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Hochul called roll-out “disaster” despite ignoring warnings

Plus, NH has a big day tomorrow

Wednesday, June 12, 2024

Good morning.

The spotlight is once again on New York where details are coming to light about how regulators have been raising the cannabis alarm for some time.

We’ve got all you need to know about the Empire State, and more.

Let’s get to it.

-CB & JR

This newsletter is 987 words or about a 7-minute read. 

💡What’s the big deal?

Intrepid reporting uncovers interagency rifts in NY cannabis

Driving the news: Internal emails obtained by THE CITY reveal that officials from the Office of Cannabis Management (OCM) repeatedly flagged a $150 million deal made in June 2022 between New York State and the Chicago Atlantic Group.

The agreement with Chicago Atlantic was meant to help finance dispensary start-ups for justice-involved individuals in New York. THE CITY’s story uncovers the airing of concerns about the fund voiced by the OCM to the Governor Kathy Hochul’s office about inflated costs and high default risks for startup retailers. 

According to the story, OCM concerns were largely ignored by top officials who were pressured to deliver on the Governor's public promises.

Rewind: The internal emails from OCM officials expressed strong concerns about the terms, describing them as unfavorable to the state and potentially predatory. However, these warnings were often ignored, leading to frustration and shock within OCM when Hochul described the cannabis rollout in New York as a "disaster" earlier this year.

Hochul had pledged to create a sizable loan program to help people affected by discriminatory drug laws to own legal cannabis stores. The state eventually partnered with Chicago Atlantic to subsidize this loan program due to numerous failed attempts to secure a better deal with other companies.

The deal made Chicago Atlantic the primary financier of New York's cannabis legalization program. 

What they’re saying: In sharing her reporting in Twitter/X, Rosaline Adams wrote: “I obtained 500 internal emails showing state cannabis officials repeatedly raised flags to Gov. Hochul about the rollout and that the state was making a poor deal with a private equity group to finance vulnerable licensees. The deal went ahead anyway.”

What’s next: The new acting leadership at the OCM was announced this week, so change is already afoot in New York. But expect all eyes to be squarely on Governor Hochul and the new leadership at the OCM as they attempt to deliver results ASAP. 


💬 Quote of the day

“I think they were looking for corruption, which they didn’t actually find. All they found is the same inefficiency that plagues every other agency that licenses anything in New York State,” Aaron Ghitelman, former OCM spokesperson, said in an interview with Green Market Report talking about the Governor Hochul-ordered review of the OCM.

Quick hits

The New Hampshire legalization bill will go to the House and Senate for final votes this Thursday. If approved, the bill will go to Gov. Chris Sununu to sign off on. Despite the compromise reached last week, there is notable opposition and skepticism about the bill’s provisions. Read more here.

The New York State Cannabis Control Board is set to adopt rules allowing individuals 21 and older to grow their own marijuana plants at home, with regulations specifying up to six plants per residence. These rules, pending publication in the state register, come after a significant delay since cannabis legalization in 2021, according to Times Union.

Florida Governor Ron DeSantis launched the Florida Freedom Fund, a political committee to oppose ballot initiatives on abortion access and marijuana legalization. The committee reflects DeSantis’ efforts to reassert control in Florida following his failed presidential campaign. Polls show strong support for both measures, which DeSantis has labeled as extreme, according to POLITICO.

Stiiizy wants to dismiss a lawsuit alleging it sold vape and edible products with THC levels exceeding the legal limit. While the plaintiffs say Stiiizy misrepresented THC levels on their Dela-8 products to circumvent cannabis regulations, Stiiizy claims the plaintiffs did not test the products they purchased, challenges the fraud claims and jurisdiction, and noted the plaintiffs did not report any personal harm or damages. Read more here

A spending bill introduced by a GOP-led House aims to ban most consumable hemp-derived cannabinoid products, including delta-8 THC and CBD with any THC content. This proposal faces opposition from the hemp industry but support from some cannabis businesses. If passed, it would redefine legal hemp, impacting many non-intoxicating CBD products and U.S. hemp farmers, told Marijuana Moment

Doctors for Drug Policy Reform (D4DPR) says that while rescheduling cannabis to Schedule III is a positive step, cannabis should be fully descheduled from the Controlled Substances Act (CSA) to eliminate federal criminalization, facilitate medical use without FDA approval, and empower states to regulate cannabis independently. Read their position paper here.

📊 Chart of the day

While there has been a $4-6 million increase in month-to-month sales in New York, May 2024 was on 🔥, as it closed with a new weekly sales record of about $12.5 million.

The data comes from a report at yesterday’s New York Cannabis Control Board (CCB) board meeting.

Want more? 2024 cannabis sales have also already well-exceeded the totals of 2023. 

🤝🏻 Deals, partnerships, launches

Pineapple Express Cannabis Company, announced a contract through its subsidiary, Ananas Growth Ventures, to receive 5% of all sales at seven retail dispensaries in Los Angeles, in exchange for a $5 million promissory note to bolster the company's revenue and sustainability.

📰 What we’re reading

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