New York Governor Hochul Announces ‘Cannabis Regulatory Overhaul,’ Says Top Cannabis Regulator Will Leave

New York Gov. Kathy Hochul on Friday released the devastating findings of a review of the Office of Cannabis Management and announced that the state’s top cannabis regulator will step down.

In March, Hochul asked the Office of General Services to conduct a review of the Office of Cannabis Management, in part to assess why the rollout of adult-use marijuana licensing has been so slow and rocky. The review found that “the combination of a complex review process, a lack of transparency about licensing progress, and a lack of enforcement action has led to deep public distrust, frustration among applicants, chaotic implementation of key capital programs, and an inability to rule out potential abuse.”

At a press conference Friday afternoon, Hochul announced the “overhaul.”

“We intend to transform OCM itself. It is time for OCM to move from startup mode to a fully operational regulatory agency. One that has stronger internal controls and a redesigned organizational structure,” Hochul said.

After sharing the report with Chris Alexander, OCM’s executive director since its inception, Hochul said, “He agrees that it is time for a new direction at OCM and has graciously agreed to work with us for the remainder of his term to help implement these operational changes. He also told us that after the end of his term, i.e. in September, he intends to pursue other opportunities.

The launch of New York’s adult-use cannabis market has faced countless headwinds: OCM and the Cannabis Control Board, which is housed within the Office, have faced significant litigation compared to other state cannabis programs, and there has been an increase in the number of competing unlicensed cannabis sellers. with legitimate retailers. Disagreement among cannabis regulators was also evident during public meetings.

OGS Commissioner Jeanette Moy works at OCM to report on the assessment. Broadly speaking, Moy focused on the organizational structure of the new regulatory body that was created after lawmakers passed the Marijuana Regulation and Taxation Act (MRTA). Moya’s aim was to identify areas where changes to policy, procedures and regulations could improve licensing.

The OGS review found that “OCM has significant structural gaps that limit its ability to fulfill its licensing role” and that “the management team is relatively inexperienced in working with leading regulatory entities and has significant leadership turnover.”

During Friday’s press conference, Moy outlined part of a five-year “change plan” for cannabis regulation.

This includes “a focus on centralizing and streamlining operations, working to unblock licensing bottlenecks, improving communication and increasing transparency so that there is someone to talk to, which is a very basic demand from the government, with the knowledge that to the question and that you will get the answer,” Moy said.

Nearly constant requests from applicants at public regulatory meetings have been for better and clearer communication with cannabis regulators.

The OGS review shows that approximately 1,200 applicants have found a location and are paying rent there, but are waiting for OCM. Moy said regulators are currently recruiting for vacant licensing positions, which will increase the size of the licensing team by 40%. Hochul added on Friday that applicants will be given a “point person” to “walk” them through the licensing process.

“Everyone wants OCM to succeed,” Moy said. “We want this for their employees. We want it for management and we want it for New Yorkers who want to see this industry grow.”

The cannabis industry in New York began with conditional adult-use retail dispensary (CAURD) licensees, or “justice-involved” individuals who had a marijuana conviction or a close family member. OGS’s findings show that “the implementation of the CAURD program has been chaotic. While CAURD is a top executive and legislative priority, the program has undergone numerous disruptive policy changes as well as litigation that have created instability and stress for licensees.”

While New York lawmakers and regulators touted the state’s cannabis equity efforts — which were expected to be more comprehensive than any other state to date — OGS’s findings suggest the capital plan fell short of expectations because it was too complicated.

“Equity is a core mandate of the MRTA, which prioritizes licensing New Yorkers negatively impacted by the criminalization of cannabis,” the findings noted. “However, the application process was characterized by excessive complexity and minimal transparency, with rules changing with each application period and difficult to implement. OCM regularly failed to meet established targets or deadlines and implemented certain policies that had adverse consequences for applicants, many of whom met the MRTA equity criteria.”

Still, on Friday, Moy expressed hope for the future of equity in New York’s cannabis industry.

“By building and maintaining New York’s commitment to equity, and restructuring and streamlining the process, we can ensure that the social equity clause that is part of New York’s cannabis marketplace continues to be effective,” Moy said.