New York’s Ongoing Struggle to Launch Cannabis Companies

New York, NY — The launch of cannabis companies in New York continues to face significant challenges, despite state efforts to regulate and control the market. The New York Office of Cannabis Management (OCM) has been efficient in issuing licenses, but the path to opening new dispensaries and replacing the large illicit market remains fraught with obstacles.

Broken Promises and Legal Delays

State promises and legal delays have significantly hindered licensees from opening cannabis businesses. While the OCM excels in the issuance of licenses, the struggle to operationalize these licenses is evident. The Cannabis Control Board approved 105 new licenses in June, increasing the total to 1,117. However, the gap between issued and operational licenses continues to widen.

Licensed, but Not Open

Current data reveals a concerning trend: out of 187 pending social equity licenses, only 44 are active. Although there are 141 operational dispensaries, the number of those run by social equity licensees remains unclear. This discrepancy highlights the ongoing difficulties faced by licensees in opening their businesses.

Types of Social Equity Licenses

New York offers two types of social equity licenses: Conditional Adult-Use Retail Dispensary (CAURD) for justice-involved applicants, and Social Economic and Equity (SEE) licenses for individuals from disproportionately impacted communities. Despite 55% of adult-use licenses being SEE-owned, data on CAURD licensees is limited, further complicating the assessment of social equity in the market.

Unlicensed and Operating

The presence of approximately 3,000 unlicensed cannabis shops in New York City underscores the challenge of replacing the illicit market with a legal one. While recent enforcement actions have closed over 500 unlicensed shops, the effectiveness of these measures remains to be seen.

Financial Challenges

Many CAURD applicants face significant financial challenges, lacking funding and experiencing delays due to state assistance failures and ongoing lawsuits. Without access to capital and provisional licenses deterring investors, these applicants struggle to open their businesses and compete with the illicit market.

Measuring Success

The success of New York’s cannabis program cannot be solely measured by the number of licenses issued. True progress will be seen when pending licenses are converted into active, operational businesses. Only then can the state’s efforts to regulate the cannabis industry and reduce the illicit market be deemed successful.