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Don’t flood market with legal pot shops, NY cannabis industry warns

A group representing the legal marijuana industry is warning Gov. Hochul’s cannabis regulators that a dramatic increase in the number of pot stores could have “disastrous consequences” for current licensed operators.

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Cannabis Association of New York president Damien Cornwell noted that state regulators have yet to weed out the hordes of illegal pot operators.

“We are writing to express our deep concern regarding the Cannabis Control Board’s (CCB) recent discussions about dramatically increasing the number of cannabis licenses in the state,” Cornwell, founder of the “Just Breathe” cannabis shop in Binghamton, said in an April 12 letter sent to state Cannabis Control Board Chairwoman Tremaine Wright and members of Cannabis Advisory Board.

Cannabis Association of New York is warning Gov. Hochul’s cannabis regulators that increasing the amount of legal marijuana dispensaries could have “disastrous consequences” for current operators.

“We believe that this approach, if implemented without proper analysis and stakeholder input, will have disastrous consequences for the fledgling industry and public health.”

Hochul and state regulators have been criticized for a slow and rocky rollout since the first licensed pot store opened in December of 2022.

Lawsuits contributed to delays in licensing and store openings last year, leaving farmers in the lurch with mounds of spoiled marijuana crops.

But state officials have ramped up the issuance of licenses and approved openings of dispensaries since ligation was settled last fall.

Marijuana products for sale in Elevate Cannabis, a licensed dispensary in Mount Vernon, New York on March 5, 2024.Mark Vergari/The Journal News / USA TODAY NETWORK

There are now 103 legal cannabis stores opened throughout the Empire State, up from 26 last November.

More than 400 cannabis licenses ranging from growers to retail stores have been issued by state regulators this year, including 101 at the April 11 Cannabis Control Board meeting.

But Cornwell advised prudent deliberation instead of recklessly overwhelming the budding market.

“We strongly believe that handing out licenses without a thorough understanding of the market’s capacity will lead to oversaturation, business failures, and unintended public health risks,” he said.

“As the cannabis industry in New York is still in its early stages, many licensed retailers are already facing challenges competing with the illegal market. Flooding the market with additional licenses exacerbates this problem and potentially leads to a wave of closures, undermining the state’s social equity goals and leaving vulnerable entrepreneurs in an unsustainable market.”

To emphasize his point, Cornwell put a paragraph of his letter in bold calling on the Cannabis Advisory Board to conduct a sweeping market analysis and a review with stakeholders prior to making any major policy decisions impacting the industry.

In a subsequent interview with The Post, Cornwell said the legal cannabis industry cannot be compared to other retail markets.

Members of Support Legal Cannabis rallying outside of Assembly Speaker Carl Heastie’s office in the Bronx on April 13, 2024.

Unlike other industries, licensed pot stores are barred from deducting ordinary business expenses for income tax purposes because it is still considered an illicit drug under federal law.

“Without the ability to deduct expenses like rent, employee wages and marketing costs and other operating expenses, cannabis retail stores face a higher tax burden compared to other retail businesses. This can significantly impact their profitability and financial viability,” he said.


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