Executive Director Gives Update on New York Adult-Use Licensure Timeline

By: Andrew P. Cooper, Esq., LL.M. and Terran Cooper

The Promise of Social Equity in the Cannabis industry was a webinar held yesterday by the Cornell University School of Industrial and Labor Relations’ Labor and Employment Law Program. A number of topics were discussed throughout its duration, one of the most notable of which being the timetable of adult-use licensure rollout. We had previously heard that the draft regulations for adult-use licenses under the MRTA would come in late winter or early spring. The Office of Cannabis Management’s (OCM) Executive Director Chris Alexander reiterated as much during the webinar, but also used May as the example for the release of proposed regulations. The Executive Director stated that with a May release, the OCM would allow for a 5-6 month window (including the required 60-day public comment period) in order to assess and make changes, with licensure then slated for October, November, or December. There is still a chance we see proposed regulations before the end of winter, but given that there is still much to be determined, spring is probably more likely. Perhaps the OCM’s optimistic timeline is to spur those who may seek licensure to act before regulations are released, as to not miss out on the potential opportunity. Chris Alexander also discussed different approaches for different licensures, and potential waves of licensure to better inform the next. Given the OCM’s focus on learning from other jurisdictions and the aforementioned statement, it is likely that licensure rollout will be staggered to ensure proper retail supply. The estimated timeline was provided within the first few minutes of the webinar, with the rest dedicated to the legacy market, social equity employment, training, resources, and more, as discussed below. 

Social Equity 

Most of the discussion held was through the lens of social equity. Norbert Pickett, the CEO of DC Holistic Wellness, and the first black man to solely own and operate a Washington, D.C. medical dispensary, discussed the many typical barriers to entry facing potential social equity operators. In addition to garnering the ability to access capital, Pickett spoke on the need for the identification of viable social equity operators beyond that of a figurehead. Many supposed social equity licenses in states across the U.S. have gone to operators that did not have access to appropriate resources or served only to allow a multi-state operator preferential treatment. Pickett believes that minority ownership will translate to minority employment and thus create a path to the middle class for many. Chris Alexander also spoke on the sustained investment by the State into businesses that last and change communities. He referenced the $200 million dollar fund announced by Governor Hochul as a starting point for social equity operators, but that it would be the reinvestment fund, to continually put revenue into social equity businesses, that would separate New York from other states. 

Training & Labor 

The Department of Labor (DOL) Commissioner Roberta Reardon spoke on the DOL’s commitment to identifying and culling the various pieces of training that come online, ensuring training is done by credentialed experts, launching various training initiatives, and providing training incentives for potential operators and employees. Commissioner Reardon emphasized the need to align the timing of training with the rollout of licensure as to not leave trained individuals seeking employment with no available opportunities. Commissioner Reardon also discussed the potential for the training of a wide range of cannabis jobs at varying skill levels in order to ensure potential employees have the skills required to be compensated well. Some such training could include on-the-job training or registered apprenticeships. Chris Alexander similarly discussed the need for social equity in not only licensure, but employment opportunities. 

Legacy Market 

When asked about the legacy market and the recent cease and desist letters sent to more than two dozen illicit cannabis businesses utilizing a “gifting” scheme (where operators would pair sale of a low value good at a markup with “free” cannabis), Chris Alexander had this to say: 

“We’ve been aware for some time that these operations were popping up across the state and we’ve paid very close attention to everything that’s been going on. Really, we explored other methods of communicating or taking kind of an initial action, but we wanted to start with education. We wanted to start with letting people know that – I know there’s been a significant shift in the law but understand that, even though the police aren’t coming to knock down your door, this activity is still not legal. And for us as the regulating body, it's concerning that we’ve taken this step and still in the law said don’t do this thing or wait for a license and folks are still taking that step.”

While the Executive Director didn’t seem to take lightly the current “gifting” schemes found across NY, he did have this to say about legacy operators: 

“I also want to distinguish that operation [those such “gifting” schemes] from other legacy operators. Because, there have been for a hundred years or however long – the last 70 years of prohibition, the last 40 years of enforcement related to the drug war, people have been operating on the fringes and in the shadows et cetera. Those operations continue. We have not “cracked down” on those operations. It’s the acknowledgment that there are operators in the space, in communities et cetera, who have used cannabis to support their families and all that stuff. That’s part of the broader strategy.

What was different about what we’ve done here, as a state, is acknowledge that in order for us to be successful we must successfully incorporate the legacy market, I think it’s groundbreaking. I think that it’s important because other states who try to combat the legacy market, you lose some, you win some, but the market will always exist. We’re taking a step to understand that part of the broader goal of legalizing cannabis in New York, wasn’t just to create the industry, but it was also to create revenue to rebuild communities. And by folks operating outside of that scope and outside of that spectrum, you’re cutting the full benefit of this program short. So for me personally, as someone who has interacted on every forum with legacy operators, they also share this goal. The real legacy operators share this goal of wanting to rebuild communities and generate revenue to rebuild communities. Taking a step to talk about legacy in a different way, I think is important.”  

Chris Alexander spoke on the necessity to be creative in getting legacy operators to participate in the MRTA’s market. The OCM will strive to make it clear that these operators are welcome to participate and provide the proper education to allow for such. Chris Alexander also discussed the removal of particular barriers to entry plaguing the industry such as the removal of certain criminal offense restrictions, lowering the capital requirements for licensure, and removal of full site control requirements. 

“We’re starting with education and we hope that people heed our warnings and if they don’t, we have to take additional steps. But hopefully, the message has been made clear, legacy folks still understand that there’s a space for them to participate in this market. We’re learning, we’re trying to figure out the best ways to do so, that work is not done. But we do want them to know that they’re welcome and that needs to be a part of the conversation.” 

(Please note that this is an approximate transcription edited for clarity) 

Conclusion 

While late winter may be a stretch, the proposed regulations are now in sight. An important topic within these discussions was the need for education. Now that adult-use sales are on the horizon, potential operators will want to ensure they have proper training and education in order to not only gain licensure, but run a successful operation. However, educating both potential operators as well as those responsible for crafting our adult-use programs will be critical to their success. We have seen the devastating effects of poorly created markets across the U.S., such as the continued illicit market in states like California. The OCM’s commitment to incorporating the legacy market and learning from the mistakes of others will be necessary to ensure that the NY market is a success.

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