The group said the state's approach to an adult-use market "has clearly backfired."
March 30, 2023
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The same group of businesses and other marijuana industry stakeholders that recently filed suit against the state of New York on Thursday issued a scathing statement attacking Gov. Kathy Hochul and cannabis regulators in her administration for “willingly” letting unlicensed marijuana dealers operate with near-impunity across the state.
The New York Office of Cannabis Management and the Cannabis Control Board “have willingly allowed – if not outright encouraged – the illicit market to flourish across New York, undercutting and devaluing the legal market, reducing the ability to generate tax revenue … and putting consumers unnecessarily at risk,” the Coalition for Access to Regulated and Safe Cannabis (CARSC) wrote in a statement shared with Green Market Report.
The CARSC includes Acreage Holdings, Curaleaf, Green Thumb Industries, and PharmaCann, along with several entrepreneurs and at least one physician, but the organization has so far only been identified as an “unregistered trade organization,” so its full membership is unknown.
The four multistate operators are among the 10 so-called “registered organizations,” otherwise known as R.O.’s, that are licensed medical marijuana companies in New York but have mostly been shut out of the recreational market thus far.
The CARSC statement goes on to blast OCM policy chief Axel Bernabe specifically, who gave an in-depth interview to Green Market Report recently. The coalition lambasted Bernabe’s comments on one potential strategy to crack down on unlicensed cannabis shops, when he mused that it could be more effective to let “pop-ups” flood the streets to undercut the hundreds of illicit storefronts.
“You actually may want to actively allow pop-ups to come in, flood the market, disrupt the consumer patterns, and then shut them down more simply, because they’re like fish in a barrel, because they’ve got a brick-and-mortar store,” Bernabe said.
The CARSC linked that statement to a recent proposal from Gov. Hochul to issue civil fines of up to $10,000 a day on those who engage in unauthorized cannabis commerce, and said the administration’s entire approach to an adult-use marijuana market “has clearly backfired.”
“Regulators already have the power to shut down illicit operators; they simply won’t use it,”
the CARSC alleged, adding that under the state law that legalized recreational marijuana in 2021, the OCM, CCB, and even the state attorney general’s office have the authority to “bring civil penalties against illicit operators and to commence proceedings to force them to cease operations.”
“The only ‘enforcement strategy’ we’ve seen to date has consisted of sending cease and desist letters to a mere fraction of illicit operators, with a mild warning that their blatant violation of the law might result in their inability to obtain a license to legally sell cannabis sometime in the future,” the CARSC said.
The coalition asserted that the state’s approach has led to at least 1,500 unlicensed cannabis sellers in New York City alone, which is costing the state itself untold sums in tax revenue, it said.
“New York’s tax collections for legal sales of adult-use cannabis totaled just $7,000 in February – down from $20,000 in January,” the CARSC statement read. “This is disappointing, but not surprising, given the state’s current approach.”
Spokespeople for the OCM and Gov. Hochul did not immediately respond to requests for comment.
