New York State’s Cannabis Control Board has recently approved new rules that will allow Multi-State Operators (MSOs) and Registered Organizations (ROs) to participate in the state’s adult-use program. The application window will open on October 4th. This policy change is a significant development in the cannabis industry, as it gives big companies with substantial financial resources an advantage over small businesses and social equity applicants.
The new policy undermines the reasoning behind the Conditional Adult-Use Retail Dispensary (CAURD) license program, which was put in place to “give communities across New York State that were impacted by the disproportionate enforcement of cannabis prohibition” a head start over Corporate America by prioritizing applications from socially disadvantaged communities. The new rule changes have now reduced this advantage significantly, which could be detrimental for small businesses already at a standstill due to the slow rollout of licenses.
BREAKING: #NYcannabis is expanding. The #NYCCB approved adult-use cannabis applications.
— NYS Office of Cannabis Management (@nys_cannabis) September 12, 2023
Starting October 4, applications for Cultivator, Processor, Distributor, Microbusiness and Retail Dispensary licenses will be available through the New York Business Express (NYBE) platform.
Application fees are reduced by 50% for all Social & Economic Equity (SEE) applicants & licensing fees are reduced by 50% for eligible SEE licensees as well as technical support through future SEE programs.
— NYS Office of Cannabis Management (@nys_cannabis) September 12, 2023
Applications for additional license types will follow at a later date.
This new policy also impacts farmers in New York, who, with many of their crops still sitting in bags rotting, have been unable to find buyers or places to sell their products because of the lack of retail open. Now, they, too, face competition from MSOs and ROs, with the possibility of these companies driving down prices and further hurting farmers’ profits.
While this new policy marks a significant shift in the New York cannabis industry landscape, social equity applicants still have some hope. Many advocates are fighting for further regulation and legislation from the government to ensure that small businesses have a better chance of succeeding in this competitive market. Hopefully, with their help, smaller companies and social equity applicants can have a fighting chance.
The Slow Rollout
Getting a license in the New York cannabis market has been a prolonged and challenging process. Several delays have occurred, which have resulted in fewer than ten licenses being issued.
This slow rollout of licenses is already a significant disadvantage for many social equity applicants who were hoping to get the head start they had been promised. With Multi-State Operators (MSOs) and Registered Organizations (ROs) now being able to access the market after a September 12th decision, many small business owners are feeling overwhelmed by the sudden competition.
The delays in the rollout process make it even harder for social equity applicants to contend with these companies. Many of these applicants have already had difficulty securing financing or finding suitable locations for their businesses. Now, they face the possibility of being undercut by larger companies with more money and resources.
The slow rollout of licenses has been a major issue for small businesses in New York, and this new policy makes an already difficult situation even worse. With fewer licenses issued than expected, many of these business owners are now competing for the same few spots in the market. This could be devastating for many smaller businesses and further highlights the need for reform and regulation to ensure that small businesses have an equal chance of succeeding in this highly competitive market.
Impact on Social Equity Program
The new policy allowing Multi-State Operators (MSOs) and Registered Organizations (ROs) access to New York’s adult-use program will most likely significantly impact the state’s social equity program. When the Office of Cannabis Management (OCM) was first launched, it Launched the Conditional Adult-Use Retail Dispensary (CAURD) license program designed for social equity licenses, a 3-year advantage to applicants by prioritizing their applications for licenses.
This new policy has now reduced that advantage to just one year since MSOs and ROs are now being allowed access on October 4th. This could be detrimental for smaller businesses that are already at a standstill due to the slow rollout of licenses and lawsuits and have been unable to get their ground rolling on their businesses.
The new policy also has an impact on farmers in New York who, with many of their crops still sitting in bags rotting, have been unable to find buyers or places to sell their products. Now, they, too, face competition from MSOs and ROs, with the possibility of these companies driving down prices and further hurting farmers’ profits.
Pushback At Recent Meeting
At Tuesday’s meeting, several people talked about how they had invested their time and money to enter the New York cannabis industry, only to be on the verge of bankruptcy.
A small farmer, Jeanette Miller, co-chair of the Cannabis Farmers Alliance, read a series of statements that had been made by cannabis officials, Gov. Kathy Hochul and key state lawmakers over the past few years highlighting their pledges to prioritize small farmers and “social equity” interests rather than big corporations.
“We relied on you and you relied on us; we totally did it,” Miller told the board. “I have 500-plus pounds sitting and rotting right now.”
Miller also weighed in on the emotional toll of her situation as she donned a rope around her neck. “I had the police come to my house because I’m done. … This ruined my life,” she said. “I feel like I’m going to hang myself. … We’re tired. We’re done. We’re struggling. We need help.”
Opinions from license applicants of the CAURD program, suspended from a current lawsuit, also spoke their minds.
Christine Richardson, a conditional license holder who hopes to open a retail shop in Loudon Plaza in Albany, said the delays from the slow rollout combined with the court injunction have been crushing.
“It’s been a year — a year of financial devastation,” Richardson said.
During the meeting, the conditional retail license holders and small farmers expressed their fear that giving access to the MSOs and ROs will effectively end their businesses. These larger companies are able to grow indoors and are allotted significantly more canopy space for cultivation, which gives them an unfair advantage over smaller players. Which, in return, threatens to put many small business owners out of business
Hal McCabe, executive director of the Cannabis Association of New York and the mayor of a small village in Cortland County, warned the board that the farmers and conditional license holders “are balancing on the edge of a pin right now, and facing ruin.”
The new policy allowing Multi-State Operators (MSOs) and Registered Organizations (ROs) access to New York’s adult-use market is a devastating blow to small businesses that were meant to have an advantage over large companies in the state. It has become apparent that the slow rollout of licenses, combined with the series of lawsuits and now allowing anyone to submit an application starting on October 4th, has rendered the social equity license program worthless.
The impact of this ruling is already being felt as people are on the verge of bankruptcy, crops are left to rot, and license applicants have been pushed to financial devastation. It seems unfair that these small business owners and farmers who were meant to have a jump start on the large companies now fear they won’t be able to compete.
The whole licensing process has been a complete failure from the start, and it’s clear that something needs to be done in order to give these businesses a fighting chance. The government must take action to ensure the success of social equity businesses and farmers who have already invested their time, energy, and money into this industry. Until then, we can only wait and hope for the best.
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