We’re going to be reporting on New York State’s dispensary approval process a great deal. It has all the potential for creating a dispensary train wreck.
Sitting on the tracks like deraileur is the state’s requirement that applicants either be justice-involved and have a history of ownership of a profitable business, or be a non-profit. If you’re scratching your head at that pair of requirements, you’re not the first. The second path, non-profit ownership, leaves open a massive door for abuse, as numerous states started out their programs with non-profit ownership (I’m looking at you, Rhode Island and Delaware), that over time shifted into a facade for corporate ownership.
But don’t blame the state’s overburdened Cannabis Control Board (CCB), this regulation comes straight from the legislature. If there’s going to be a fix, it won’t be until next January, when the New York General Assembly returns to session, rejiggered from the November elections.
In the meantime, the CCB has made at least one good move, by requiring the entire application (as staggeringly long as it is) be put online. Assuming regulators hit CCB’s deadlines, we could start seeing dispensary licenses doled out by the end of September. And well-capitalized owners might even be open before the November elections, making Gov. Kathy Hochul look pretty good – since it’ll take at least a couple more months for the inevitable lawsuits to hit.
As always, the big question is: How many underground dealers will be drawn to the legitimate market?
And here New York has another crazy requirement, which is that you either show up with a $200,000 cash bond, or show that you have control over the property where you plan to open a dispensary. Since most underground dealers are going to come from New York City, how are they going to afford the property? And since they’ve been operating underground all these years, how will they convince some pinstriped banker to allow them to open a bank account – for a weed business?
The state is attempting to level the playing field with its social equity investment fund (which we have doubts about), but even if New York hands out fitted out dispensary shops like Oprah gives out cars, there’s still the issue of: How’re they going to run a balance sheet and payroll? The move from running a cash register business like sidewalk dealing to a legal cannabis dispensary is pretty rough – even for the people who know a thing or two about business.
New York, I’m wondering how you think you’re gonna get through this one.