A New York Pickle

The State’s Cannabis Rollout Has Been a Mess, Is All Lost?

The New York State rollout of legal cannabis has been nothing short of a disaster. Consider this recent story where not one retail store licensee has been able to open their own store:

So far, not a single one of the individuals awarded a “Conditional Adult Use Retail Dispensary” (CAURD) license who want to open on their own have done so. The fund itself has only managed to get two dispensaries up and running — both of them temporary pop-ups, including one that opened in Ithaca on Thursday. 

Let’s just repeat what this article points out: in the two years since the State of New York legalized adult use cannabis, the state has only helped open two legal adult use dispensaries open. I put the word legal in italics because there are over 1,200 illicit dispensaries open, including one brazenly open across from New York City’s City Hall.

Ashley $Southall @AshleyAtTimes

How many unlicensed cannabis shops are there in New York City? Sheriff Anthony Miranda says the authorities have identified 1,200 locations for inspection and investigation. That's the first hard number I've heard from anyone in enforcement.

While the state’s intentions to prioritize those who were hurt by the War on Drugs to get into the new cannabis industry is a well-intentioned policy for sure, it has created a quagmire. How do you shutdown people running illicit cannabis stores, when you are trying to then turn around and hand out licenses to people who used to illicitly sell cannabis?

The NY GOP is having a ball poking fun at how ridiculous and predictable this has all been:

Brad Racino @bradracino

NY Assembly GOP is calling for an audit of the state's cannabis program, citing a "delayed and dysfunctional" implementation.

NY Assembly GOP @NYS_AM

Assembly Republicans wrote to Gov. Hochul and Comptroller Tom DiNapoli today, calling for an audit of the state’s cannabis program and enforcement plan to address the growing number of illegal stores. https://t.co/00M5ZDbfRm

And the police are noticing and don’t want any part of this and are amazingly even pushing back on crackdowns.

The union representing deputy sheriffs on the front line of the city’s bid to crack down on smoke shops that are illicitly selling cannabis is raising questions about its members’ authority to conduct many of its raids.

In addition to failing to launch legal cannabis dispensaries, the state has also tried to raise its own $200 million cannabis social equity investment fund, which to date has raised, as far as I can tell, zero dollars. Welcome to the wonderful world of capital availability in cannabis.

And then there are the existing medical dispensaries, mostly run by larger companies, that are now suing the state for blocking them from selling and supplying the legal market.

And yet in true New York style, cannabis is everywhere and flourishing thanks to all the illicit dispensaries, with many people complaining that the whole city smells of cannabis.

And all of this has turned into a giant headache and an embarrassment for the state and its politicians as neighboring states New Jersey and Connecticut successfully, albeit slowly, launched their own legal sales. This is nothing compared to Missouri which is on track in record time to blow the doors off a legal launch of cannabis with $100 million of legal sales in its first full month.

New York’s dysfunction has also led investors to flee from cannabis stocks with direct exposure to New York. For example, Goodness Growth’s (OTC: GDNSF) market cap has shrunk to just $15 million partly because investors are ascribing zero if not negative value to its license and operations in New York.

But all is not lost. New York is already a massive market, though it is all illicit right now. But it is also very likely to be a massive legal market one day too. It’s just that right now, it seems like that may never happen or happen anytime soon.

So, what can lawmakers and regulators to do turn things around?

Enter medical reimbursement.

Last summer at the end of the legislative session, the New York Senate passed a bill to require the publicly (government) run health insurance plans cover medicinal cannabis and define it as a prescription drug. Nearly 7 million people are covered under New York’s publicly run medical insurance plans.

And just on Tuesday, the New York State House advanced a very similar bill.

Tom Angell 🌳📰ⓥ @tomangell

BOOM: The New York Assembly Health Committee approved a bill to require public health insurance programs to cover medical cannabis expenses and clarify that private insurers are allowed to do the same.

marijuanamoment.netNew York Bill To Require Health Insurance Coverage Of Medical Marijuana Clears Assembly CommitteeNew York lawmakers have approved a bill that would require public health insurance providers in the state to include medical marijuana as a covered prescription drug and authorize private insurers to do the same. The Assembly Health Committee passed the legislation from Majority Leader Crystal Peopl…

Nothing would set up a legal market quicker than to allow people to get free or $5 co-pay cannabis. The guaranteed customers and the demand for legal cannabis would be a boon for the legal industry. Just imagine someone hearing that grandma got free cannabis for her glaucoma. Imagine the demand those type of stories would create.

So, while everything appears hopeless in New York, it may not stay that way. The politicians have an easy way to stand up the legal market that is currently comatose on the ground. Will they follow through or will they fall on their faces like Congress has with SAFE Banking? Stay tuned, because with the stroke of a pen and a few votes, New York could quickly become one of the hottest legal cannabis markets in the world.