INDUSTRY

Will This Work? New York's "Conditional" Cannabis Industry Aims to Launch Sales in 2022

Standard cannabis license applications have been pushed to mid-2023, much to the dismay of early movers in the space.
Standard cannabis license applications have been pushed to mid-2023, much to the dismay of early movers in the space. /

Cannabis advocates and industry stakeholders are gradually catching on to the shifting timeline around New York’s seemingly clunky cannabis rollout.

Some people are confused. Others are concerned and frustrated.

On Sept 19, 2022, Beard Bros Media published a report entitled, “NY Delays Adult Use Licensing Until Middle of 2023.”

The post references comments made on August 25, 2022, when Office of Cannabis Management (OCM) Executive Director Chris Alexander revealed that adult cannabis licensing will begin in earnest by mid-2023.

Obviously the OCM is more than a few months behind its initial timeline. They haven’t even released regulations for standard licensing yet, so the delay shouldn’t be too big of a surprise at this point.

However, that’s not the full story.

Conditional Licenses Still a Go for 2022

The delayed timeline does NOT include the conditional cannabis licenses already in motion – cultivation, processing, and now retail.

The conditional cultivation and conditional processing cannabis licenses were made available earlier this year to already-licensed hemp operators.

Meanwhile licenses for Conditional Adult-Use Retail Dispensaries (CAURD) are open to “justice-involved” applicants, aka people whose lives or families were disrupted by anti-cannabis laws. The CAURD application window closes at 11:59 PM on September 26.

“CAURD licensees are positioned to make New York’s first legal cannabis sales before the end of 2022, speeding the delivery of investments into communities across New York State that were impacted by the disproportionate enforcement of cannabis prohibition,” reads the OCM website.

In other words, OCM is still planning to launch legal cannabis sales by end of 2022, but through a conditional cannabis supply chain made up of established hemp operators and incoming social equity players.

This is what we wanted, right? We wanted people whose lives were shattered by the war on pot – yet who also have the necessary experience – to make up the foundation of this industry rather than marginalizing them to the sidelines like so many other state cannabis markets have done. Right?

Not everyone sees is that way.

The Challenge of Uncertainty in the Cannabis Industry

The truth is that nobody is 100 percent certain how New York’s master cannabis plan will play out.

No cannabis market has ever approached regulation quite like this, let alone on such a big stage.

Yet many early-moving entrepreneurs in the space are already sharing important concerns over the delays.

“It’s not something I’m happy to hear,” said Brittany Carbone in a Sept 7 article originally published by NY Cannabis Insider.

Carbone is founder/CEO of Tonic CBD and co-founder of Tricolla Farms, which applied for and secured an adult-use conditional cultivation license earlier this year.

“This makes it a bit more difficult for the conditional licensees to operate confidently and know exactly what to prepare for,” she said.

Carbone, also a board member of the Cannabis Association of New York, expressed concerns that conditional operators may not produce enough product to meet demand during New York’s first year of legal sales.

“That’s a bad problem to have when licensed businesses are trying to woo customers from the unregulated market,” she added.

Carbone also explained that investors are reluctant to move forward until the OCM sheds more clarity on its regulations.

Indeed, many cannapreneur hopefuls who’ve been making moves based on the initial timeline estimates are feeling the burn. Many of them may not be able to hang on long enough for standard licenses.

For example, entrepreneur Mike Flynn – also mentioned in the NY Cannabis Insider report – has run into challenges with the banking side. He’s currently sitting on a 13,000-square-foot space that he’s already spent $3.3 million on, renovating and setting up point-of-sale systems.

Flynn hopes to one day become a dispensary owner, but until then he’s out of pocket, spending up to $5,000 per month on the building’s utilities.

No bank will back him, he said, until OCM releases its regulations in full.

The OCM Has Made Its Priorities Clear

It’s clear that New York intends to keep its social equity plan at the forefront of its cannabis industry rollout. This has been their modus operandi from the beginning.

The OCM is even keeping New York’s medical cannabis suppliers (most of them multistate operators) on edge with a proposed $20-million dollar adult-cannabis licensing fee if they want to expand into the recreational market.

For now, however, it’s conditional licenses only, and hopefully we get clarity on standard licensing regs before the end of the year.

No matter how you feel about it, the New York industry rollout continues to be an interesting saga, and hopefully a sensible effort to build a paradigm industry – the state’s  mission all along.

How Can Cannabis Entrepreneurs Better Prepare?

Lots of small businesses who’ve already invested in becoming legal cannabis operators may not survive while New York gives itself more time to flesh out its regulations.

Should the state provide some sort of assistance to help these people? It’s sad and frustrating to see small businesses – early movers in the space – screwed over because of regulatory delays.

Yet, where would the money come from in order to bail these people out? Tax dollars?

Regulatory headaches are an issue in many new cannabis markets. Delays are also quite common.

Even though the OCM has given us its share of surprises, entrepreneurs that diligently follow the cannabis industry will have known better than to bank on the initially projected rollout timeline.

If you want to succeed in cannabis, it pays to understand the nuances of this industry, to know its risks and pitfalls.

Why not skip as many of those headaches as possible?

This is why The Bluntness has published “The Guide to Starting a Cannabis Business,” which you can check out for free here.

Guide to Starting a Cannabis Business