Business
New York’s Long Island opts out of marijuana retail, limiting options for store operators
Summer tourist destination The Hamptons is located in Suffolk County on New York’s Long Island.
When New York regulators announced plans to double recreational marijuana retail licenses to 300 for social equity applicants, local cannabis operators and other industry advocates applauded the news.
But behind the scenes, concerns were mounting over the challenge of finding affordable cannabis real estate across large parts of the state because of zoning and commercial restrictions.
About half of New York’s 1,520 municipalities have opted out of adult-use retail, according to the Rockefeller Institute of Government, a public policy think tank based in Albany.
Densely populated Long Island, just east of New York City, is a prime example.
The license expansion implemented by the state’s Office of Cannabis Management (OCM) has exacerbated a mad scramble to find zoned properties in Nassau and Suffolk counties, which together are generally referred to as Long Island.
“The opt-out issue is really more prevalent in Long Island as opposed to anywhere else in New York,” said David Feder, a cannabis attorney in the state who represents Conditional Adult-Use Retail Dispensary (CAURD) social equity applicants and other license hopefuls.
“It’s a major issue for not only the CAURD licensees who have been granted this preliminary approval because there’s limited locations to find, but it creates an even more challenging issue for the next round of licensees.”
According to the Rockefeller Institute, only 11 of 111 jurisdictions on Long Island are effectively open for retail cannabis business, or about 10%, underscoring the difficulties marijuana entrepreneurs face in New York’s potential billion-dollar marijuana market.
Nearly 3 million people live in Nassau and Suffolk counties, which are among the state’s most populated.
In Nassau County, only five of 69 municipalities have opted in, or roughly 7%, according to Rockefeller Institute data, a mix of proprietary research, public documents and media reports.
They include Kings Point, Mill Neck, Oyster Bay Cove, Plandome and Saddle Rock.
In Suffolk County, 11 of 42 municipalities have opted in for recreational sales and consumption, or about a quarter of those eligible.
Of those in Suffolk, five have “no or limited” commercial properties available, according to Rockefeller Institute research.
“Finding an actual appropriate spot is really hard given all these zoning issues,” said New York cannabis attorney David Holland, who represents some CAURD clients looking for retail locations on Long Island.
Retail opt-outs are one of the reasons only five licensed dispensaries in New York are operational nearly three months after the state’s Dec. 29 launch of recreational sales.
Three of them are located in Manhattan.
A different approach
Municipal opt-outs are all too common in the cannabis industry, perhaps no more so than in California, where nearly two-thirds of cities and counties still prohibit retail operations more than five years after the state launched adult-use sales.
These cannabis deserts are one of the primary reasons that marijuana sales declined in 2022 in the world’s largest regulated marketplace.
But other markets, most notably Rhode Island, have taken a different approach, leaving opt-outs and opt-ins to the will of the voters.
When the nation’s smallest state by landmass kicked off adult-use sales Dec. 1, 33 of the state’s 39 municipalities had opted in, or nearly 85%. That’s believed to be the highest percentage of any market launch.
When New York’s Marijuana Regulation and Taxation Act (MRTA) was enacted in March 2021, it gave cities, towns and villages until Dec. 31, 2021, to opt out of adult-use sales and consumption areas.
Most did, though they can opt back in through a voter referendum or legislation.
Municipalities are prohibited from opting out of cannabis processing, cultivation, distribution and delivery.
Residents last year in the small town of Tusten near the Pennsylvania border garnered enough signatures for a ballot referendum in November after its board opted out in late 2021.
Voters overturned both opt-outs – 54% opposed consumption-area bans and nearly 60% opposed retail bans.
“It was the power of the voters,” Holland said.
“It’s a little bit troublesome when you look at Long Island. There were not strong referendum movements out there.”
More barriers to entry
As in other states, New York regulators have proposed distance barriers between marijuana stores and other property types, including schools and places of worship.
According to insiders, a few location restrictions are causing big challenges for retail operators around New York City and particularly in Long Island, which has now been allotted 40 stores.
Among them:
- Prohibiting retailers on the same road or within 500 feet of a “community facility,” an ambiguous term, critics tell MJBizDaily.
- A 1,000-foot buffer between stores in municipalities with more than 20,000 residents.
- A 2,000-foot buffer between shops in municipalities with fewer than 20,000 residents.
“A lot of these Long Island towns are all community centers,” contends Lauren Rudick, managing principal of New York City-based Rudick Law Group, which is representing several CAURD licensees and other applicants in the region.
Long odds in Long Beach?
In late December 2021, the city of Long Beach in Nassau County opted out of adult-use retail and consumption areas.
On paper, the oceanfront community of 35,000 seems like an ideal market for recreational cannabis sales.
The city can use a tax revenue boost after struggling financially for years, including two recent settlements with developers that will set it back about $250 million, according to media reports.
Its five City Council members are all backed by Democratic voters, who outnumber Republicans threefold in the jurisdiction.
And the beach town is a destination for block and sunset parties as well as its lively bar scene.
“I feel like it’s a real big miss,” said Beryl Solomon, a Long Beach resident and adult-use marijuana advocate.
Source: https://mjbizdaily.com/options-limited-as-long-island-new-york-opts-out-of-marijuana-retail/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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