BIG COMPANIES IN THE BIG 🍎
New York’s cannabis market is about to get a lot more competitive
What’s happening: New York’s cannabis market is set to open up in a big way.
The state’s cannabis regulators on Friday announced that the big cannabis companies operating in the state’s medical market, known as Registered Organizations (ROs), will be able to start opening up recreational cannabis shops on December 29.
These ROs include big, publicly traded cannabis firms like Curaleaf and The Cannabist, as well as companies like Etain Health and Pharmacann.
The long-awaited move is set to give consumers many more options to buy legal cannabis in one of the biggest markets in the US, exactly a year after the state launched commercial cannabis sales.
And executives and investors in big cannabis companies that have struggled with declining sales and shrinking margins over the past year are looking at the lucrative New York market as somewhat of a savior.
Here’s the full list of companies:
Why it matters: The state is under pressure to get more recreational cannabis stores open quickly, as the roll out to date has been challenging.
Most regular consumers are left scratching their heads as to whether the cannabis they just purchased is legal and tested, or not — and whether the bodega on the corner is even a legal shop.
Others aren’t so happy about the move: New York’s cannabis regulators have sought to give minority entrepreneurs and those harmed by the War on Drugs first access to the cannabis market through the Conditional Adult Use Retail Dispensary (CAURD) program.
That, they say, was the intent of the law, the Marijuana Regulation and Taxation Act (MRTA), which legalized cannabis in the state in 2021. The program has also been the subject of numerous lawsuits, and more broadly an elemental battle over who and what the project of cannabis legalization is for and how success should be measured.
Some of these CAURD entrepreneurs, those the state’s cannabis policies are explicitly designed to help, have struggled to get stores open as the program has been mired in lawsuits and they’ve been forced to compete with the untaxed illicit market.
Many of these entrepreneurs worry, privately and publicly, that they’ll be pushed out of business once bigger, more well-capitalized operators enter the market in a few weeks.
In other words, the first-mover advantage they would have had has mostly been killed by the slow and chaotic rollout of the legal market.
What the big companies are saying: “To finally get on the same page as OCM (Office of Cannabis Management) in charting a sustainable path forward for a vibrant cannabis market is an incredible step forward for New York customers and patients, and the countless entrepreneurs from businesses of all sizes who have been eager to enter this emerging market,” Curaleaf CEO Matt Darin said.
What the CAURD groups are saying: “If anyone here is following NY legal cannabis our community was left holding the empty bag and I feel its pertinent for our organization to continue to help until the final days,” Jayson Tantalo, the VP of Operations at the New York Cannabis Retail Association said in a Sunday email to reporters.
“When New York State went on this massive campaign to help those gain access to the industry they left out the most important part and that's assistance.”
Our take: It’s not up to the Cultivated team to decide how to regulate the cannabis industry. We’ll leave that up to the pros.
But it is crucial to note that this isn’t just another consumer packaged goods category. Cannabis has a sordid history of racialized prohibition, and any attempt to legalize cannabis and create a regulated market should take that history into account. The disastrous social, political, and economic results of the War on Drugs are clear.
At the same time, we’ve maintained that consumers need more regulated, tested, and safe options to purchase cannabis in New York. It’s been far too long since legalization with far too few stores open. And, we also understand that big, publicly traded cannabis companies have the scale and sophistication to meet the market demand, though that will take time.
Ultimately, it’s up to consumers to decide where and how they want to spend their money. At the end of the day, there’s plenty of room for both craft-scale and big businesses to make money in New York cannabis, but it’ll take some time to get there.
More dispensaries are opening, too: After the OCM voted to settle a pair of lawsuits regarding the CAURD program, and the court’s approval of the settlement, more dispensaries are able to open across the state — including two in Troy and Albany last week.
The Troy and Albany dispensaries are the first two to open with support from the New York Cannabis Social Equity Investment Fund, the Times Union reports.
Georgia Senator wants to hold bank’s feet to fire on social equity
Driving the news: During a Senate Banking Committee hearing last week, Georgia Democratic Senator Raphael Warnock challenged major financial institution leaders on their commitment to social equity in the context of cannabis banking reform.
During a Senate hearing, he expressed support for the Secure and Fair Enforcement Regulation (SAFER) Banking Act but emphasized the need to ensure that such reforms also address the long-standing harms caused by the War on Drugs, particularly in communities of color.
Why it matters: The SAFER Banking Act, which awaits debate and vote in the Senate, aims to eliminate legal liabilities for banks working with state-legal cannabis businesses.
Warnock's stance reflects a growing concern that banking reforms, while beneficial to the cannabis industry and financial institutions, might not adequately address or repair the broader societal damages inflicted by drug policies, especially on marginalized communities.
What's next: While most stakeholders support federal banking reform, achieving bipartisan consensus remains challenging.
Senate Majority Leader Chuck Schumer clearly understands the difficulty in securing Republican votes due to concerns among some constituents.
Some Republicans, however, are coming around to the legislation as the language could be interpreted to bar the government from denying services to lawful businesses based on “personal belief or political motivations.” That could mean cannabis, or it could mean gun sellers and pornography.
As these discussions continue, the emphasis on social equity could shape the final form of the legislation, potentially setting a precedent for how the financial sector engages with the burgeoning cannabis industry and affected communities.
It’s unlikely the new(ish) Speaker of the House Mike Johnson will allow a full floor vote of the bill, even if it manages to get out of Schumer’s Senate.
PRESSURE ON PA
Legislative action in Pennsylvania gets renewed attention
What's happening in PA: Pennsylvania Senators Sharif Street (D) and Camera Bartolotta (R) are advocating for a bill to decriminalize cannabis.
Their proposal, SB 107, seeks to reclassify simple possession from a misdemeanor to a civil offense, with reduced penalties. This legislative effort reflects a growing movement towards cannabis reform in Pennsylvania, amidst a national shift in cannabis policy.
Why it matters: Decriminalization in Pennsylvania is crucial, given the current harsh penalties for minor possession, which include jail time and significant fines. This punitive approach disproportionately impacts individuals' lives, affecting their employment, housing, and childcare opportunities.
Moreover, with medical cannabis legal in Pennsylvania, the criminalization of recreational cannabis appears inconsistent and outdated.
What's next: The path forward for cannabis reform in Pennsylvania is complex. While Democratic Governor Josh Shapiro and the Democratically-controlled House show support for legalization, the Senate remains under Republican control.
However, pressure is mounting from neighboring states that have moved towards legalization, including New York, New Jersey, Ohio, and Maryland - and Pennsylvania legislators probably hate seeing all those sweet, sweet tax dollars going out of state. So, the PA clock is ticking.