Cannabis MSOs Get OK to Enter New York

State authorities in New York have granted permission to multistate operators (MSOs) with existing medical marijuana licenses to enter their adult-use market. This decision marks a pivotal moment since it will take effect on December 29, exactly one year after the commencement of recreational cannabis sales in the state.

Anticipation Meets Reality

The Cannabis Control Board’s (CCB) authorization was long-awaited and is a landmark in the evolution of New York’s recreational marijuana market. Following the state’s Supreme Court decision on December 1 to lift an injunction hindering the issuance of new adult-use business licenses, the CCB’s announcement was both critical and controversial.

Key Players in the New Landscape

The CCB’s approval includes six prominent registered organizations, which are New York’s equivalents of MSOs:

1. Columbia Care NY, under The Cannabist Co.
2. Curaleaf NY, part of Curaleaf Holdings.
3. Etain, owned by RIV Capital.
4. NYCanna, a division of Acreage Holdings.
5. PharmaCann of New York, under PharmaCann.
6. Valley Agriceuticals, a subsidiary of Cresco Labs.

PharmaCann spokesperson Jeremy Unruh expressed enthusiasm about the approval, committing to provide top-quality cannabis products to consumers in the Big Apple.

The Turning Point: June Projections to December Reality

Previously in June, there was a report of a proposal from the state’s Office of Cannabis Management (OCM) that envisioned MSOs entering the recreational market by the end of the year. This plan effectively shortened a three-year waiting period initially set for the state’s 10 vertically integrated medical marijuana providers, also known as registered organizations (ROs). The waiting period was originally designed to give social equity retailers and smaller suppliers a head start in the market.

However, this first-to-market advantage was nullified as approvals for hundreds of Conditional Adult-Use Retail Dispensary (CAURD) applicants and licensees were delayed for months due to lawsuits over the licensing process and social equity provisions.

Impact on Small Cultivators

In a less favorable turn for small-scale cannabis cultivators, the OCM also announced the discontinuation of the state’s Cannabis Growers Showcase program by year-end, contrary to the desires of smaller growers. The showcase program, which facilitated sales of surplus inventory through various market-like setups, has generated over $4 million in sales this year.

While New York’s cannabis retail sector has generated over $110 million in sales this year, these figures are significantly lower than the initial billion-dollar projections. This shortfall has been a source of concern for operators and small farmers alike. Wyatt Harms, CEO of Flamer, highlighted the showcase as a critical lifeline for small farmers struggling with distribution.

Looking Ahead

As of now, 31 adult-use stores are operational statewide. The entry of MSOs into the adult-use market is poised to reshape the landscape, potentially increasing access and variety for consumers but also raising questions about the balance between large-scale operations and small local businesses. As the market evolves, stakeholders across the spectrum — from large MSOs to small cultivators and retailers of weed accessories — will be closely watching the impacts of these regulatory changes.