the CCB. “They’re doing terrible, terrible, terrible numbers. I’m talking about $8,000 Saturdays on places that have like $25,000-$35,000 rent.”

David Nicponski, a representative of the New York Cannabis Retailers Association and a shop licensee himself, also told the CCB that the OCM has a communications problem that needs fixing so as to benefit all stakeholders.

“We have been contacting the OCM thrice weekly for the last seven weeks,” Nicponski told the board. “We have had no responses to any of those 21 communication attempts. The lack of communication is not an isolated case… It’s surprisingly common issue among licensees, with some licensees waiting months for a response.”