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News

Prompted By Critical Report, Gov. Hochul Orders Overhaul of NY’s Cannabis Agency

By:
S.J. Steinhardt
Published Date:
May 14, 2024

GettyImages-1210433696-cannabis

New York Gov. Kathy Hochul has ordered an operational overhaul of the state’s Office of Cannabis Management (OCM) in the wake of a critical report of the agency’s performance following a 30-day organizational review, Green Market Report reported.

The review, led by Office of General Services Commissioner Jeanette Moy, was tasked with shortening the time it took to process applications and get businesses open. In March, when the review was announced, there were 83 legal dispensaries reported by the OCM out of roughly 500 licenses for retail dispensaries issued since November 2022. Only 10 of those dispensaries had received state real estate and financial assistance. More than 1,500 unlicensed competitors had set up shop in New York City alone, the New York Times reported at the time.

The review faulted the OCM for, among other issues, leaving many administrative positions unfilled, failing to provide clear licensing requirements, providing poor customer service, failing to establish performance targets, and utilizing multiple and incompatible IT systems.

The review recommended that the agency unclog the bottleneck of applicants awaiting determinations, improve transparency and communications with stakeholders and customers, and adjusting the organizational structure to ensure long term transformation.

The reforms will also create additional capacity for closing illegal storefronts and lifting up legal operators. Hochul also announced the establishment of a $5 million grant program to help Conditional Adult-Use Recreational Dispensaries (CAURD) licensees.

As of April 10, the report found, the OCM determined that 309 applications should be denied, including 248 from the 2022 CAURD program. However, it had not notified the applicants or the Cannabis Control Board (CCB). Of the 248 applicants, 115 had their applications placed on hold due to background check issues, which is not disclosed to the applicant until the issue is resolved.

The report also found no documented process for denying applications, deeming an application abandoned or appealing denials.

“The multi-agency task force created to assess the Office of Cannabis Management has identified several steps the agency can take to unclog the bottleneck of applications by improving communication with applicants and streamlining the application process,” said Moy in the statement.” The proposals outlined in the task force’s report will improve transparency and open lines of communication in the application process while boosting the state’s efforts to meet Governor Hochul’s commitment to equity in New York’s cannabis market.”

Moy will take a larger role in the process as a result of the report. Chris Alexander, the current OCM director, will resign on Sept. 1, when his term ends.

“We promised to build the strongest, most equitable legal cannabis market in the nation, and we’re announcing long-needed steps to make New York’s cannabis program work as promised,” said Gov. Hochul in a statement. “I would like to thank Commissioner Jeanette Moy and her team for their hard work and thoughtful assessment, and I look forward to working with OCM to implement the report's recommendations and transform New York’s cannabis industry.”

Hochul announced several immediate actions "to begin the overhaul of the OCM, address illegal cannabis enforcement and put New York’s cannabis industry on the path to success." These actions include:

• Launching an enforcement task force to close illegal cannabis retail stores.

• Fixing the internal licensing process and clearing the backlog for retail establishments who were required to apply with site control.

• Committing to putting in place an SLA (service-level agreement) to allow for completion of retail license applications within 90 days for future application windows.

• Creating new communications tools, including regulatory bulletins and public dashboards to improve customer service.

• Launching an OCM cannabis map to improve the transparency surrounding licensed retail locations in summer 2024.

• Adding staff to licensing, compliance and enforcement teams.

• Strengthening agency foundations and management including hiring senior positions for customer service, internal controls and audit and operations; and

• Creating a fiveyear strategic plan for the OCM.