NAACP And Allies Push New York Governor To Stop Letting Marijuana Officials Favor ‘Big Corporations’ Over Small Businesses And Equity 

A group of 18 organizations wrote to New York’s governor on Tuesday to express dismay at what they described as marijuana regulators’ “efforts in service of big corporations at the expense of small business and equity outcomes” during the latter half of this year.

“When you entered office, you publicly committed to New York having the most equitable and small business-focused cannabis market in the country, but we are seeing different priorities from your administration,” says the new open letter, signed by organizations including the NAACP New York State Conference, Black Cannabis Industry Association, Minority Cannabis Business Association, Service Disabled Veterans in Cannabis Association, Drug Policy Alliance, NYC NORML and VOCAL-NY.

In a press release about the new letter, advocates assert that since the departure of the state’s first chief cannabis regulator, Chris Alexander, in May, state officials have demonstrated a “shift toward corporate interests at the expense of small business, justice-involved entrepreneurs, and Conditional Adult-Use Retail Dispensary (CAURD) licensees who are directly impacted by prior marijuana arrest.”

“Since the Office of Cannabis Management’s (‘OCM’) inaugural executive director was forced out,” the organizations told Gov. Kathy Hochul (D) in the new letter, “the OCM, under the leadership of its interim executive director who is novel to both cannabis and economic markets, has pursued efforts in service of big corporations at the expense of small business and equity outcomes.”

In recent months, the groups said, they’ve “grown increasingly concerned by the lack of political leadership” in fully implementing the state’s adult-use marijuana law, pointing to what they say are a “lack of funding of social and economic equity programs, a series of short-sighted regulatory decisions, and the lack of appropriate OCM leadership.”

In addition to challenging the qualifications of Alexander’s replacement, OCM Acting Executive Director Felicia A.B. Reid, the organizations point to the handling of a recent review of licensing applications, changes to the office’s chief equity officer position, understaffing and troubles with the state’s low-interest loan program for people impacted by the drug war.

“During this critical time of establishing New York’s cannabis market, the Administration has irresponsibly failed to seat a permanent leader with appropriate economic development and cannabis experience and instead has appointed an interim director who lacks experience in cannabis and economic development to serve in leadership,” the letter to Hochul says. “In a sharp pivot, OCM expanded its review of the November queue without regard to market capacity, only to push back its review of the less capitalized businesses in the December queue, effectively jeopardizing hundreds of small businesses’ opportunity to open.”

“To diminish oversight of these changes, OCM has transformed the Chief Equity Officer role by redrafting the job description to ensure the next Chief Equity Officer holds less decision-making oversight of licensing and market regulations with cannabis equity in mind,” it continues. “Add to this the mounting financial challenges facing CAURD entrepreneurs caused by the failed commitment by this administration to help fund at least 150 CAURD licensees with low-interest loans.”

The groups are calling for new leadership at OCM with more relevant expertise and a more demonstrable commitment to social equity. Specifically, they’re asking for a new OCM executive director with experience in cannabis, market development or regulatory licensing; a commitment to equity and community engagement; and a track record of helping grow small businesses.

“We believe many of these knee-jerk changes in licensing review and failed commitments to equity,” they wrote in the letter, “stem from a lack of experience and exposure to cannabis market development and regulatory licensing regimes, as well as a poor demonstration of a commitment to lead the agency according to the goals set out” in New York’s adult-use cannabis law, known as the Marihuana Regulation and Tax Act (MRTA), which was signed into law in 2021.

At the time, Assembly Majority Leader Crystal Peoples-Stokes (D), who sponsored the legislation, said the law’s social justice provisions “will provide equity to positively transform disenfranchised communities of color” and that the bill would “serve as a blueprint for future states seeking inclusive cannabis legalization.”

When the law was enacted, Melissa Moore, New York state director of the Drug Policy Alliance, called it “an outright victory for the communities hit hardest by the failed war on drugs.

“By placing community reinvestment, social equity, and justice front and center, this law is the new gold standard for reform efforts nationwide,” Moore said. “Today we celebrate, tomorrow we work hard to make sure this law is implemented fairly and justly for all New Yorkers.”

Hochul, who was then the state’s lieutenant governor, said at the time: “Not only will this help correct an unjust system that targets marginalized communities, it will create jobs & invest in those who have been historically underserved.”

Following the departure of Alexander from OCM earlier this year, Hochul again referenced the state’s commitment to equity. “As OCM transitions into its next phase,” she said, “we look forward to continuing the world of building the strongest, most equitable industry in the nation.”

New York’s slow rollout of the adult-use cannabis industry following legalization, however, has frustrated consumers, business owners and state officials alike. Even Hochul in January of this year called the market launch a “disaster.”

In May, she also released a state report that highlighted a lack of experience at OCM, shortcomings in the licensing process and scant support for applicants waiting on licensing decisions.

Despite a slow market rollout, leadership controversies and so-called “predatory deals” around the state’s marijuana social equity fund—officials behind the report said they were confident New York was poised for success.

By August, Hochul was touting the state’s “smokin’ hot” marijuana market.

“Smokin’ hot is right!” she said on social media, referring to a New York Post article. “Thanks to our efforts to shut down illicit storefronts and support our legal dispensaries, New York’s legal cannabis industry is reaching an all-time high—surpassing $500 million in sales!”

Hochul said in June that the state escalated enforcement actions against illicit marijuana shops, resulting in a significant increase in legal sales at licensed retailers.

But even then, there was growing criticism from equity-focused activists over what they described as a “corporate takeover” of the cannabis market, citing reporting about the administration dismissing state officials’ concerns about a “predatory” private equity loan deal the state approved to provide funding for startup cannabis retailers.

Since then, local reports have chronicled growing frustration with the state’s cannabis social equity fund, which have made nearly $2 million for its managers despite accusations of predatory lending and failing to adequately support social equity entrepreneurs.

Some state officials have defended the rollout. In an op-ed last month in Marijuana Moment, for example, Damian Fagon, OCM’s chief equity officer, argued that focus by media and others on the state cannabis program’s shortcomings have “obscured a significant development: the state’s success in establishing a legal cannabis market that is more equitable than any of its predecessors.”

Others have been more critical, however. A recent report by THE CITY told the story of Roland Conner, who was once widely seen as the face of New York’s social equity loan program but now faces foreclosure as loan payments, tax bills and other expenses pile up.

Meanwhile, legal marijuana sales in the state are up in recent months, with the market expected to hit a major milestone in the next month as retailers pass $1 billion in products. As of last month, the total sales figure stood at $863.9 million—up from $500 million in August, according to data from the Office of Cannabis Management (OCM).

“These numbers clearly indicate that New York is open for business,” John Kagia, OCM’s policy director, said at the time. “There’s strong momentum behind the market right now.”

Read the full text of the new letter to Hochul:

Dear Governor Hochul:

We write to you as a statewide community of advocates concerned about the administration’s change in direction for the buildout of New York’s cannabis market—in frustration with the legislative intent of the Marijuana Regulation and Taxation Act (“MRTA”). When you entered office, you publicly committed to New York having the most equitable and small business-focused cannabis market in the country, but we are seeing different priorities from your administration. Since the Office of Cannabis Management’s (“OCM”) inaugural executive director was forced out, the OCM, under the leadership of its interim executive director who is novel to both cannabis and economic markets, has pursued efforts in service of big corporations at the expense of small business and equity outcomes.

We are a group dedicated and determined to see New York’s cannabis market fully realize its legal potential as set forth in the MRTA. We celebrated in 2021, when Governor Cuomo signed into law the MRTA, legalizing adult-use cannabis, after the legislature passed the law with community reinvestment, equity, and justice at the forefront. In light of the shortcomings of other states’ legal cannabis markets, we have long fought for New York to chart a different course in legislation and implementation, knowing that true market success would require adopting radically intentional approaches to building out a legal market that ensures that everyday New Yorkers and their families–particularly those who have faced drug-related arrests and incarceration–have a meaningful market entry point and a fair opportunity to thrive. We applaud the initial efforts of OCM’s inaugural leadership and see their intentionality in the data that was released earlier this year showing the impressive number of small businesses, social and economic groups, and justice-involved entrepreneurs comprising the cannabis retail market. And we appreciate the currently existing regulatory protections around competition, like the 1,000-foot proximity rule.

However, in the past few months, we have grown increasingly concerned by the lack of political leadership in fully implementing the MRTA, specifically the lack of funding of social and economic equity programs, a series of short-sighted regulatory decisions, and lack of appropriate OCM leadership. During this critical time of establishing New York’s cannabis market, the Administration has irresponsibly failed to seat a permanent leader with appropriate economic development and cannabis experience and instead has appointed an interim director who lacks experience in cannabis and economic development to serve in leadership. In a sharp pivot, OCM expanded its review of the November queue without regard to market capacity, only to push back its review of the less capitalized businesses in the December queue, effectively jeopardizing hundreds of small businesses’ opportunity to open. The new licensing review has also deprioritized the previous review of those with Social and Economic Equity Group status and kept justice-involved entrepreneurs in the CAURD program waiting in the balance for location approvals. To diminish oversight of these changes, OCM has transformed the Chief Equity Officer role by redrafting the job description to ensure the next Chief Equity Officer holds less decision-making oversight of licensing and market regulations with cannabis equity in mind. Add to this the mounting financial challenges facing CAURD entrepreneurs caused by the failed commitment by this administration to help fund at least 150 CAURD licensees with low-interest loans.

We were once hopeful that this administration would fully appreciate the administrative challenges facing OCM and meaningfully invest resources and talent to ensure its success. But, today, given the hiring of OCM leadership who lack cannabis and economic market experience, persistent delays and confusion around the agency’s licensing review of the December queue, and chronic understaffing of the agency writ large, we are led to believe that this administration woefully under-appreciates the urgent needs to fully implement and protect the MRTA, particularly its intent to ensure equity and fair opportunities for small businesses.

To ultimately restore confidence in the future of New York’s cannabis market buildout, OCM’s leadership must change to reflect expertise in cannabis, economic market development, and regulatory licensing. We believe many of these knee-jerk changes in licensing review and failed commitments to equity stem from a lack of experience and exposure to cannabis market development and regulatory licensing regimes, as well as a poor demonstration of a commitment to lead the agency according to the goals set out in the MRTA. Given our concerns, we implore you to appoint an Executive Director to OCM who has a demonstrated track record in the following areas:

• • cannabis literacy, financial economic market development, or regulatory licensing operations;
  • a proven commitment to equity and community engagement; and
  • a proven commitment to small business growth.

The MRTA was enacted to ensure that New York’s cannabis market prioritized health and safety, economic and racial equity, and sustainability. To achieve and sustain this effort, we implore you to heed our concerns and request. We appreciate your attention to this critical matter.

The organizations that signed the letter include:

• 024 Inc
• Black Cannabis Industry Association, Inc. (BCIA)
• The Bronx Cannabis Hub
• Cannabis Social Equity Coalition of NYS
• CannaBronx
• The CannaDiva
• Drug Policy Alliance
• empCanna Media
• High Exposure Agency
• Hi-impact
• LYFE CHARMZ
• Minority Cannabis Business Association
• NAACP NY State Conference
• National Hispanic Cannabis Council Tristate Chapter
• NYC NORML
• Service Disabled Veterans in Cannabis Association
• Social Equity Empowerment Network New York
• VOCAL-NY

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