The American state had promised to issue the first retail licenses to already convicted marijuana sellers. In most cases this has not happened.
New York authorities launched the legal sale of marijuana for recreational purposes by promising many of the first retail licenses to ex-convicts of cannabis trafficking, hoping to give them a chance to succeed, before the competitors arrive en masse.
But more than nine months after sales began, only two dozen state-licensed dispensaries have opened. Legal challenges to the state’s licensing process have left more than 400 provisional licensees in limbo.
Marijuana growers are also at a loss because there are too few stores to sell their crop.
Faced with these difficulties, New York State regulators are expanding the market. They recently opened a 60-day window for general applications to grow, process, distribute or sell marijuana, expecting to issue more than 1,000 new licenses.
The new rules will also allow companies licensed to grow and sell medical marijuana in New York to enter the recreational market. A market today dominated by outlaw sellers who have opened retail stores without permission.
“They have all the money they need to bleed us dry.”
The new rules will also allow companies licensed to grow and sell medical marijuana in the state to move into the recreational market.
But the prospect of competing with medical suppliers worries some farmers and retailers who fear being crushed by richer companies.
“I fear they have all the money they need to bleed us”says Coss Marte, which will open a store in Manhattan next week, after being pushed back by a lawsuit against New York State regulators.
“They are vertically integrated*. So they could grow their own product at the lowest price and outbid all the growers, all our products and all our prices,” he specifies.
Coss Marte’s Conbud store was among those temporarily blocked from opening by a judge following a lawsuit filed on behalf of disabled veterans. The latter claimed that they had been wrongly excluded from the license application. Coss Marte, who had already been arrested for drug trafficking, found himself paying rent for a store he could not open.
A judge recently ruled that Conbud and several other stores can open. But they weren’t all as lucky.
Balance between fairness and competition
Like many other provisional license holders, Carson Grant, after months of delays in opening his store, was wondering whether he should reapply for a license within this 60-day window to introduce applications for the cultivation, processing, distribution or sale of marijuana. “It’s very difficult”he confides.
Reginald Fluellen, senior consultant with the Cannabis Social Equity Coalition, accused the state of botching the process.
“They have failed miserably to provide those involved in the justice system with the kind of market lead they promised,” says Reginald Fluellen.
To avoid monopolies, medical providers will be limited to three points of sale. Additionally, in a nod to farmers, their stores will initially have to dedicate half of their shelf space to products grown and processed by independent companies.
However, critics say regulators should have given economically and socially diverse entrepreneurs more time to succeed before letting larger competitors enter.
Chris Alexander, executive director of the Office of Cannabis Management, assured that the new regulations respect New York’s commitment to social and economic equity, while making the market more competitive.
Chris Alexander acknowledged that there had been some “frustrations” with opening retail stores, but he said the state had shown that a market supplied by small farmers could work.
ADVERTISEMENT“We have some of the most successful dispensaries in the country here in New York.”he says.
And there is still room for growth. Regulators have estimated that New York state will need at least 2,000 dispensaries to meet demand.
*Vertical integration means that a company owns or controls its suppliers, distributors or outlets to manage its value creation or supply chain.
