Weed Like Some Clarity: New York’s New Industry

Regulatory architecture demands fairness and confuses operators.

by Jack Porcari

sk anyone. Legal weed just feels different in The Empire State. The move represents a shift in the trends of previous legalized markets–for consumers and business owners alike. Fundamentally, New York built six pillars for legalization: equitable application process, maximize consumer choice, prioritize small businesses, center social and economic equity, protect public health and safety and minimize impact on the environment. Governments and entrepreneurs are trying to establish certainty in an industry with no rulebooks. As regulators break stigmas, there is one job to do: ensure the plant is delivered to the people in a smart and safe way. Legal weed has been available for almost two months in the state while regulations and testing requirements are still being finalized. The growing pains of a slow rollout (or roll-up) are frustrating to some, but the promise of certainty, innovation, cultural freedom and equity remain. Loud Thoughts spoke with experts to gain some clarity on how it’s growing here in New York.

Timeline

• Medical cannabis was legalized in 2014 and took effect in 2016 through the Compassionate Care Act. The state went on to decriminalize possession in 2019.

• The Marihuana Regulation and Taxation Act was signed into law by Governor Andrew Cuomo on March 31, 2021. The law centers future cannabusiness around justice for those harmed by the “War on Drugs.”

• In October of 2021, most employers became canna-friendly.

• The long-awaited adult-use regulations were approved by the Cannabis Control Board on November 21, 2022 and published in the NYS Register on December 14, 2022.

• Public comment period for the adultuse regulations ended February 13, 2023. The Office of Cannabis Management expects to review over 10,000 public comments from applicants, licensees, consumers, patients and everyday people alike.

• In Binghamton and New York City, a total of four dispensaries have opened, including a nonprofit and father-son team.

Context and Legislative Highlights

• 400,000 cannabis convictions were automatically expunged.

• Dispensaries are required to post education material about consumption and public health on their website and at time of sale. Consumption is allowed on premises.

• New York’s promise and financial is realized for Conditional Adult-Use Retail Dispensary (CAURD) licensees.

• Where you can smoke a cigarette, you can smoke a joint.

• There is a proposed 13% cannabis sales tax.

• Licenses include retail dispensary, cultivator, nursery, processor, distributor, cooperative, and microbusiness.

• You must be 18+ to work in a cannabusiness and you must be 21+ to purchase tested products.

• Forty percent of tax revenue will go toward community reinvestment grants, while another 40% will go to education and 20% of cannabis tax funds drug treatment and education.

• The NYS Office of Cannabis Management (OCM) hosted over 15 Equity Roundtables and monthly legacy meetings.

• In social consumption lounges, secret entrances are prohibited.

• Licenses are valid for 2 years; owners must remain in good standing to renew.

As buds cure and flowers are placed on shelves, cannabis laboratories are ramping up to lower lead times and meet the demand of a growing market. New York State will use data management software BioTrack™ for all recordkeeping, certificates of analysis (COAs) and quality assurance. “It’s so confusing for people that are in the industry, let alone people outside of the industry,” said Bill Nichols,

Technical Director of Cannabis at BioTrax Testing Laboratory. “Right now you’re getting changes every other week and it’s hard to keep up with for the farmer that’s not reading this stuff every day—it’s hard for me to keep up with and it’s literally my job.”

The official track and trace system “doesn’t exist” yet is currently being built out by the state, according to Nichols. BioTrax Testing Laboratories aims to use their 20+ year history in food and water for hemp and adult-use testing, too. Nichols says the DEA-certified lab “tracks everything down to the gram,” noting cannabis samples are filed away in a secure numbering system.

While testing is in its infancy, labs have encountered problems like requiring cultivators deliver samples in-person, not by mail. To ameliorate the issue, labs retain samples for about 60 days. Located in Cheektowaga, BioTrax also dealt with a blizzard that left nine feet of snow in its wake. “During the blizzard, we lost three days of power in the lab—anything we were incubating is worthless,” Nichols said. “The back door blew in but luckily we’re on the second floor,” he said.

Amid the ramp-up period, software company Forian sold their cannabis subsidiary, Bio-Tech Medical Software, Inc. for $30 million cash, transferring Cannalytics® and BioTrack™ to cannabis tech company Alleaves’ offerings. Due to the plant’s many Routes of Administration (ROAs), new tests are always being devised, meaning niche and precise examinations are expected to become a $3 billion industry by 2030.

Jack Porcari

It is no doubt uncertainty is at an all-time-high, but the pure adoration of the plant keeps entrepreneurs grounded daily. Brittany Carbone, founder of cannabis wellness brand TONIC put it best: “There’s nothing like actually growing weed— right?” She was among the first licensed growers to experience the legal hemp blossom in Upstate

New York. “Whether it’s, you know, a small home-grow or it’s a field of plants, we’ve been growing since 2018 and it just doesn’t get old,” she said.

Innovative farmers like Carbone have been able to stay on the cutting edge, but it has come with challenges as industry regulations are rapidly drafted and approved. Before cannabis products can be sold, it must be shipped to a lab in dispensary-ready packaging, for quality testing. While watering her plants is truly watering her soul, Carbone is worried about New York’s delayed rollout. “A lot of people did not have their packaging quite ready because there were no responses to the first round of public comments [for packaging and labeling] at this point,” Carbone said. “People were like, ‘I don’t know what retailers are open, so I’m not going to take this risk right now.’”

A legal motion is also stalling retail dispensaries in Western New York, Central New York, Finger Lakes, Mid-Hudson and Brooklyn areas, hurting farmers’ ability to budget their crop and assess demand.

Aleece Burgio, general counsel for Western New York-based sustainable greenhouse consulting firm MJI Solutions, says the case has big implications for the future of cannabis in the state. “OCM (Office of Cannabis Management) is going to have a really big fight against this [case]… it affects every CAURD license, not the five areas.” An applicant with a Michiganbased cannabis crime accused the program of prioritizing New York businesses, violating the “Dormant Commerce Clause.” Variscite says the company will face “irreparable harm” if it does not have a chance to participate in the first round of dispensaries. If OCM loses, it will force them to rethink licensing requirements.

Natural supply-chain challenges have also presented themselves, making cultivators rethink their operations within the state.

“These guys [AUCCs] are failing tests,” Burgio said. “Outdoor [growing] is very difficult to control; I don’t think they ever anticipated how difficult it is to grow in New York climate.” Fortunately for cultivators, the MRTA forbids vertical integration, creating a network of likeminded entrepreneurs.“The conditional supply chain is made up of people who are small, medium sized businesses,” Carbone says. “We’re all kind of trying to rely on each other and support each other because we understand that we’re not the competition.”

New York State did not underestimate the occasion of equity—multi state operators(MSOs) and large medical cannabusinesses were not given a spot in the first round of licenses as they did in the majority of other states. Despite OCM’s efforts, DASNY’s $200 equity fund still needs capital, finding real estate for new licensees remains complicated and a typo in the law made certain criminal records difficult to wipe. On top of this, cannabis is going through a unity epidemic as entrepreneurs grapple with racial inequality within the industry. But where there is darkness, there is light—especially in cannabis: “Good relationships are being formed between CAURD awardees and the processors and cultivators,” Carbone said. “Seeing some of these applicants now— they all have such incredible stories and everybody’s really rooting for each other.”

The Office of Cannabis Management (OCM) did not reply to emails in time for publication.

Damian Fagon did not respond to messages seeking an interview.

Jack Porcari

aves of legalization have caused a cultural eruption of cannabis enthusiasm in America and beyond. In the Constitution State, adult-use sales began January 10, 2023. Two brothers, Kevin and K’Ronn Cranford are changing the way people look at cannabis through their highking club and lifestyle brand, Cannacticut. The seed was planted when Kevin wanted to “learn