License Holders' Frustrations With New York's Sluggish Retail Cannabis Rollout Are Boiling Over

Carl Anderson was excited when he learned last November that he was going to be awarded a retail cannabis license by New York state. But that excitement has since faded, replaced with disillusionment at the state agencies overseeing the retail rollout.

New York's retail cannabis licensees are frustrated by their inability to secure retail locations and get going with their businesses. There are just 17 retail stores open statewide, per the New York State Office of Cannabis Management’s latest count, while a July press release placed the total number of licenses awarded by the state at 463. 

The pace is picking up for store openings, with nine dispensaries opening in June and July this year, but is far behind Gov. Kathy Hochul’s previously stated goal of opening 20 stores per month in 2023. Licensees' frustrations have already boiled over in public, leading to the resignation of a key government figure in the state’s rollout process last month.

"I'm just sitting here like, 'There is no transparency whatsoever,'" Anderson said. "'You guys have made a living on not telling us anything.'"

New York created two tiers of licensing along with recreational legalization. There are licenses for individuals whose lives had been adversely affected by marijuana charges — known as social equity, or Conditional Adult Use Retail Dispensary, licenses — which would get to set up shop ahead of a second group of retailers without a social equity case.

When New York state legalized recreational marijuana in 2021, Anderson learned that the charge that had followed him for more than a decade qualified him for a social equity license to sell cannabis.

Anderson, a Harlem-raised military veteran who founded and runs his own consultancy firm providing fraud investigations for banks and insurance companies, has been followed by a marijuana charge for having a single joint on him when he was 17 during a school trip upstate.

He was a minor when he picked up the charge, so his record should have been sealed once he turned 21, he said. But it wasn’t, which meant the disposition kept showing up. Employers couldn’t see what it was, only that it existed, and told Anderson that this meant they couldn’t hire him for compliance jobs that he was otherwise qualified for. 

“I didn't do the number of years of incarceration that most people did,” Anderson said. “I recall coming out of military service — I’ve completed school at this point, I have a degree, I have all this military time under my belt — and I was still getting hammered by this charge from high school because it kept showing up as a violation on my record.”

Once awarded a license by the Office for Cannabis Management, licensees have two options when finding a location. They can either allow the Dormitory Authority of the State of New York to find them a location and cover the cost of building the space out for them — a policy intended to help remove barriers to entry for entrepreneurs, as the New York Business Journal previously reported — or they can strike out on their own with a specialized cannabis broker to find and fund a location themselves. 

“We’ve had more luck on our own,” Emmanuel de Jesus, a social equity license holder who received his license in April, told Bisnow. “The OCM and DASNY haven’t helped.”

The lack of transparency from government agencies has led licensees like Anderson and de Jesus to seek space without DASNY's help. Kristin Jordan, founder and CEO of cannabis brokerage Park Jordan, is one of several brokers who are well-versed in the frustrations of licensees.

“They feel as though the deals that they're being offered aren't competitive. They don't have insight into line-item budgeting processes,” she said. “The process has been frustrating and challenging for them, so they don't have a whole lot of trust in that agency and they feel as though they can do it on their own.”

But finding space via brokers hasn't been a straightforward experience, either.

Anderson, working with Ripco Director of Cannabis Real Estate Colby Piper, submitted a Bronx location, the site of a former McDonald’s near Fordham University, to the OCM in January. Anderson had already negotiated with the landlord and reached a lease agreement, he said, but he didn’t receive a reply from the OCM until May 30, when the agency rejected the location on the basis that DASNY had identified a location less than 1,000 feet away.

“My first question was, when did DASNY do this?” Anderson said. “Because I submitted back in January. You're coming to me in May, telling me that they identified a spot less than 1,000 feet away. When did they identify the spot?”

The state is ramping up its process, the OCM said in a statement provided to Bisnow. 

“In the last two months, New York State's legal cannabis industry made significant progress toward creating the most equitable adult-use market in the country,” said Trivette Knowles, public affairs press officer and community outreach manager for the OCM. “The number of licensed dispensaries has more than doubled, and we recently announced the new Cannabis Growers Showcase initiative that will provide consumers with even greater access to safe and legal products from our local farmers in partnership with CAURD licensees.”

License holders who have secured their own location will also be eligible for a $100K low-interest loan from DASNY, the OCM said.

DASNY didn't respond to Bisnow’s requests for comment.

Anderson said his outreach to the OCM yielded no results. De Jesus, another CAURD licensee, told Bisnow he has faced similar challenges: submitting applications for locations and being denied by the OCM on the basis that DASNY had another location nearby. He said he has sunk tens of thousands of his own dollars into finding a space.

“According to the OCM, they would find properties, negotiate with landlords and secure a place on behalf of business. We saw very little to no rollout with that,” he said. “Everyone seems to be having the same issues. They’re submitting leases, not getting approved and being given DASNY locations at higher rents. ... It’s very frustrating.”

The process hasn't seemed to work faster for CAURD licensees who have opted to let DASNY find locations for them. 

In a fiery meeting between CAURD licensees and DASNY last month, Brooklyn license holder Misha Morse-Buch said that in the two months since receiving his license from the state, he hadn’t received any communication. The silence from the state agencies made Morse-Buch nervous enough that he went out to look for his own spot, which was approved by the OCM but left him with more unanswered questions.

“Do I actually have my 1,000 feet locked down right now while I'm negotiating this lease?” he asked at the meeting. “Or can someone else come in and, before I finish the lease negotiation, take that 1,000-feet zone or something?”

Another licensee, Carson Grant, was offered a 9K SF location on Jamaica Avenue in Queens by DASNY. But the agency failed to share details of a timeline or loan agreement with Grant, Syracuse.com reported.  

An hour into the June meeting, Grant asked then-President and CEO of DASNY Reuben McDaniel what transparency meant to the agency. McDaniel offered a one-on-one meeting with Grant, leading to shouts exploding through the room. 

“That’s not transparency!” one attendee yelled.

McDaniel announced his resignation just days after the meeting, but licensees are still frustrated.

CBRE was tapped as the state's brokerage responsible for securing locations. The brokerage's shortlist of 350 locations that meet DASNY's requirements isn't public, giving licensees no insight into whether their locations are viable or not, the NYBJ reported. The OCM has stated to licensees that it is working on an app that will show potential locations.

CBRE declined Bisnow's request for comment for this story.

A DASNY official said at the June meeting the agency would slow down its acquisition of storefronts. Anderson said DASNY has made promises of transparency that it has not lived up to. 

“You have the head of the DASNY fund saying, ‘Look, I don't know about your specific location. Let's take this offline and maybe we can get an answer for you.’ And you never hear from them again,” he said. “That’s where the frustration really comes in.”

The lack of transparency has led to misunderstandings about the process for CAURD licensees. Another item of concern for Anderson and others is how long they can keep their licenses without a space.

Under the law originally passed by New York state, licensees have to secure a retail space within a year or lose their license. Anderson and de Jesus said they are unsure what will happen to their licenses in November if they still haven't secured locations.

"The license is conditional," de Jesus said. "I only have as much time on it as they give me."

The OCM was unable to confirm to Bisnow whether that policy will change.

“You’ve got people that have waited nine months already, and they need three months to build out. They’re out a year to even open the business,” said Piper, adding that he knows somewhere between 20 and 30 licensees in a similar position to Anderson. “They're not opening the business until 13, 14, 15 months in.”

Piper advocates for patience from both sides. By working to get social equity licensees off the ground before allowing other retailers a slice of the action, the state is sticking firm to the legislation’s social equity premise.

“The state is giving you a golden ticket, for lack of a better term,” he said. “If you're a little bit more patient than wanting to be open tomorrow, I can see the program working itself out. But no one wants to hear that when they have a license and they're ready to go.”

There is a need to get the process right or risk undermining the law’s aims, Temeka Group CEO Mike Wilson told Bisnow. DASNY selected Temeka Group for store build-outs. 

“Was the process a little bit slower than we wanted it to be? Absolutely. But there's not a playbook for what's being done,” Wilson said. “When you get government involved, you get different institutions involved, we have the best of hopes, but the reality is things are a little bit slower.”