Medical cannabis operators in New York are worried about having to pay an exorbitant fee in order to go recreational.
According to the New York Times, in order to sell marijuana outside of a medical program, multi-state operators (MSOs) must pay a fee of $20 million.
Winning bidders of the state's first 10 cannabis licenses, once happy at the thought of entering a new market, now feel slighted (the large fee is meant to help those who had been harmed or affected by the federal government's so-called War on Drugs).
“It needs to be grounded in the economic realities of the market," Ngiste Abebe, president of the New York Medical Cannabis Industry Association, told the Times.
Abebe, who is an executive at Columbia Care, added that while operators were “excited” to support social equity, she “would love to see the economic analysis that justifies $20 million.”
So far, companies are already spooked about doing business in the Empire State. The Times pointed out how Ascend Wellness Holdings AAWH AAWH, for example, recently ditched plans to buy the New York operations of MedMen NY Inc. MMNFF.
Chris Alexander, the executive director of the state’s Office of Cannabis Management, said that while regulators were “sensitive” to registered operators’ perspectives, the fee is meant to support New York's social equity program.
“So that’s kind of the guiding factor,” Alexander said.
Operators are now urging regulators to lessen the fee to approximately $3 million per company, and allow them to pay it over time rather than up front. The fee would need to be approved by the state Cannabis Control Board.
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