Britni and Jayson Tantalo took the first step to opening a legal cannabis dispensary in New York back in fall 2022.
For the Tantalos, it was a no-brainer.
The state had created a pathway for people previously convicted on cannabis charges — which both have — a first chance at entering the legal market. And the pair already had run successful businesses, Flower City Hydroponics and Metavega, a company producing specialized light-hanging ratchets. That met another state requirement.
Taken together, it seemed they would be a shoo-in, and soon be making a living selling legal weed. And that might have been true, if not for the state’s disastrous roll-out of its first dispensary licenses.
Confusing regulatory guidelines and litigation stalling store openings abounded. Meanwhile, the illicit market flourished, and those looking to play by the rules were left on the hook.
“We’ve been holding a lease since November, paying rent,” Britni Tantalo said, as the state required applicants to hold an active lease on their dispensary space throughout the process. “When I say we were in the 11th hour of being able to keep that space, I mean that.”
The long wait to open up shop in Victor prompted the Tantalos to start the New York CAURD Coalition, named after the Conditional Adult-use Retail Dispensary license program. That organization, now known as the New York Cannabis Retailers Association, seeks to advocate for cannabis businesspeople through lobbying and education.
In New York’s cannabis marketplace, the Tantalos’ story is not unusual.
Promises of equity
State officials had created the CAURD program as a way to push racial and social equity in the state’s legal cannabis market. The first licenses were meant to be given to people of color, people with cannabis convictions, or people from communities historically burdened by criminalization.
But the state quickly was mired in lawsuits after opening applications in 2022. The most high-profile legal challenge came from Kenneth Gay, a Michigan man who runs the cannabis company Variscite NY One. He had sued claiming he meets every requirement to receive a conditional license besides New York residency.
A court injunction blocked the opening of dispensaries region-by-region. The Finger Lakes region was the last in New York to be cleared for a dispensary to open, when Gay settled the lawsuit in May 2023. But another lawsuit soon followed, this time involving a group of men claiming discrimination because the conditional license program didn’t preference their veteran status.
The lawsuits were seen as predictable developments by those in cannabis policy.
But Assembly Majority Leader Crystal Peoples-Stokes, D-Buffalo, also has placed blame on the Office of Cannabis Management, the state agency in charge of cannabis.
“This was a brand-new agency, a new bureaucratic agency, and we just did not give it the proper resources and staffing that it needed to get off the ground,” Peoples-Stokes said during a recent appearance on Capitol Connections. “…It allowed the opposition to social equity to fester. And while they festered, they put out lawsuits.”
A May audit by the New York State Office of General Services of the OCM further emphasized this point. While actors on the outside were a factor, the agency’s structure and operations only worsened the issue.
“OCM’s lack of transparency, inconsistent dissemination of regulatory information, and inadequate customer service, as well as its policy choices, have created exceptionally challenging circumstances for many applicants eager to launch their businesses,” the audit reads.
Jayson Tantalo agreed, blaming the state agency for causing the legal jams.
“Because of their lack of experience in the regulatory process, they (OCM) put in constraints that allowed injunctions to be put into place,” he said. “Not just delaying but halting (the licenses).”
Through the end of last year, just 55 conditional use applications had been approved statewide, according to the OCM’s annual report. None in the Finger Lakes. So far this year, nine have opened in the region.
The Office of Cannabis Management declined to comment for this story.
Aaron Ghitelman formerly served as the deputy director of communications of OCM before leaving the office earlier this year to serve as a cannabis consultant. He said the issues the legal market has faced were easily foreseen: people were willing to litigate to have a stake in a highly lucrative market, and those with the means would do so.
“I think the problems are rooted in the same problems in every level of our society, markets, and our government,” Ghitelman said. “In that, people with money and with access to capital often times will do whatever they can, however they can, to protect their interests and work towards it, whether it’s a monopoly or cartel-like control of the space.”
“And I think that isn’t a shock or a surprise,” he continued. “But this wound up in a way that really ended up harming a lot of applicants, particularly in the Rochester-Finger Lakes region.”
Black markets and money
The Tantalos are not shy about having illegally grown and sold marijuana in the past. After all, it’s that very background that opened the door to enter the legal industry. Ironically, that black market is now the competition.
“We are combatting a rampant illicit market,” Britni Tantalo said, pointing to how those “shops are shutting down, regulatory changes are being proposed. We really have more stability (in the legal market) than we’ve ever had. But don’t get me wrong, a lot needs to be done.”
Here, as in other states that have legalized cannabis, the new market quickly gave rise to black market shops. But the slow rollout of legal dispensaries in New York allowed for an even greater explosion of illicit ones, a fact recognized by the state.
“This delay prevented cultivators from selling their perishable crops and created stress for conditional licensees,” according to the audit.
The state’s Cannabis Control Board could vote Friday to waive license fees for farmers who got into the legal market early, saying they “suffered a sufficient need for financial assistance.” But cannabis farmers say more relief is needed.
In 2023, OCM touted seizing $56 million worth of cannabis from illicit dispensaries and issued 305 citations. But that’s likely a drop in the bucket. Earlier this year, New York City officials estimated there are over 2,000 illicit dispensaries in the city alone. Comparably, there are 146 legal dispensaries across the state.
The entire legal industry in New York garnered an estimated $250 million in revenue in the first half of 2024.
“We’ve learned from that, we’re acting faster, we’re acting swifter, and we’re closing down these illicit stores,” said State Sen. Jeremy Cooney, D-Rochester, chairman of the Senate’s cannabis subcommittee. “But that’s not enough. You can’t just close down illicit stores without opening legal ones.”
While the illicit market remains a constant struggle, Cooney now believes the legal market is entering a rapid growth phase. He and the Tantalos had long been in conversation over the struggles they had faced in getting their license.
“They are exactly the type of cannabis store owner or licensee that the program was designed to impact,” Cooney said.
The Tantalos’ Flower City Dispensary is set to open Sept. 26, the two-year anniversary of their original application.
H/T: news.google.com
