The Office of Cannabis Management has released its annual report along with two separate documents that focus on equity and enforcement against unlicensed operators.
The full annual report is 91 pages long and comes just days after OCM released an overview of the first year of legal cannabis sales. It highlighted that consumers bought more than 3.5 millions cannabis products in the past year. Total sales are expected to surpass $150 million when December’s figures are added up. This is a good start, but a slow one, given that there were only 40 licensed dispensaries operating across the entire state at the end of 2023.
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New York’s legalization of marijuana, which began in the last days of 2022 slowed down in 2023 due to lawsuits, and a court order that was not lifted until early December, and prevented regulators from issuing hundreds of new retail licenses. This created a market bottleneck, which left growers with insufficient retail products to sell their products.
OCM leaders pointed out in their annual report that New York had achieved many milestones over the last year, such as social equity and steps taken to grow the fledgling market despite obstacles.
In a report, OCM’s Executive Director Chris Alexander stated that “New York has built a licensed marijuana market unlike anything else we have seen before.” “Despite the adversity we’ve faced, we knew all along that the Marihuana Regulation and Taxation Act has created a legal marijuana industry that is disrupting the status quo in a positive way.”
“While not all of the licenses we’ve issued are operationalized, we’ve issued over 700 licenses primarily to social and economic equity businesses,” he said, highlighting the state’s interest in building a fair marijuana industry. At the beginning of the year, there were about 20 Black-owned marijuana dispensaries in the United States. New York opened 12 new dispensaries.”
In October of this year, the state also opened a licensing window for the general public. “This gave all New Yorkers an opportunity to apply for a license for adult use for the first in the history of our state,” Alexander said. The industry is at risk of losing hundreds of licenses.
He wrote that in 2023 OCM had “evolved” from a new state agency into a fully-operational cannabis regulatory body. In 2024, regulators and operators, as well as consumers, want to see a state retail system go through its own maturation process.
Tremaine Wright wrote in his report, “all of this hard work will only be the beginning.”
OCM Annual Report
The report starts with a list of “legalization by the numbers” that includes the following statistics. Most of these were also included in preview report from last month.
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Nearly 6,200 licenses, permits, and registrations were issued or provisionally aproved in the State Fiscal Years of 2022-2023, 2023-2024
- 279 Conditional Adult Cultivator Licences
- Licenses for 40 adult-use conditional processors
- Licenses for Adult-Use Retail Cannabis Dispensaries Conditional on 463
- 5404 Cannabinoid Hemp Licenses & Permits
- Ten Registered Organizations have been approved and one renewal is pending.
- 41 adult-use retail dispensaries are now open for business
- The 60 Cannabis growers Showcase has been approved
- Retail sales of over $137 million [by December 9, 2022]
- More than 3.5 million units sold
- Revenues of nearly $16.3 million for the State Fiscal Year 2022-2023
- Revenues of over $16.6 million by the middle of the State Fiscal Year (2023-2024)
- Inspections of illegal operations 369
- 11 600 pounds of illegal products seized
- Seized products worth $56 million on the street
- 6 934 Adult-Use License Applications Received
- 932 hours of field inspections for compliance
- More than 121,900 medical cannabis patients have registered under the Medical Cannabis Program
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The report highlights social and economic justice, which it describes as being “central to the Office of Cannabis Management’s efforts”.
“In order to begin the work of repairing decades of over-criminalization and disproportionate enforcement of cannabis prohibition–especially in Black and Brown communities,” the report says, “the Office is hard at work ensuring that those harmed are given an equitable chance to participate and thrive in the new legal New York State (NYS) cannabis industry.”
CCB, OCM and other organizations noted, among others, that they had approved a plan for social and equity in May last year. They also issued guidelines about what it means to be disproportionately affected by marijuana prohibition. This is one of the requirements of priority business licenses based on social and equity. Census tract data revealed, among other things, that “approximately one quarter of NYS population experienced three-quarters of marihuana related arrests in the last four decades,” according to the report.
Another state equity effort over the past 12 months included a mentoring and training program that concluded in late April. It included 241 participants. Of these, 43 percent were “from diverse ethnic backgrounds” and 26% were women. The authors noted that “the cohort was a highly engaged group, with a remarkable program completion rate of 97.5 percent.”
The office worked to provide technical assistance to equity applicants when license applications opened to the general public in October, creating a Cannabis Hub and Incubator Program and working with “key community stakeholders”–including 25 organizations and 75 individuals–to provide pro bono application assistance to more than 650 applicants statewide.
The annual report notes that New York has also expunged more than 400,000 criminal records eligible for expungement, under the state legalization law. As of September 30, 2023, 202,189 convictions were sealed. The report states that “because the marihuana offense was their only conviction”, “24,400 people no longer have a NYS Criminal Record which prevents them from obtaining employment, housing or professional licensing.”
In October, as the state prepares to dramatically expand its adult use market, regulators began receiving applications from cultivators, processors, distributors, retailers and microbusinesses. They received 6,934 by a deadline in mid-December. The state will soon open new application windows for nursery, delivery and collective or cooperative licenses, as well as on-site consumption.
The report states that “as retail storefronts sales increased month-over-month in 2023 from $2.2m in January to $18.8m in November, an image of the demand in New York was revealed.”
In addition to the adult-use rollout in California, regulators are also working to improve the existing medical marijuana program. For example, in February, new regulations were approved that implement an automatic registration process. Under this system, people who get a doctor’s prescription for cannabis will be automatically registered into the state system. “This allows them to go straight to a medical cannabis store.”
OCM
The OCM report stated that at the end September, over 121,900 people were registered with the state medical program. The OCM report said that the number had decreased slightly in the last year. According to the two-year medical marijuana report released by the office last December, there were 123,052 active registrations on December 31, 2022.
The board has approved 16 independent labs to test adult-use and medical cannabis products. The state has also adopted emergency cannabinoid regulations for hemp in December, which limit the amount of THC or other cannabinoids allowed to be sold as hemp-derived products.
OCM
The OCM report made recommendations to the industry. It said that the state should update its plan for social and economic equality, “ensuring it is a document which reflects the current climate and priorities.”
New York should establish additional support to expand enforcement against unlicensed retail outlets, the report said. It noted that “some unlicensed shops may appear legitimate to consumers but they undermine NYS’s ability to create a truly equitable market with the capacity to deliver new resources for schools and communities who are disproportionately affected by cannabis prohibition across New York State.”
The office stated that other health and safety initiatives should include investments in public security and monitoring of public outcomes. It also recommended addressing the gaps in public education and scientific understanding of the substance’s health effects.
Other recommendations include that the state continues to prioritise expanding and strengthening its system of medical marijuana, conduct background check on license applicants and expand the definitions of crops and animals to include cannabis in order to “normalize” cannabis as a legit crop and allow certain tax deductions. It also recommends continuing to monitor the environmental impact of the new industry, and allowing adults to grow cannabis at home for their personal use.
The Secure and Fair Enforcement Regulation Banking Act (SAFER) would provide legal protection to financial institutions who work with state-licensed cannabis businesses. This act would also address some of the risks associated with operating cannabis businesses solely on a cash basis.
The report also recommended that federal measures be taken to fill the regulatory gaps left by the 2018 Farm Bill. This bill legalized hemp nationwide but did not provide any regulations. The report states that “without federal oversight, the states have developed unique approaches to mitigate the public health and security concerns caused by intoxicating products containing cannabinoids, leading to confusion, and lawsuits across the country about which hemp-derived product can be sold by state.”
The report also recommended “advocating changes to federal law to create less strict requirements around cannabis research”. This includes allowing state-licensed entities to provide cannabis to researchers conducting research within the same state. Currently, researchers must use workarounds which impact the scientific validity of studies, or rely solely on sources approved by the National Institute of Drug Abuse. Researchers should not be restricted to NIDA approved cannabis sources due to the concerns over the quality of the cannabis supplied by existing suppliers. There are also concerns regarding the limited number of suppliers.
In order to administer New York’s Cannabis System, OCM hired 46 Full-Time Equivalent (FTE) employees in 2023. This brought the agency’s headcount total to 162 FTEs by the end of that year.
The report details the contracts that were entered into by the office with third parties. For example, Bio-Tech Medical software was paid nearly $4 million to develop a tracking system for cannabis seeds. Google received more than $11 millions for “cannabis system support.” Cornell University also received $1 million in support for hemp cannabinoid research.
Chief Equity Officer Annual report
OCM’s 19-page Chief equity Officer Annual Report provides more detail on social justice in the state. It also paints a more detailed picture of the efforts undertaken by the team responsible for social and economic equality in the state, who over the last year have “conducted research, engaged community members, provided oversight and developed programs and projects in economic development and policy, research, support for small businesses, and incubation”.
OCM’s plan for social and economic justice, which was released in May, drew on roundtables, community events and other sources.
OCM
The equity team is composed of three deputy director, eight permanent employees and five temporary employees who “work on programs and initiatives related to economic development and policy, small business services and incubation, as well as research and small business services.”
Staff worked on a number of initiatives including promoting access to licensing, identifying areas that are still underserved in the state by its medical marijuana system, and educating lawmakers about the challenges associated with cannabis banking.
The team was also responsible for technical assistance and training, offering around 300 licensees 40 workshops, 20 weeks worth of online content, financial consultations, and mentoring. The report stated that staff will be pursuing an expansion of contracts in 2024 to allow the office reach 450 additional equity licensees.
Report on the Disparity of Workforce and Ownership within New York’s Medical Cannabis Industry
The agency released a 48 page report on the disparity in workforce and ownership in New York’s Medical Cannabis Industry, prepared by the Rockefeller Institute of Government at SUNY.
The report examines the composition of 10 registered organizations (RO), vertically integrated companies operating 38 medical dispensaries throughout the state. It describes the findings as a “snapshot of employment and ownership within New York’s medical marijuana industry in 2023”.
The authors also noted that RO employees are disproportionately male, with a 59 percent ratio. This is higher than other private employers where men make up on average 48 percent of employees.
According to the report which did not differentiate between gender and sex, women were “relatively represented in RO managerial roles, with 45.2 percent of all positions filled” and “make up a greater portion of the RO professional work force segment than men (53 percent versus 46 percent).
It added that “Females make up 39.9 percent in the RO sales force.” The report states that women are underrepresented both in technical and support roles with only 32.1% of the total workforce.
OCM
Nearly 6 out of 10 (59.9%) of New York State’s medical marijuana industry employees are white. This compares to 54 percent of the state’s total workforce. The report states that “Non Hispanic white employees are the largest racial/ethnic groups across all occupations and make up the bulk of employment in Management (78.8%), Support (70.4%), Technical (69.7%%) and Professional (61.3%) occupations.”
It found that people of color–including those who identify as American Indian, Alaskan Natives, Asian Americans or Pacific Islanders, Black or African American and multiracial- are less likely than other workers to work in cannabis-related fields.
Inaugural Enforcement Report
Daniel Haughney’s supplementary report detailed the enforcement efforts of OCM against illegal and unlicensed marijuana operators. In the state, despite the slow rollout by OCM of licensed shops, illegal shops have proliferated. This is a common trend in other jurisdictions.
Haugney reported that since a new law was passed in May, allowing OCM and the Department of Taxation and Finance of the state to take action against non-licensed actors. Authorities have carried out more than 350 inspections.
He added: “We’re pleased to announce that the first county supreme court closure orders were issued in 2023.” These orders enable us to padlock and shut down illegal cannabis retail outlets.
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On December 15, OCM enforcement, along with its agency partners, had conducted 369 inspections. This included 103 reinspections of “locations believed to be selling marijuana without the required licence.”
reports that “as a consequence of these inspections, over 11,600 pounds illicit products valued at $55 million on the street were seized.” As of December 15, 2023 $1,312,500 had been fined to unlicensed operators as a result of decisions made through the administrative hearings process.
The New York Department of Labor published in December a number of sample job descriptions for various positions within the emerging cannabis sector. Officials said that the purpose of the publication was to streamline the hiring process and to allow potential employees to evaluate their qualifications.
The New York Senate Cannabis Subcommittee was formed in April by Sen. Jeremy Cooney, (D) and has been chaired since then. In October, possible legislative solutions for the ongoing problems with the implementation of cannabis legalization in the state were discussed.
Gov. Kathy Hochul (D) signed legislation in November to try to make it easier for banks to work with clients licensed by the state. She also signed a bill to give tax relief to New York City cannabis businesses who are currently barred from taking federal deductions due to an Internal Revenue Service code called 280E.
New York City’s tax laws were not affected by the change in Hochul’s budget bill of 2022, which included provisions allowing state-level cannabis businesses tax deductions. This new measure is intended to close that policy gap.
Hochul vetoed a bill that would have allowed Hemp seeds to be added to animal feeds for horses, pets and camelids like llamas or alpacas.
In September, about a third (66) of the state’s legislators wrote Hochul to urge her to to sign a law that would allow licensed marijuana manufacturers to sell their products to tribal retailers. This plan will allow cannabis farmers to release surpluses they have but are unable to sell.
Hochul , however, vetoed the bill last month.
State regulators also work to dispel what they call the false narrative that marijuana is often contaminated with fentanyl — a “misconception,” which is “widespread”, despite a dearth of evidence. OCM released a factsheet recently on the subject, stating that while fentanyl can be found in heroin and MDMA, the anecdotal evidence of marijuana being laced with fentanyl is unfounded.
The Office of Addiction Services and Supports also recently revised its guidance on THC testing in people receiving treatment for substance abuse disorder. It advises marijuana screening in cases when “the patient has indicated that a reduction or cessation of use of cannabis is part of their treatment goal.”
After the Black Friday after Thanksgiving, regulators encouraged consumers to take advantage and support small business by shopping at licensed cannabis retailers.
New York local governments could shut down unlicensed marijuana businesses under the new ‘SMOKEOUT’ Act Bill
Photo by Mike Latimer.
The article New York Officials Release Annual Reports on Marijuana Market Equity And Enforcement first appeared on Marijuana Moment.
