New York's Stalled Cannabis Program Takes A Hit As Key Figure Resigns, Scandal Brewing?

Reuben McDaniel, one of the most influential figures in the rollout of New York’s beleaguered legal cannabis program, told Gov. Kathy Hochul’s office on Wednesday that he is resigning from the board of the Office of Cannabis Management (OCM), reported The City.

McDaniel, who was appointed by Gov. Hochul to the five-person board in September 2021, also serves as the CEO of the Dormitory Authority of the State of New York (DASNY), which is another key player in NY’s long-stalled efforts to launch the legal cannabis market. 

In that McDaniel was involved in both approving retail licensees while overseeing the agency assisting licensees with locating storefronts, many viewed those two positions to be a conflict of interest

DASNY was contracted with a private investment firm to raise $150 million for licenses meant for those who’d been convicted of cannabis crimes or their family members. In early 2022, Gov. Hochul pledged $200 million for social equity applicants though now it is unclear if that fund has raised any private sector money toward its promise. DASNY provides construction, financing and services for public and nonprofit organizations.  

Last week, the OCM and DASNY held a meeting for cannabis retailers to address their grievances. Things got heated as licensees spoke their minds.   

“This entire process has been catastrophic,” said licensee Carson Grant. “Everything about the onboarding process has been extremely unprofessional and to me downright shady.”

It seems he’s not the only one who feels that way.

In March a group of interested parties, the Coalition for Access to Regulated and Safe Cannabis (CARSC), initiated a lawsuit against the OCM alleging that both OCM and the Cannabis Control Board (CCB) violated the state’s legalization law when they reserved the first 150 adult-use retail licenses for social equity applicants. At least four large cannabis companies are part of the group, including Acreage Holdings ACRHF, Curaleaf Holdings Inc CURLF, Green Thumb Industries Inc GTBIF, and PharmaCann.

In May, per The City, seven “justice-involved” retail shop licensees sent a letter to Hochul, McDaniel and OCM executive director Chris Alexander criticizing the fund for rejecting sites suggested by the licensees, and for other actions they say are preventing them from opening their stores. 

While OCM has awarded more than 200 retail licenses so far, only 13 stores across New York state are currently operating, including three doing deliveries. 

Meanwhile, NYC alone is said to have at least 1,600 illicit weed shops, which, as of last week, are being raided by armed OCM officials 

operating under new emergency regulations.

For more on NY's ongoing retail issues, see Cannabis Professionals Discuss Struggles With Illicit Operations In New York