This past year in New York’s cannabis industry has been a lot like a New Year’s Eve party: high expectations made for a fair amount of disappointment, even though there were some genuinely good times, as well.
The state’s first adult-use dispensary opened just before the start of 2023, and a few more outlets opened in the following weeks. However, retail shops – many of which contended with real estate issues – opened at a slower than expected pace this year, even before a lawsuit paused the entire Conditional Adult-Use Retail Dispensary program altogether.
However, we also saw some undeniable greenshoots throughout the year. Cannabis Growers Showcase events provided struggling farmers with much-needed retail outlets, as well as access to legal products in areas without any dispensaries. The Cannabis Control Board also completed regulations and launched the state’s first general licensing application period.
As we turn our eyes toward 2024 – and all the opportunity and heartbreak it presents – let’s take a look back at this past year, and all it entailed.
A look at 2023
In January, the Office of Cannabis Management launched the Cannabis Compliance Training & Mentorship program for adults with advanced farming, cultivation or horticulture experience and/or advanced experience with manufacturing, processing, packaging or branding products for human consumption.
Some of New York’s legacy operators saw the program as a foot in the door for cannabis business licenses – especially microbusiness licenses. But by June, some participants who completed the 10-week curriculum said a lack of clarity around whether completing the program would make them any more likely to get a license put its value into question.
Later in January, the Dormitory Authority of the State of New York released information on the players managing New York’s $200 million cannabis social equity fund to NY Cannabis Insider – a prompt 100 days after we requested the information.
NY Cannabis Insider sought documents from DASNY that would show how the agency ended up selecting Social Equity Impact Ventures to raise and manage money for the fund. The documents include a partially redacted version of Impact Ventures’ response to DASNY’s request for proposals submitted in June. The documents also confirm that Impact Ventures did submit information to the state that was not true or, at best, was a stretch.
In February, we ran a long-form profile on Joshua Waterman, a longtime operator within New York’s underground market and president of the Legacy Growers Association. Waterman and many others informally created the Legacy Growers Association years ago as an underground network through which members of that community can trade tips. As he and partner Brandi Hester worked to establish LGA as a formal entity, Waterman told NY Cannabis Insider that he wanted to keep helping legacy operators grow their businesses.
In March, a NY Cannabis Insider story led to policy change at OCM after our investigation found a majority of the best-selling weed available in the nascent marketplace contained drastically lower THC than advertised.
The discrepancy between the label and what’s inside was due primarily to an OCM Band-Aid – called line testing – that allowed flower and pre-rolls to get to shelves fast without measuring actual potency, and instead allowed advertising “anticipated potency.” By the time the story was published, the OCM had concluded that the state’s flower “should be tested for potency” and announced an end to its line testing program for flower and pre-rolls.
That same month, we were the first to report a major lawsuit filed by a coalition that included some of New York’s medical cannabis companies. The lawsuit asked a judge to compel state regulators to open up licensing for all retail dispensary applicants immediately, and was settled alongside another similar suit this month.
Real estate was always going to present a challenge to New York’s cannabis industry – especially for retailers – and that surfaced in 2023, as CAURD licensees were forced to compete with DASNY for storefronts. Entrepreneurs and their lawyers complained of an emerging dynamic in which small business owners were pitted against DASNY – a huge government institution that issued more than $10.6 billion in bonds in the 2021 fiscal year.
Predatory financing deals also became an increasing issue in 2023, according to stakeholders. In an adult-use market which only included small businesses – at the time – predatory investment offers seemed to be increasingly common, with licensees receiving exploitative offers, such as a $1 million investment in exchange for 49% equity in the company.
In May, the state’s largest cannabis industry group, the Cannabis Association of New York, escalated a call for swift regulatory action, specifically regarding alleged conflicts of interest by then-Cannabis Control Board member Reuben McDaniel, who was also president of DASNY.
Following calls for accountability from CANY and others, McDaniel resigned from the CCB in June and from DASNY in October.
As an increasing number of CAURD licensees sought storefronts, zoning issues came to the forefront. Though the time has long-passed for cities and towns to opt out of cannabis retail, some CAURD licensees told NY Cannabis Insider that many are creating zoning standards that make it nearly impossible for dispensaries to open within their borders.
In late-spring, cannabis regulators settled a federal lawsuit that paused parts of the CAURD program for months. The CCB agreement with Michigan-based plaintiff Variscite NY One, Inc., ended a court injunction that had prevented the state from granting CAURD licenses to businesses in the Finger Lakes region. It also guaranteed an adult-use license for the plaintiff once general licensing began. (Variscite filed a second lawsuit on Dec. 18, asking for another injunction.)
But not long after the state settled the Variscite lawsuit, the CAURD program screeched to a halt a second time in early August, after a lawsuit initially filed by four service-disabled veterans, including Carmine Fiore, resulted in an injunction that prevented more than 400 CAURD licensees from opening their stores, causing another huge disruption in New York’s legal weed rollout.
U.S. Department of Health and Human Services made a late-summer recommendation that cannabis be moved from the Drug Enforcement Agency’s Schedule I to Schedule III, and NY Cannabis Insider took a look at how that would affect New York’s legal market.
We also ran a story about a disparity in how cannabis regulators seem to treat “True Parties of Interest” rules. While the OCM is holding businesses to stringent standards, the state appears to be giving itself a fair amount of latitude in its funding agreement with asset management firm Chicago Atlantic – the sole private lender to New York’s $200 million social equity fund for CAURD licensees.
An investigation NY Cannabis Insider published in late-September uncovered systemic public health failures at every level of the state’s legal cannabis industry, from farmers to labs to state regulators, that experts said may pose a serious health threat to consumers. Top-selling weed strains, available at licensed dispensaries from Western New York to Manhattan, were found to contain microbial levels 10-250 times higher than what’s allowed under the state’s rules for medical cannabis.
Also in September, the head of New York’s Cannabis Advisory Board said in a meeting that the group needs a staff and budget to function properly, and noted the board hasn’t been as involved with the state’s legal weed rollout as the cannabis law prescribes.
On Oct. 4, the OCM launched its long-awaited general licensing application period after approving all regulations for each license category. Applications for the initial tranche of general license hopefuls had a deadline of Dec. 4 to file their paperwork.
As the injunction from the Fiore case dragged on, many CAURD licensees began applying for general licenses in October, worrying that their conditional licenses were too precarious and vulnerable to lawsuits.
In late-October, the New York State Senate held a fact-finding public hearing in Albany that Sen. Jeremy Cooney called to address the state’s troubled rollout of its legal cannabis industry. Lawmakers heard from regulators, government officials and businesses about the problems and successes associated with New York’s legal weed market.
NY Cannabis Insider wrote about a partnership between companies that serve medical cannabis patients, which appears to violate medical regulations. Cannabis telemedicine company Leafwell, in partnership with medical cannabis company Curaleaf – and possibly other medical operators in New York – have been emailing medical cannabis patients who have subscribed to mailing lists with offers of lower-cost telehealth certifications, both companies acknowledged to NY Cannabis Insider.
In early December, a judge approved a settlement in the lawsuit that led to a nearly four-month injunction on the CAURD program, and a prior one filed by a coalition of medical cannabis companies. The settlement lifted that injunction, while regulators agreed to award retail licenses and site protection to the plaintiffs, and add pro-veteran programs to the OCM.
Later in December, Carmine Fiore – the face of that lawsuit – spoke exclusively with NY Cannabis Insider about the litigation and its fallout, while other service-disabled veterans in New York’s cannabis industry also provided their opinions. Fiore told NY Cannabis Insider that he believes veterans would have been ignored if not for the litigation. Among other service-disabled veterans in the state’s weed industry, opinion is split.
Happy New Year everyone, we’ll be back with plenty more in 2024!