Kremer’s Corner: New York is going to pot very slowly

Kremer’s Corner: New York is going to pot very slowly

Once upon a time a comedian was asked to name the biggest lies. His most memorable one was “I’m from the government and I am here to help you.” That comedic line has been applied to hundreds of cases where the government launched a new program and the results were a disaster.

If you are looking for a good example about a disastrous rollout of a program, the one at the top of the list is the state’s legalization of the sale of cannabis products. Roughly three years ago the New York State Legislature approved the legal sale of cannabis in the state and created the Office of Cannabis Management.

With the approval of the sale of cannabis, New York joined 22 other states. Many of those states were able to create the appropriate mechanism for licensing in a short period of time, and currently almost all of them are getting millions of dollars in fresh revenue.

Massachusetts became the poster child for getting the program launched and it joined states like Colorado, which has one of the most impressively run programs in the nation. The major philosophy behind the cannabis legalization was to help communities that had been hurt by illegal pot sales and provide drug treatment and other vocational programs for the impacted residents.

The new New York State law provided for nine categories of licenses, which represented a very promising economic opportunity. The first licenses issued were for growers and testing laboratories. At that point hundreds of potential licensees were jumping for joy at the thought of getting a state license. But like all things that can go bad, the OCM decided to create a license opportunity for applicants who had a previous marijuana conviction. The intent was good, except for the fact that the law didn’t create such a license.

The clock continued to tick and while growers were busy planting and hoping for a sales opportunity, the OCM was caught up in a program that was producing very few licensees. At the same time smart businesses were opening up illegal locations to sell cannabis. At last count it is estimated that there are 12,000 stores in the state that are selling pot without a valid state license and the state is getting no revenue from these sales.

While the OCM was moving forward at a snail’s pace, two lawsuits were started challenging the entire process. One suit was allegedly funded by the major cannabis growers who were anxious to get ahead of all of the smaller business owners. A second lawsuit was started by a group of disabled veterans who claimed that the licenses for individuals with marijuana convictions were not in the state law. Each time a lawsuit was started, the judges issued injunctions stopping the entire program.

In the next two weeks, it is expected that the upstate court handling the veterans’ suit, will render a decision and more than likely require  the OCM to begin granting licenses to social equity applicants and other qualified businesses. The OCM finds itself finally doing what it was supposed to from the very beginning, which is get the program going and produce revenue for the state.

Is this the happy ending that everyone was hoping for? Not really. At this moment there are hundreds of growers who have cannabis ready for sale by the licensed outlets, but with only an estimated 29 retail outlets available to buy the cannabis. The state has authorized the sale of the product at farmer’s markets, but with the summer season over, there are not a large number of markets in existence.

There is no doubt that there is plenty of blame to go around, but naming names and kicking butt is too late to make up for the lost state revenues and the financial harm that has been inflicted on hundreds of individuals who took steps to help them get their licenses approved.

The next state program waiting in the wings is the licensing of three downstate casinos. Potential applicants are prepared to spend billions to get a coveted license and the state could reap badly needed dollars if the process moves forward smoothly and on time. If the cannabis experience is repeated, New York taxpayers will be paying increased tax dollars as a punishment.

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