Three years in, New York’s adult-use cannabis program has faced a series of setbacks, primarily due to mismanagement of the rollout, which allowed illegal dispensaries to thrive at the expense of legal cannabis operators.
Changes at the Office of Cannabis Management have provided cause for optimism. The new leadership team has demonstrated a commitment to providing a welcome course correction for the still nascent adult-use market.
The medical program, however, has proved thus far to be a blind spot, continuing to steadily deteriorate both in patient participation and accessibility. And that’s happening despite clear direction in the Marijuana Regulation and Taxation Act to bolster and expand it.
Over the past two years, the number of medical cannabis dispensaries has dropped from 40 to just 34 — by the OCM’s count — while the number of registered patients has fallen from 150,000 in 2019 to just over 108,000 today. This patient number is so meager it was not included in the state’s recent annual cannabis progress report. These figures are not mere statistics; they represent real people who have lost access to the treatments and pharmacists they rely on to maintain their quality of life and manage a wide array of illnesses and ailments.
Recent efforts targeting illegal dispensaries have given legal operators some much-needed breathing room. In the first ten weeks following the start of a ramped-up enforcement effort, legal cannabis sales in New York City rose by 72%, with retailers reporting a collective $2.6 million increase in weekly revenue. This is good news, as the slow adult-use rollout robbed the state of millions in tax revenue.
While the outlook is brighter, much work needs to be done. Medical cannabis operators have been struggling to keep their doors open and retain workers in the face of the state’s failure to enact simple policy changes that would help keep them afloat. That includes expanding the number of dispensaries, as the MRTA mandates; allowing reciprocity for out-of-state medical patients, and fully repealing the excise tax on medical cannabis, though a partial reduction was realized in this year’s budget deal.
In the face of these and other challenges, the so-called “special one-time” fee of $20 million for medical operators to enter the adult-use market is no longer realistic. Established at a far more optimistic moment for the cannabis industry, this fee, intended by lawmakers to fund social equity programs, is now serving as a barrier to the growth of New York’s cannabis market, inhibiting revenue and job generation — all as the medical program withers on the vine.
To be clear, New York is not alone in experiencing a cannabis market slowdown. Across the nation, states are reassessing their expectations when it comes to the revenue-generating potential of cannabis, as are businesses, farmers and investors who all bet big on the cannabis bubble.
Jeremy Unruh, vice chair of the New York Medical Cannabis Industry Association, put it bluntly: This kind of business is not sustainable under current conditions.”
A robust medical cannabis program that provides patients with medical-grade products and professional expertise can and should co-exist with a thriving adult-use program. Medical cannabis operators are ready to invest in New York, but they need regulatory partners who recognize the market’s many challenges and who can adapt accordingly.
Despite recent progress, New York’s cannabis market is not yet out of the woods. The months ahead will determine whether the state can fully realize the enormous potential of this industry by putting in place smart, pro-growth policies. So far, the new leadership at OCM seems up to the challenge. Now they need to continue with clear-eyed reforms and leadership to ensure these recent gains don’t go up in smoke.
H/T: www.timesunion.com
