It was a shocking day for New York’s cannabis community, as while the state’s Cannabis Control Board (CCB) met to confirm the granting of more licenses, Governor Kathy Hochul announced her intention to overhaul the Office of Cannabis Management (OCM). Her most striking directive was to order the agency’s Executive Director, Chris Alexander, to step down in September. Chief Equity Officer Damian Fagon, who was placed on administrative leave earlier this year following accusations of questionable conduct, is also expected to be removed from his position.
Governor Kathy Hochul Announces Overhaul Of New York's Office Of Cannabis Management
“Now, I’ve been frank with New Yorkers that I’m not satisfied,” Governor Hochul stated at her press conference on Friday, May 10th, describing her feelings on the state’s rollout of the legal marketplace. “I even used the word ‘disaster’ to describe the status quo. Today, I'm here to announce an overhaul of the Office of Cannabis Management based on a review that was recently completed… Let me be clear – there are deep seated issues at OCM, issues that have limited its ability to fulfill its licensing role – a complicated application process for prospective business owners. And unfortunately, this has overshadowed the excellent work done by hardworking OCM staff.”
What Was In The Audit Report On The Office Of Cannabis Management?
The Governor’s words came after a report was published by Office of General Services Commissioner Jeanette Moy. According to the audit, which Hochul had ordered in March after being embarrassed by the setbacks of the regulatory program, the OCM struggled to move out of a “startup culture,” marred by lack of centralization, inefficiency, and confusion.
“There is no clear, single line of sight or accountability for all activities needed to open an adult-use cannabis retail business below the Executive Director,” the report said.
Within the document, a picture emerges of New York’s licensing process, one that has been criticized as opaque and much more complicated than it needs to be. CBS News noted that the review included “a laundry list of failures” from inexperienced leadership to neglecting to use existing state resources: “For example, the agency tried to create its own map of schools and houses of worship where pot shops are forbidden from opening even though the state liquor authority already had a map.”
Among the most damning charge in the report is that the OCM could have spent $26 million to clear the license application backlog, yet failed to do so. The report suggests possible strategies for cutting through the obstacles that have helped unlicensed shops flourish in the years between the passage of the Cannabis Law and the present.
Commissioner Moy, who joined Hochul at the press conference on Friday, asserted that the audit’s intent was to reduce the OCM’s issues with the logjam of applications. She mentioned that there are plans underway to streamline the agency’s data management and increase staffing.
What Will Governor Hochul's Overhaul Of The Office Of Cannabis Management Do?
Hochul briefly outlined her approach to the intended overhaul of OCM:
- “Unclog the licensing bottleneck” by immediately reviewing the hundreds of applications currently stuck in the queue. “We're going to streamline the application process, assign each application one point person and shepherd through the process, communicate with the applicant and ensure that applying is as open and transparent and painless as possible,” the Governor declared.
- Launch an “OCM cannabis map” to help applicants find locations for their stores and ease the process of verifying a store’s legality.
- Improve communications with aspiring entrants into the cannabis industry.
- Produce regulatory bulletins to inform the public of policy changes and hold statewide listening sessions to gain public feedback.
- Transform OCM from “startup” to “fully operational regulatory agency” by strengthening internal controls and prioritizing hiring new staff to fill out agency operations, customer service, compliance and enforcement.
In addition to reforms made within the agency, the Governor proclaimed her intention to crack down further on illicit businesses, both through expanded powers of enforcement at OCM and in launching a new task force to go after illegal suppliers. At the CCB meeting, which happened concurrently with Hochul’s press conference, the Board members discussed what some of the latest enforcement measures would entail, such as being able to padlock doors to unlicensed shops and targeting landlords who knowingly rent to illicit tenants.
Though Hochul praised OCM Executive Director Chris Alexander for his work as “a key player drafting the original legislation” for the Marijuana Regulation and Tax Act, and expressed gratitude for his commitment to the office, she stated that he would be leaving the agency in September to “pursue other opportunities.”
What Happened At The Cannabis Control Board Meeting? New Licenses Awarded And Denied
The news all came on the heels of a relatively successful, though still conflicted, CCB session. Many watching the meeting celebrated the awarding of 121 new licenses to applicants who have been waiting since late October. But others questioned the inaugural display of applicants whose bids were denied, and Board member Adam Perry spent a substantial amount of time during the meeting inquiring about the review procedures for these applications. However, the room did burst into applause when the CCB passed a resolution extending the CAURD provisional license period, with the directive that a provisional licensee “shall commence operations no later than 12 months after the license is granted.”
Public Comments Support Chris Alexander, Express Frustration At Governor's Interference
Alexander, who was absent from Hochul’s press conference and instead presented his usual report at the Board meeting, gave no signs of anything being amiss. Yet when the floor was opened for Public Comment, a number of supporters spoke up.
Notably, Matthew Robinson of Legacy Dispensers, a delivery-only CAURD licensee, exclaimed to Alexander, “We want you here! Legacy, dispensaries, most of the dispensaries that I know support you. The cultivators, they support you, they stand behind you. You got backing, we support you 100 percent… We got almost 300 cultivators, almost 50 processors, and because they did a good job, they get in trouble. Now they want you to step down? That’s just wrong… That’s disrespectful.”
Dasheeda Dawson, Founding Director of Cannabis NYC, shared a public comment at the session that expressed her frustration with both the OCM’s hurdles in the rollout and what’s being perceived as the State’s larger inability to defend the agency. “It’s been incredibly disheartening to see so many missteps, largely due to not understanding the cannabis industry,” she said. “Ranging from the Governor’s mismanagement of the social equity fund through [the Dormitory Authority of the State of New York], poor defense of the MRTA, and private equity winning over social equity in discussions of the OCM’s effectiveness… What happened to following the law? There is a difference between operationalizing licenses and issuing licenses. New York has more than 300 provision CAURD licensees still waiting to get real estate and investment, people who applied under the impression that Governor Hochul’s social equity fund would support that effort.”
Observers have pointed out that DASNY’s handling of the social equity fund received little attention in Moy’s report of OCM, despite the fact that it has been criticized just as much as the much newer agency for not delivering on promises to support licensees.
Kassandra Frederique, Executive Director of the Drug Policy Alliance, vented her displeasure over the state of New York’s legal market at the CCB meeting. “I’m deeply disappointed in the conversation here today about how this industry is rolling out,” she noted. “Part of the reason why we created the Cannabis Control Board was to protect it from the whims of a governor. To be an independent body that was not supposed to be swayed by business interests, or by the politics of the legislature or by the governor.”
She went on to explain that the goals set by the MRTA, to repair the harms done to marginalized communities by the War on Drugs, were not being met by the OCM’s operations. And, she emphasized, would certainly not be met by Governor Hochul’s overhaul of the system. “They had no problem filling all those cages [incarcerating people of color during the War on Drugs],” Frederique asserted. “And now we are at this moment where it is lobbyists who are running the system here. Those lawsuits didn’t come out of nowhere; that was coordinated. And we have not protected people. And if people want to ask why people of color do not want to stand up to be in these positions, as elected officials, as progressive prosecutors, as leading the industry, it’s because we get set up… They want to cut our heads off in public!”
What Are The Cannabis Industry's Reactions To Chris Alexander Stepping Down?
Across the industry, stakeholders’ reactions to the news that Alexander will be stepping down was mixed. Many share Robinson’s outrage, while others acknowledge that Governor Hochul needed to make some drastic changes to the agency’s operations. Cannabis Farmers Alliance President Joseph Calderone told City & State: "Today the governor took some long overdue steps to right the state's cannabis market. And although we applaud these efforts, we remain concerned that absent relief for cultivators, cannabis farmers will be unable to enjoy this progress.”
What we do know is that New York, once again, is in the midst of turbulence. And wherever Chris Alexander’s path may lead him come September, we must remember his integral role in creating the MRTA. It is never easy being the first.
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Written By:
Jaime Lubin is Honeysuckle's Editor-At-Large. Her writing has appeared in HuffPost, Observer, Billboard and more. Also an actress and singer, she can be found on Twitter and Instagram.
@jaimelubin (IG)
@jaimelubin (Twitter)
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Featured image: Governor Kathy Hochul announces her overhaul of the Office of Cannabis Management. Screengrab via Governor's Office Livestream.
