David Standa, Partner
Earlier this month, New York’s Gov. Kathy Hochul told Advance Media New York that the state’s plan to have 20 conditional adult-use retail dispensaries (CAURD) open by the end of the year is “still on track,” and that “another 20” will open every month thereafter. The Governor’s positive thinking is respectable but seems quite impractical, unless the state is planning to ditch its previously announced plans for the CAURD program. The Governor deserves credit for jumpstarting the program into action after coming into office last year, but the delays and uncertainty around the program over the last six months virtually guarantee that CAURD dispensaries will not be operational any time soon unless something changes. To get operational dispensaries by year end under the current plan, the CCB and OCM would have to move at a breakneck pace after plodding along for the better part of this year.
Four things need to happen before new dispensaries can become operational under the previously announced plan, and none of them are quick tasks. First, regulators need to publish the full regulations that will govern the industry – a process that has been mired with repeated delays. Yet of all the things that need to happen to get dispensaries operational, publishing new regulations is by far the easiest task. The three other items on the checklist are large-scale government projects that are sure to get bogged down in the bureaucratic slog. The Dormitory Authority of the State of New York (DASNY) has been charged with overseeing the buildouts of the first 150 CAURD dispensaries. The plan is for DASNY to fully buildout the dispensaries and deliver turnkey buildings to CAURD license winners. The issue is that DASNY has yet to secure a single location or announce who it has retained to design and buildout the facilities. Further, the acquisition and buildout of those facilities is supposed to be financed through a $200 million public-private partnership fund with $150 million coming from private investments. So far, none of the $150 million private funding has been raised. Making things more difficult, New York has not yet secured a bank to house the fund. The state put that task out to bid and only received bids from two small state-chartered banks, Dime Community Bank and Five Star Bank. There are questions surrounding either bank’s expertise and ability to manage that amount of money for so many different licensees whose involvement with cannabis will all trigger suspicious activities reports. Finally, but certainly no less important, is the fact that
none of the over 900 CAURD license applications have been scored yet. In fact, the state has yet to even retain a firm to conduct the application scoring. While the CAURD applications were not as involved as some of the other competitive application processes conducted by other states, it was still a competitive process (over 900 applications for 150 licenses) and scoring, and auditing that scoring is crucial. A significant amount of litigation has arisen in other states even when application scorers were not under the time crunch that the scorers are going to be under here.
To summarize, DASNY has not confirmed securing a single location; the social equity fund, which will finance these buildouts, has not announced raising any money toward its $150 million goal; there is no bank yet secured to house that money; and although the OCM received more than 900 applications, it still must hire a vendor to vet, score and award licenses. In other words, opening 20 dispensaries under the previously announced CAURD process seems nearly impossible. Which means, if Governor Hochul’s statements are to be believed, the state is going to need to move in a different direction, and it seems that might be what it is doing. There are rumors out of Albany that the CCB and OCM may be looking to issue the first CAURD licenses to those applicants that secured their own real estate and have sufficient funding to finance their own buildouts. That has some applicants scrambling to see what they can come up with in the coming weeks. Of course, to meet the self-proclaimed end of the year deadline, the state still needs to get those applications scored and those licenses awarded in short order. There’s a mountain of work to be done, all of it by politicians as an election looms a mere two weeks away.
Everyone is excited to see the New York industry get going, but it sure seems like we will all be waiting a little longer than anticipated. Be sure to follow our blog for more information on these regulations and all cannabis developments in New York. If you have any questions or would like to contact the authors, please email David Standa (
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