Published by NCIA’s Diversity, Equity & Inclusion Committee (DEIC)

The burgeoning New York State Cannabis Market has been able to launch in record time compared to more mature markets like California and Illinois. The time between state legalization and the actual opening of licensed cannabis medicinal retail and more recently adult-use dispensaries is within one year! This is a great feat to be proud of by any metric though we are in the beginning stages.

With an indelible New York State of Mind, cannabis industry advocates, ancillary technical/professional services stakeholders and regulators created well-informed introductory regulations to get the ball rolling. The New York Social Equity Roundtable examined the best and worst practices of other programs and weighed in on current regulations in our recommendations to the NY Office of Cannabis Management (OCM).

The New York Social Equity Roundtable is a diverse gathering of industry stakeholders along the cannabis industry supply chain with a mission to be a catalyst in the building of an equitable and inclusive cannabis that reflects the ethnic, cultural, social, and economic diversity of New York State. The Roundtable is committed to gathering and sharing valuable industry insights and invites collaboration with other advocacy organizations and individuals to develop solutions. 

This article is a followup to The Pathway to Greater Equity in New York’s New Adult Use Cannabis Market and serves as a compendium of the work this Roundtable has executed on over the past year since that article was published.

I would like to point out that while the news cycle has brought to light certain aspects of the New York market, the public should also be made aware of the ongoing, painstaking battle it has taken to fight for equity in New York. 

Below are snapshots of the NY market landscape and some of the major challenges facing current and aspiring cannapreneurs that will hopefully inspire further conversations on the matter. Our hope is that this article helps not only provide understanding of what it has been like in the Empire State, but also provides new states with an understanding of the massive undertaking that cannabis legalization requires in order to be executed upon equitably.

In this article:

• Comments on the impact of unregulated smoke shops
• Comments on bad faith lawsuits
• Legacy Operator definition
• A note on Supply Chain Opportunities
• July 31st Public Comments on Adult Use Rules 
• January & February Public Comments
• Letter recommending an Advisory Board focused on Economic Inclusion & Expansion
• Letter to the Governor urging Pardons for ALL Nonviolent Cannabis Offenders

Unregulated Smoke Shops / Grey Market thwarting the growth of licensed retailers

Frederika Easley, The People’s Ecosystem, MCBA Board Member: New York’s goal must be to create a regulated market that is so enticing and easy to navigate that operating in both the gray and legacy markets feels like unnecessary risk. The smoke shop owners who have decided to be greedy and harmful in many cases offering tainted products and appealing to the youth must receive consequences that educate, penalize and offer opportunity for redemption.

Stephanie Keeffe, Etain: Allowing smoke shops to operate without the appropriate licensure sets a dangerous precedent and undermines the efforts to establish a safe and legitimate cannabis industry in New York. It is in the best interest of everyone, including consumers, businesses, and the government to ensure that all businesses follow the appropriate licensure procedures and comply with regulations. Safety should always be paramount.

Tavian Crosland, Social Equity Empowerment Network: Gray market operators are a reality in any transitioning market and we don’t want to have a second wave of cannabis criminalization. We also want to give the people most impacted by prohibition a chance to profit from the plant. With priority CAURD licenses issued we have taken a step towards restitution and equity and without the step of enforcement we may be setting them up for failure. This is the most hostile environment a new business, in a new market could traverse. Enforcement doesn’t have to mean criminalization and we’ll miss our mark if we don’t reign in non compliant operators. We won’t get a second chance to get it right.

Scheril Murray Powell Esq, JUSTUS Foundation:  The MRTA is very clear that priority should be given to those who have been significantly harmed by the criminalization of cannabis.  The typical Grey market participant is not from these disproportionately impacted communities and have the financial means to open these storefronts.   The individuals that have not directly experienced the harm referenced in the MRTA should recognize that they are trying to skip ahead of those who qualify for equity and have been harmed.  There will be thousands of retail licenses in NY and plenty of opportunity for everyone to participate, but the grey market actors need to wait their turn.  This is not judgment, but an appeal to their moral compass.

Hawaii Mike: The grey market shops are causing the biggest obstacle on the pathway to a thriving legal market. The lack of clear laws and regulations make this an almost impossible battle without using extreme measures to force these businesses to cease operations. Until these shops are closed permanently there will be confusion amongst the consumers and unsurmountable competition to legal operators.

Raina Jackson, NCIA DEI Committee Organizer: NY needs an Advisory Board that is more representative of the cannabis supply chain as operators and ancillary providers with direct applicant/operator interaction. Too many assumptions are made about what operators want without a robust survey of what we say we actually need.  More than just money is needed. would help illuminate pain points and to keep the conversation focused on how to resolve unintended consequences arising from any venture this new under regulation. The current configuration does not represent stakeholders disproportionately targeted and excluded.

Lawsuits Attempting to Circumvent the Equitable Rollout of Cannabis Retail Licenses 

The recent CARCS lawsuit is reminiscent of lawsuits launched in Illinois by general market operators disregarding the need for the prioritization of those disproportionately harmed by racially motivated cannabis prohibition tactics. Guided by greed, their intentions are to use the courts to stall progress and eliminate competition.

Mike Lomuto (former Head of DEI at the NCIA): While New York has an uphill battle as it navigates the unregulated market and integrates Legacy operators into the regulated space, OCM has ensured that the first set of licenses in New York go to individuals deemed disproportionately impacted by the war on drugs. It appears as if this lawsuit is a tactic we have seen in other states, where the small handful of multistate licensees who were part of a highly exclusive rollout of the Medical market are attempting to push themselves into the Adult Use market, under the guise of promoting equity while in actuality furthering the harm of the war on drugs and continuing the exclusion of justice-involved licensees.

Raina Jackson, NCIA DEIC Organizer, Policy & Regulatory subcommittee chair: As a reminder to companies that have unloaded these spurious lawsuits against well intentioned cannabis programs, be on notice that we see you and have documented what you have been doing to undermine equity, progress, and fairness. When you end up on the wrong side of history, no one will buy your revisionist historical accounts. The influential Millennials and GenZ populations that you seek as customers demand a higher level of corporate responsibility and may not be so forgiving. Before it’s too late I hope you find that it’s more rewarding to cooperate and coexist rather than to try to conquer. It is proven that well run companies that prioritize equity, inclusion, and transformation reap the benefits in the bottom line, including employee retention and community goodwill, no matter what industry.

Discussion of the ASTM Legacy Operator Definition

Legacy operators have been maligned and misunderstood in the regulated The definition of Legacy is Definition – as an added layer to help readers understand the situation

ASTM Definition of Legacy Operator

• “A Legacy Operator is an individual who:
  • 1) Commercially for the majority of their income, or sacramentally, or ceremonially distributed cannabis
  • 2) Outside of the Legal Framework
  • 3) During the period of Prohibition 
  • 4) For a minimum of 5 years before legalization”

Lack of Education on Supply Chain Opportunities and Licensing Timelines

We notice that the infrastructure focus on brick and mortar retail is often to the detriment of other license types that don’t get as much attention but are more financially attainable. 

• Lack of education provided on license types within the supply chain outside of retail and cultivation, including ancillary opportunities without a need for licensure. There is a need for real or hypothetical case studies illuminating the financial and business steps and resources necessary to succeed. Expectations need to be tied to realistic timelines and financial inputs.
• Resolutions and Opportunities. Need for heightened levels of Technical assistance and ancillary service/product providers

Public Comments Submitted on July 31st Regarding Adult Use Rules

The Office of Cannabis Management put out a request for public comments in May of this year, on its latest round of Adult Use rules. Over the course of several Roundtable discussions and countless hours of document review, comparison to previous Rules, and several debates over specific language, our Roundtable produced a set of public comments we are very proud of, that we believe if adopted would provide for a more equitable industry.

This is an excerpt of the full document, which can be found here.

Part 121 – Social and Economic Equity

§ 121.1 Qualifications for a Social and Economic Equity Applicant. (a) (b) 

RECOMMENDED TEXT
(a) General Qualifications. To qualify as a social and economic equity applicant, an applicant shall demonstrate, through the mandatory production of documents and other information described in this Part:
       (1) that sole control of the applicant is held by:
              (i) an individual from a community disproportionately impacted by the enforcement of cannabis prohibition;
              (ii) a minority-owned business;
              (iii) a women-owned business;
              (iv) a distressed farmer; or
              (v) a service-disabled veteran owned business.
(b) If sole control of the applicant is held by a woman who is also a minority-group member or women who are also all minority group members, the applicant may qualify as a minority- owned business, a women-owned business, or both.
       (1) Applicants qualifying for both a minority and women owned business shall have extra priority status in processing  applications. 

RATIONALE 

We have added (b.1) because there needs to be a prioritization of Black, (Afro-Latin), and Indigenous women within women-owned businesses. Otherwise social equity disproportionately benefits White women, as selective affirmative action has often done in the past. 

Due to Prop 209 in CA, race could not be used as a qualifying criterion for equity. As a result in San Francisco, equity grant funds were distributed among an even number of Black and White applicants/operators. CA is unique because of the history of white legacy operators upstate yet this was not equitable funds distribution. NY should avoid the same mistake. 

Public Comments Submitted in January and February 2023

Earlier in 2023, our Roundtable also submitted public comments on an earlier version of OCM’s Adult Use rules, as well as its rules regarding marketing and packaging. Internally, our Roundtable faced the challenge of transitioning into a new year and a new committee term at the NCIA. The fact that our public comments were the most robust document we had completed to date was a testament to the resilience and collaborative nature of our Roundtable.

These documents can be found here.

And here.

Letter Recommending Advisory Board, Re-submitted to OCM September 2023

In September of last year, our Roundtable submitted a letter to OCM, recommending the creation of an Advisory Board that would be community-based and focus on Economic Inclusion & Expansion. This was modeled after a similar initiative that has produced successful in Michigan, with Eric Foster, M4MM’s National Policy Director, serving as the bridge between our Roundtable and the Michigan Social Equity Task Force.

You can read the full letter here.

Letter to Governor Hochul Urging Pardons for Nonviolent Cannabis Offenders

A very strong unifying factor of our Roundtable is everyone at the table’s commitment to the repair of the harm inflicted by the War on Drugs. With that in mind, we submitted a letter to Governor Hochul late in 2022 urging her to pardon ALL nonviolent cannabis offenders, effectively taking the lead of President Biden, but going an imperative step further to set New York as a leader to undo some of the harm it has itself inflicted. As this action has still not taken place, our Roundtable has resubmitted this letter to the Governor.

The full letter can be read here.

In Conclusion

This is just the beginning. Unfortunately, it is necessary for us to always remain diligent in our work for true equity, not only in cannabis but in society. At least until the overall momentum of society is moving in that same direction. Until then, we encourage you to keep going strong, to tap into collaborative groups doing the same work, to draw on one another’s strengths, as well as wisdoms, experiences, and collective resources.

The fight to create an equitable industry in New York and other states will continue on, and the members of the New York Social Equity Roundtable will be here until our mission is achieved.