NY botched cannabis rollout. How long will it take to fix it? Here's Hochul's plan

David Robinson, New York State Team
·3 min read
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The botched cannabis industry rollout in New York has now spurred Gov. Kathy Hochul to overhaul the poorly run state agency that stifled marijuana business growth and fueled an explosion of illicit cannabis shops, state records show.

After New York's legal cannabis marketplace floundered over the past two years, Hochul's administration last week announced new measures aimed at greenlighting more marijuana businesses and shuttering illicit weed stores, including a new enforcement task force headed by state police.

But New York's cannabis industry will not be fixed "overnight" due, in part, to prior mismanagement of the state Office of Cannabis Management, which had inexperienced leadership making regulatory and communications mistakes that financially ravaged scores of marijuana business hopefuls, a scathing new assessment of the state's cannabis agency asserted.

A $5 million pool of state funds will also become available to reimburse those wronged by the Conditional Adult-Use Retail Dispensaries program, including numerous legal challenges that stalled approvals, Hochul said. That money will help them offset eligible investments they made to secure storefronts and other business resources as part of the delayed cannabis licensing process.

State cannabis leader to step down

Gov. Kathy Hochul announces the framework of a budget deal with legislative leaders in Albany on Monday, April 15.
Gov. Kathy Hochul announces the framework of a budget deal with legislative leaders in Albany on Monday, April 15.

During a media briefing Friday, Hochul revealed plans to establish new leadership positions at the state cannabis agency, including the replacement of Chris Alexander, its inaugural executive director who will step down in September.

In 2021, Hochul appointed Alexander, who previously worked as an associate counsel for the state Senate and as policy coordinator for the Drug Policy Alliance, a nonprofit advocacy group.

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How New York cannabis rollout failed

A marijuana activist holds a flag during a march on Independence Day on July 4, 2021 in Washington, DC.
A marijuana activist holds a flag during a march on Independence Day on July 4, 2021 in Washington, DC.

New York's cannabis overhaul plan followed a 30-day assessment of the state cannabis program conducted by a team of investigators led by the Commissioner of the Office of General Services Jeanette Moy. Hochul ordered that review after declaring the industry rollout a disaster.

The assessment findings of the state cannabis program included:

  • A failure to centralize licensing operations that created complex and obscure requirements, which contributed to creating a bottleneck of marijuana business applicants.

  • The cannabis agency provided sparse customer service while lacking transparency about its licensing process, both of which left many businesses frustrated and distrustful of the state agency.

  • A lack of data and key performance indicators within the cannabis agency structure, which also pursued a misguided attempt to create new information technology systems rather than leveraging existing IT resources within other state agencies.

"Most concerning," investigators noted, the cannabis agency "did not intend on reviewing all retail license applications it received, while accepting nonrefundable application fees, and requiring many applicants to execute leases or purchase property."

"The decision to limit the number of licenses without full transparency to applicants has created an environment of deep mistrust," the assessment added.

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How Hochul plans to fix cannabis industry

During a media briefing last year in Brooklyn, Gov. Kathy Hochul displayed photos of some of the 1,000 pounds of illicit marijuana seized by authorities as part of a crackdown on shops illegally selling cannabis without a state-issued license.
During a media briefing last year in Brooklyn, Gov. Kathy Hochul displayed photos of some of the 1,000 pounds of illicit marijuana seized by authorities as part of a crackdown on shops illegally selling cannabis without a state-issued license.

The cannabis overhaul plans described by Hochul included:

  • Committing to putting in place an service-level agreement to allow for completion of cannabis retail license applications within 90 days for future application windows.

  • Creating new communications tools, including regulatory bulletins and public dashboards to improve customer service.

  • Launching a state-run cannabis map tool online to improve the transparency surrounding licensed retail locations in summer 2024.

  • Adding staff to cannabis business licensing, compliance and enforcement teams.

  • Strengthening agency foundations and management including hiring senior positions for customer service, internal controls and audit and operations.

"While change will not be easy or overnight, the (cannabis) agency can overcome many of its internal challenges and become the regulatory agency the New York cannabis market needs, without losing any of its focus on building an equitable industry," investigators said in the assessment.

This article originally appeared on Rockland/Westchester Journal News: NY botched cannabis rollout. Hochul plans to fix it. Will it work?