New York regulators approved 104 new adult-use cannabis licenses on the same day that Gov. Kathy Hochul called for an overhaul of the Office of Cannabis Management (OCM), following a scathing audit report released two days prior.
“There are deep-seated issues at OCM, issues that have limited its ability to fulfill its licensing role,” said Hochul during her May 10 speech.
The 104 new licenses included 40 retail, 27 cultivation, 23 distribution, 14 microbusiness and 17 processing applicants. There were also 17 provisional retail licenses approved.
At its May 10 meeting, the Cannabis Control Board also voted to deny 78 Conditional Adult-Use Retail Dispensary (CAURD) licenses. Most were denied for failing to show that the applicant had a previous applicable cannabis conviction. A few failed to show they had the appropriate business structure.
The large number of denials at once was because the program was delayed after several lawsuits were filed against OCM. Along with approvals, the lawsuits prevented the agency from issuing formal denials, according to Executive Director Chris Alexander.
“Due to litigation we were frozen for several months from taking action,” said Alexander. “The settlement that we entered into paused on reviewing or doing anything with the CAURD applicants until April 1.”
Critical report leads to changes
Two days before the OCM meeting, the governor’s office released a 31-page report on OCM and the slow licensing roll-out based on the recently completed audit of the agency.
The report, which Hochul ordered in March, was very critical of OCM’s licensing process, noting that there were not enough administrative employees. It said the agency failed to centralize licensing operations, created complex and obscure requirements, offered sparse customer service, and suffered from a lack of data and key performance indicators while also using multiple disparate computer and network systems.
“The challenges are extensive, and it will take time and significant effort to make necessary changes,” wrote Commissioner Jeanette Moy, New York State Office of General Services, in the report’s opening statement.
CCB Member Adam Perry said that it was unusual that the state released the audit report on OCM without first presenting the findings to the board.
“Every other public authority that is having public review, the agency is being provided with a draft,” he said, while also arguing that external factors outside of how OCM is governed contributed to the licensing challenges.
“As a business litigator for 30 years and public authority board member for 20 years, understanding the tide and type of litigation, I have never seen the volume and breadth of lawsuits that the office has faced in this short period,” he said.
CCB Chair Tremaine Wright also said she had not received a copy of the report before it was released to the public.
“At this time, the board has not been presented with any report,” she said. “With regards to the audit and oversight, we have requested that our board receive an update on their findings.”
The meeting ended after public comments, which were dominated by concerned applicants who were still waiting for approvals.
“We’ve been holding our lease for six months,” said Brian Taylor of applicant dispensary Upstate Pines. “I hope that we hear from you guys soon.”
Immediately after the meeting, Hochul announced that she would order immediate reviews of pending applications, change how OCM communicates with applicants and entrepreneurs, while also ordering an overhaul of OCM’s management structure.
“We’re going to unclog the licensing bottleneck and immediately review hundreds of applicants who’ve simply been waiting for an answer,” she said. “Applicants who are required to apply with a lease, a paid for lease, are still paying rent, hoping their license comes through.”
Hochul also announced that OCM’s inaugural executive director would be leaving office once his current contract ends in September.
“My team has shared these findings with Executive Director Chris Alexander, who is a key player in drafting the original legislation and served as OCM’s first ever executive director,” said Hochul. “We’re grateful for the work he has done to stand up this new agency and this new market. He agrees there is a time for a new direction at OCM and has graciously agreed to work with us for the remainder of his term to help implement those operational changes.”
