While social equity applicants welcomed the new permits, analyst Pablo Zuanic from Cantor Fitzgerald believes NY state cannabis regulations “may not represent a significant upside for MSOs once recreational cannabis sales begin.”

Although the potential consequences of the NY cannabis regulation model is still unpredictable, Zuanic assumes an MSO could still potentially scale up its own brands if using third-party processors and cultivators.

However, the resulting economics would be different for MSOs if full, unrestricted, vertical integration had been allowed.

He noted that in this context, supply, quality and accessibility issues may hamper the start-up phase of the state’s recreational program. In short, when and how many retail stores will open during 2023?

Small Print

Cantor’s analyst highlighted that the initial social equity retail licensees will have a 3-year window before medical incumbents (ROs, in state parlance) can begin sales.

Although ROs will be allowed to add four additional medical stores (to their existing four) and co-locate recreational services in three of those eight stores, they will not be able to offer recreational retail services until three years after the first sale of recreational sales in the state.

In terms of geographic distribution, licenses will be capped once recreational sales begin.

When ROs begin recreational retail services, they will need to allocate 40% of the space to non-RO suppliers (meaning new cultivation and processing licensees). Of the three collocated stores, at least one store will need to be outside the counties of New York, Kings, Bronx, Queens, Richmond, Nassau, Suffolk, and Westchester, and the three collocated stores will not be allowed to be in the same county.

ROs will not be allowed to have more than 100k sq ft of the canopy “unless otherwise authorized by the Board in writing”, which accounts for roughly, 100k sq ft of canopy that can result in 60,000 lbs of biomass per year, and if the RO has purchased any cannabis from another licensee in that calendar year, will not be authorized to process more than 55,000 lbs of biomass.

Moreover, “ROs will not be allowed to begin new construction or major renovation on any indoor cultivation area or facility “unless authorized by the Board in writing” — this would mean Cresco and Green Thumb’s plans to start building indoor facilities will need to be halted,” added Zuanic.

Will Recreational Stores Open Before EOY?

Many cannabis enthusiasts and patients wonder if they will be able to purchase and share legal cannabis with their friends and families these holidays.

In total, 36 Conditional Adult-Use Retail Dispensary (CAURD) licenses will be issued. These 36 stores (of 900 applications received) will be subsidized by the state.

A NY state government fund will arrange and pay for the construction of these stores that will be located in geographic regions designated by the state. However, due to a recent court ruling, the board will not be issuing licenses for the five geographic regions of Brooklyn, Central New York, the Finger Lakes, mid-Hudson, or Western New York.

But, will the stores be open by then?

Those granted a CAURD license will not be allowed to begin operations “until the completion of a secondary supplemental application to the satisfaction of the Office, including completing a notification to the appropriate municipality where the conditional adult-use retail dispensary will be located. In this sense, we doubt any of these 36 stores will open before year-end,” Zuanic concluded.

Photo By Girasol Tarsio Arte Visual On Pixabay.