NY Governor Hochul Hits The Ground Running On Cannabis Policy

This article was originally published on The Leaflet, a newsletter by Feuerstein Kulick.
Governor Kathy Hochul’s ascension to the Executive Mansion in Albany marks a major milestone for the Empire State and (perhaps) a turning point for its adult-use cannabis program.  Not only is Governor Hochul the State’s first female Executive-in-Chief, she may herald a new beginning for the New York cannabis industry. With the implementation of the Marijuana Regulation and Taxation Act (“MRTA”) languishing, Governor Hochul has stepped in to launch New York’s adult-use program with aplomb, and her appointees have the potential to revitalize the State’s medical cannabis program as well.

Or, as Governor Hochul put it herself: “New York’s cannabis industry has stalled for far too long.” “I am making important appointments to set the Office of Cannabis Management up for success so [its appointees] can hit the ground running.”

A Wave of Appointments

The launch of any successful cannabis program depends in part upon the timely appointment of regulators capable of issuing rules, overseeing the receipt and scoring of licensing applications, and providing regulatory oversight.  And while New York cannabis industry observers had hoped for a speedy launch of the State’s adult-use program, for months appointments to the two agencies responsible for overseeing the implementation of the MRTA – the Cannabis Control Board (“CCB”) and the Office of Cannabis Management (“OCM”) – were nowhere to be found. 

But within just a few weeks of assuming office, Governor Hochul appointed former Brooklyn Assemblywoman Tremaine Wright to chair the CCB and tapped Chris Alexander (a former Associate Counsel for the State Senate) as the Executive Director of OCM.  One week later, the State Assembly and Senate followed with nominations of their own – appointing Buffalo attorney Adam Perry and former State Senator Jen Metzger to serve on the CCB. And just last week, Governor Hochul rounded out the CCB by appointing Reuben R. McDaniel, III (the President and CEO of the Dormitory Authority of New York State) and Jessica Garcia (an assistant to the President of the UFCW labor union and former political director for the RWDSU) to serve.

The wave of appointments to both the CCB and the OCM is a promising sign for New York’s adult-use program, and a welcome change from the political stalemate that had developed under Governor Cuomo. “New York’s cannabis industry has stalled for far too long.” “I am making important appointments to set the Office of Cannabis Management up for success so [its appointees] can hit the ground running.”

The Quiet Power of the CCB and Chairperson Wright

Due to key provisions of the MRTA, Governor Hochul’s appointments to the CCB (and her appointment of Chairperson Wright) may be of particular importance to the development of the State’s adult-use program.

While the OCM will oversee New York’s adult-use program, the MRTA vests the CCB (and its Chairperson) with primary authority to shape the industry’s future.  Under the MRTA, the CCB’s considerable powers include (i) the promulgation of rules and regulations, (ii) setting the timeline for the opening of New York’ application window, (iii) prescribing the form of licensing applications, (iv) determining the total number of licenses awarded, and (v) overseeing the State’s social equity program.  And while the MRTA vests the OCM with the duty of reviewing license applications and making recommendations of licensure to the CCB, the MRTA also designates the Chairperson of the CCB as the final arbiter of whether the license or registration “shall be granted, denied, or held for further action.”  

In other words, the New York’s adult-use program will bear the considerable imprint of the CCB’s actions, and the decisions by Chairperson Wright in particular.  

New Life for New York’s Medical Program

In addition to shaping the development of New York’s adult-use program, the CCB and Chairperson Wright can also exert significant influence over the State’s existing medical program.  For example, the CCB could opt to grant additional medical licenses to new Registered Organizations – with a focus on granting licenses to Minority and Woman Owned Businesses (“MWBEs”).  

Section 31 of the MRTA’s seems to require as much, providing that “in coordination with the chief equity officer, the [CCB] shall register additional registered organizations to provide services to unserved and underserved areas of the state” – with an emphasis on selecting Registered Organizations that are “representative of communities disproportionately impacted by cannabis prohibition.”

To date, New York has licensed ten Registered Organizations to cultivate, grow, distribute, and sell medical cannabis.   Each of these 10 Registered Organization can open four dispensaries.  As a result, a state with 19.5 million people only has only thirty-eight open medical dispensaries – or one per 487,500 residents.  By comparison, Florida (a state with 21.5 million residents) has 350 dispensaries – or one dispensary per 61,428 citizens.   The shortage of medical cannabis operators has hobbled New York’s medical program.   

The MRTA thus hands Governor Hochul and Chairperson Wright an historic opportunity. By registering new WMBEs committed to operating in underserved communities, the State could spur job growth, boost tax revenue, and increase access to critical medical cannabis products and services.

In short, Governor Hochul and her appointees have the chance to shape New York’s medical and adult-use programs for years to come, and (so far) they seem intent on making the most of their opportunity.

(For more information contact Matt@dfmklaw.com and Julia@dfmklaw.com.)