As NY Cannabis Control Board Looks At 2023 Launch, Grey Market and Indigenous Operators Fill the Gap

ALBANY — New York’s cannabis program isn’t expected to launch until at least mid-2023. But take a stroll down the street in Harlem or Brooklyn, and as a skunk odor wafts on the air and grey market operators sling flower and vapes from curbside vans and buses, you’d think it had been this way forever.

Since April 1, it has been legal for New Yorkers 21 and older to possess up to three ounces of cannabis, but they have no legal way to obtain it.

Though possession was very suddenly made legal, it can’t yet be sold or grown legally for recreational use in New York, because those regulations and licensing requirements haven’t been adopted.

Given the holes in policy, it’s hardly surprising that a robust grey market has sprung up to fill the gap.

Setting the Stage in March

Then-Governor Andrew Cuomo (D) signed a legalization bill in March of this year hours after the New York Legislature passed it, setting the state for one of the largest cannabis markets in the country.

Gov. Kathy Hochul (D) only appointed members to the Cannabis Control Board in September. Hochul was not governor when lawmakers passed the broad legalization bill last March; she would replace Gov. Andrew Cuomo in August following his resignation over sexual misconduct allegations.

The five-member Cannabis Control Board is led by chairman Tremaine S. Wright. The director of the Office of Cannabis Management is Christopher Alexander.

While state regulators have been slow to get the cannabis licensing process underway, adult-use cannabis sales have already commenced under the jurisdiction of several New York tribes, including the Mohawks, Senecas and Cayugas – currently the only legal places in the state where cannabis can be purchased.

While the Marijuana Regulation and Taxation Act the state passed this spring legalized cannabis use and limited possession effective immediately, retail sales were instead given a framework for legalization in the near future. The board must now turn that framework into final rules and regulations.

And, of course, it’s a free-for-all on the streets of New York City, while police, to the relief of more than a few adventurous operators, largely look the other way.

Delayed Launch of NY Cannabis Retail

The adult use cannabis market in New York won’t get off the ground for at least another year and a half, meaning the program won’t launch until mid-2023, the state’s top cannabis regulator said at a press conference last month.

New York’s delayed start is big news for New York’s neighboring states, like New Jersey and Vermont, which are gearing up for their own legal markets in 2022 – and competing for a juicy Northeast market share.

According to Rochester-based City News, New York Cannabis Control Board Chair Tremaine Wright disclosed that she doesn’t expect the agency to finish crafting regulations or begin issuing business licenses for an additional year and a half.

Welcome to the New York State Office of Cannabis Management twitter feed. While it may be our first day on this website, we’ve been busy these last two months building a new cannabis industry ecosystem in New York that protects public health and creates equitable opportunity!

— NYS Office of Cannabis Management (@nys_cannabis) December 14, 2021

Wright added it could be longer until adult-use businesses are operational, that her estimate is only the timeline for when the board will be finished writing industry policy.

New York’s delayed start is big news for New York’s neighboring states, like New Jersey and Vermont, which are gearing up for their own legal markets in 2022 – and competing for a juicy Northeast market share.

In spite of the delays, this fall proved to be an exciting one full of developments in New York State, including:

• Around 500 municipalities, around 30%, have opted out of retail + lounges so far
• Bill introduced to allow licensed cannabis companies to deduct some business expenses
• Protections expanded for employees with landmark ban on THC drug testing
• Control Board votes to let New Yorkers grow medical pot at home
• Regulators move to expunge over 400,000 marijuana convictions
• The NYS Control Board says gifting is illegal
• Cannabis-related arrests in NY have dropped rapidly as state changes drug laws

Indigenous Dispensaries Already Buzzing

The Cayuga Nation has begun selling cannabis at its Lakeside Trading business in the village of Union Springs. An Oct. 26 Instagram post by the business said “we have cannabis” at its Seneca Falls and Union Springs locations, the latter of which has a neon cannabis leaf sign in its window.

 

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A post shared by LakeSideTrading&CayugaCorners (@lakesidetrading)

Though The New York Times called the subject “a legal gray area,” the legality of an Indian nation selling cannabis before other licensed businesses open isn’t as hazy as it may seem.

Indian nations don’t appear to need a license to sell cannabis due to their tribal sovereignty. That constitutional right to regulate themselves is the reason other Indian nations in New York have already begun selling cannabis on their lands, including the St. Regis Mohawk Tribal Council in Franklin County and the Seneca Nation in Cattaraugus County.

A spokesman for the state’s new Office of Cannabis Management confirmed this month that tribal sales are legal.

“Dispensaries (marijuana shops) are legal if they are on federally recognized, sovereign tribal land,” Freeman Klopott, the OCM spokesman said.

Opt-Out Deadline Looms

As of this writing, elected officials in 28% of New York’s more than 1,500 municipalities have voted to opt out of allowing dispensaries, while 32% opted out of consumption sites, according to the Rockefeller Institute of Government, which is tracking the votes, though no clear pattern has emerged. Communities that have voted no span the political and geographic divide.

New Year’s Eve, December 31, marks the deadline of when cities, villages, and towns can opt-out of allowing licenses for either cannabis consumption lounges or retail dispensaries within their jurisdictions, according to New York’s cannabis law. Counties don’t have that option.

The localities were given the authority to adopt a law to withhold either or both of those licenses as part of the Marijuana Regulation and Taxation Act, the state law approved in March that legalized the sale of recreational cannabis.

Rockefeller Institute of Government NY Opt Out Tracker

This has prompted a flurry of opt-outs in various villages, towns and cities in recent weeks, as the new year looms on the horizon. Readers are encouraged to check out the Rockefeller tracker for the most recent numbers.

Cannabis Arrests and Incarcerations Drop

From April through October of this year, just 116 people statewide were arrested on a top-level misdemeanor or felony charge related to cannabis possession or sale in New York, data compiled by the state Division of Criminal Justice Services shows.

And as of early October, 11 people remained incarcerated in state prisons with a top crime of either criminal sale or possession of cannabis in the first-, second- or third-degree, according to the state Department of Correction and Community Supervision.

The state has reduced all the criminal sanctions in New York as part of an essential step toward legalizing. The gap in criminal law and civil sanctions must be bridged, which legal experts estimate will take at least another six months to a year.

And in the meantime? Grey market and indigenous operators are likely to continue to thrive as New York’s Control Board works towards establishing the first of its rules and regulations.

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