Ouster of top New York marijuana official raises questions

(This story has been updated to correct Tremaine Wright’s former position to state assembly member.)

The exit of Chris Alexander, the top state official overseeing New York’s rollout of adult-use marijuana sales, is seen by many as assigning blame for what has been decried as the country’s worst cannabis market launch to date.

More than three years after New York legalized adult use, only 122 stores were open for business statewide, and the market’s $123 million in 2023 sales was only about one-quarter of projections.

But whether Alexander’s departure as executive director of the state Office of Cannabis Management (OCM) will mean a turnaround – or whether his replacement, to be assigned by Gov. Kathy Hochul upon completion of Alexander’s term in September, will be any better – is far from clear, industry observers told MJBizDaily on Monday.

Though rumors of Alexander’s exit had been brewing for months, there are rumblings in state political and cannabis circles that Hochul was fishing for a scapegoat – and it will be some time before New York’s adult-use market fulfills its significant potential and ambitious social justice promises.

“My concern is that Chris will be made a fall guy for the shortcomings of other departments,” New York-based attorney David Holland, a partner at Prince Lobel and executive director of the state’s chapter of the National Organization for the Reform of Marijuana Laws (NORML), told MJBizDaily.

“I don’t think that with the completion of his term and his departure that we’ll see the end of some of the things vexing the program.”

Master of ‘disaster’?

Hochul, who earlier this spring branded New York’s attempt to launch regulated cannabis sales a “disaster,” asked Alexander on Friday to step down, The New York Times first reported.

The OCM did not respond to an MJBizDaily request for comment.

That was the same day Hochul’s administration released a blistering report criticizing the OCM’s performance on Alexander’s watch.

Hochul claimed during a news conference that the report – and Alexander’s de facto firing – was not about assigning blame.

But the report, compiled by the state Office of General Services, faulted the OCM for, among other things, a “complex and obscure” licensing process that, along with “sparse customer service,” often kept marijuana business license applicants in the dark for months or longer.

Untapped potential

Faced with such uncertainty, many would-be retail operators ditched commercial leases rather than pay rent on storefronts for a year or longer without knowing when – or if – they’d be able to open a marijuana store.

The OCM also had an unspent budget surplus of $26 million and 65 unfilled staff positions, the report found.

However, observers of New York politics noted that it’s unclear whether it the OCM or another department was responsible for failing to complete the hirings or spend the money.

In a series of posts Friday on X, formerly known as Twitter, a former OCM staffer said early warnings about bureaucratic problems went unheeded by the Office of General Services (OGS), the same agency that compiled the report for the governor’s office.

And the OCM was only one of several state agencies responsible for rolling out regulated marijuana sales in New York.

Those departments were “conspicuously absent” from the Hochul-ordered OGS report, according to Osbert Orduña, the CEO and founder of The Cannabis Place, a licensed retailer in Queens.

“When we talk about what were the problems with OCM, they’re in the pool trying to stay afloat, but someone else is making the waves,” he told MJBizDaily.

Origin of a failure

New York legalized adult-use cannabis in March 2021 under a bill signed into law by then-Gov. Andrew Cuomo, who resigned amid scandal shortly thereafter.

Hochul, who stepped up from the lieutenant governor post to replace Cuomo, appointed Alexander as the OCM’s executive director in September 2021.

Alexander had a heavy hand in writing the Marijuana Regulation and Taxation Act passed by the Legislature.

And it was under his direction that OCM launched the much-criticized Conditional Adult-Use Retail Dispensary (CAURD) program.

The CAURD program guaranteed that the first marijuana stores to open would be owned and operated by applicants who could demonstrate harm caused by the war on drugs.

That angered the state’s so-called “registered organizations,” most of which are well-known marijuana multistate operators that already held New York medical marijuana business licenses.

Most MSOs are still not retailing recreational cannabis products, though state officials approved several more larger operators’ applications to open storefronts Friday.

It was MSOs that filed one of several lawsuits challenging the OCM’s decision to let other entrants into the market first.

The way the CAURD program was structured also appeared to expose the OCM to lawsuits.

One prominent suit challenging the constitutionality of CAURD’s original residency requirements paused licensing in several parts of the state entirely.

Another major lawsuit, brought by service-disabled military veterans who alleged the OCM’s preference for “impacted individuals” violated their rights, halted another 400 CAURD applicants from proceeding.

It would be more than a year before the first marijuana store opened in New York, on Dec. 29, 2022.

By that time, New York City, which has the potential to be one of the world’s largest regulated cannabis markets, was rife with illicit marijuana sellers operating with near-impunity.

Third state cannabis official exit

Alexander is at least the third high-profile state official responsible for New York’s marijuana launch to leave.

Reuben McDaniel, a former president of the Dormitory Authority of the State of New York (DASNY), quit his post in June 2023. The DASNY was tasked with raising a promised $150 million capital fund that would be made available to CAURD applicants,

Critics say the DASNY was responsible for finding locations where CUARD applicants could open so-called “turnkey” stores but largely failed to do so.

Several months after McDaniel’s departure, Axel Bernabe, the OCM’s chief of staff and policy director and a former top official in the Cuomo administration, also left government service.

Others, such as former state Assembly Member Tremaine Wright, who chairs New York’s Cannabis Control Board (CCB), remain in their positions.

Some players in the state’s marijuana industry questioned why the New York Legislature, the CCB or Hochul herself aren’t just as responsible for the dire situation.

They point out that law enforcement and state marijuana officials claimed they were powerless to do much about the unlicensed competitors – which might number as many as 2,800 in New York City alone, according to a recent estimate – without new enforcement powers that the state Legislature granted only this spring.

Alexander being Hochul’s designated fall guy “is the vibe I get,” The Cannabis Place’s Orduña said.

“Here’s a guy who was on the forefront of cannabis reform in New York state for a very long time,” Orduña continued.

“There would be no legal cannabis in New York if it weren’t for Chris Alexander.

“To throw the guy out? It’s messed up.”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.