Medical Cannabis Companies to Cough up $20M Fee

Dispensaries

Cannabis was legalized in New York State more than two and half years ago and only 13 licensed dispensaries have opened since. 

So far, the rising demand for cannabis has been partially filled by more than 1400 illicit cannabis stores that have opened across the state, more on this on page 21. Licensed cultivators are also stuck with hundreds of millions of dollars worth of cannabis they can’t sell because there aren’t enough licensed retail outlets. 

With all of this going on, and NY’s cannabis industry in a state of crisis, many are wondering when New York’s 10 medical cannabis licensees, commonly called "registered organizations" (ROs), may get to expand to the recreational market. 

Originally, the rollout of adult-use cannabis sales intended to prioritize 150 (now 300) social equity retailers, referred to in New York as Conditional Adult-Use Retail Dispensaries (CAURD), through the state’s “Seeding Opportunity Initiative.”

As part of that plan, CAURD licensees were to be given a 3-year head start before the larger corporations, known as Multi-State Cannabis Operators (MSOs), that currently serve the state’s medical cannabis program could expand their dispensaries to adult use.

But now, this may be happening much sooner than expected. 

The Office of Cannabis Management (OCM) published a draft of revised adult-use regulations that would allow ROs to expand up to three retail locations to adult-use sales, including a first site in December 2023—two years earlier than originally proposed. The businesses would then be allowed to open two more retail stores in June 2024. 

However, ROs would also have to pay an initial one-time “special licensing fee” of $20 million to New York State. OCM officials say these fees would be used to support NY's Social and Economic Equity Plan. 

Less than three months after adult-use sales started via the first licensed CAURD dispensary, the Coalition for Access to Regulated and Safe Cannabis (CARSC) filed a lawsuit in Albany, alleging that regulators overstepped their bounds based on the Marijuana Regulation and Taxation Act (MRTA). 

CARSC includes many of New York’s medical cannabis MSOs, such as Acreage Holdings, Curaleaf Holdings, Green Thumb Industries, and PharmaCann Inc. 

CARSC says that the OCM’s policies have delayed the availability of regulated cannabis products for recreational consumers and that locking out medical cannabis operators and other entrepreneurs with access to capital to quickly open retail dispensaries is contrary to the goals of the MRTA and the public health of New Yorkers.