New York Regulators Open Adult-Use Cannabis Market to Medical Operators: Brandon Kurtzman Weighs In

On Tuesday, New York regulators made a significant decision by permitting the state's medical marijuana operators to apply for licenses to operate adult-use retail establishments. This development will allow multistate operators, who acquired a majority of the state's 10 “registered organization” permits several years ago, to enter what experts believe could become the largest market on the East Coast.

The Office of Cannabis Management approved resolutions outlining the application process, which will be open from October 4 to December 23, for those seeking retail or microbusiness licenses. Additionally, there will be a separate application window for registered organizations, the timing of which will be determined by the Office.

Brandon Kurtzman a partner at Vicente LLP, a leading National cannabis law firm providing legal and policy services to marijuana, hemp, and psychedelics businesses has weighed into the conversation.

“The New York Cannabis Control Board’s vote to adopt adult use regulations and open the general application period for adult use cannabis licenses marks an exciting milestone for the cannabis industry in New York State and across the nation. Legal cannabis businesses across the Empire State will stimulate local economies and create jobs while enhancing access to safe, tested cannabis and reducing the proliferation of the illicit marketplace,” said Brandon.

Barry Carmody, a spokesperson for the New York Medical Cannabis Industry Association (NYMCIA), expressed his thoughts on this decision during a Cannabis Control Board meeting in Albany, emphasizing the significance of expanding the state's medical cannabis program and creating a financially viable and equitable adult-use cannabis industry.

The NYMCIA represents eight of the existing medical marijuana licensees, including major multistate operators such as Acreage Holdings and Columbia Care, Cresco Labs, Green Thumb Industries, and Curaleaf Holdings.

This vote has several implications:

• It could render moot the ongoing litigation aimed at opening licensing to all applicants, a lawsuit filed by some of the same multistate operators who sued the state in March as the Coalition for Access to Safe and Regulated Cannabis.
• Social equity applicants and licensees in the state may feel abandoned and betrayed, as many of them continue to face delays and legal hurdles in the state's Conditional Adult-Use Retail Dispensary (CAURD) program.

This vote comes after the CEOs of four multistate operators urged Governor Kathy Hochul to allow them to enter the adult-use market in New York promptly.

However, small businesses are expressing their discontent with the decision, feeling that it has opened the door for larger cannabis companies to compete with New York-based businesses. The Cannabis Association of New York (CANY), which represents small and state-based businesses, has made three demands to level the playing field:

• Reform the state's potency tax, which currently imposes higher rates on concentrates.
• Impose identical canopy limits on “registered organizations” (ROs) and small businesses.
• Crack down on the illicit cannabis market in the state, with estimates suggesting there could be as many as 2,000 unlicensed sellers in New York City alone.

While New York legalized adult-use cannabis in March 2021, the availability of adult-use retail licenses has been limited to “impacted individuals” of the war on drugs and certain nonprofits, who were promised 50% of all licenses. Despite the issuance of numerous CAURD permits, only 23 of these licensees are currently operational, with five being delivery-only establishments.

Furthermore, ongoing litigation surrounds the adult-use licensing process in New York, with two pending lawsuits against the Office of Cannabis Management—one filed by multistate operators and another by a group of “service-disabled veterans” excluded from the CAURD program. The future of the CAURD program remains uncertain, with legal experts questioning its constitutionality.

Small-business advocates have appealed to Governor Kathy Hochul to convene a special legislative session to formally establish the CAURD program. Despite these challenges, the industry remains dynamic and continues to evolve.