New York’s attempt at legalizing cannabis has been a predictable failure. The state bureaucracy is bad enough when it comes to basic policy items such as infrastructure and taxation, so a complex policy involving the commercial sale of marijuana was destined to be a nightmare.
For this reason, the Assembly’s Republicans have continued to ask for transparency, clarity, and robust auditing of this out-of-control program. Last March, we wrote a letter to Gov. Kathy Hochul and Comptroller Thomas DiNapoli expressing our concerns over this drug legalization effort. Little progress has been made to get state-sanctioned shops that are taxed up and running and the illegal shops, which pay no tax, closed down. This may be because the Office of Cannabis Management (OCM) only employs a dozen or so investigators to pursue illegal operators, a losing battle compared to the more than 1,500 illegal shops open in New York City alone.
Instead of prioritizing applicants with the qualifications and experience required to succeed, the OCM prioritized applicants with drug offenses and criminal histories. Only in New York are criminal records more appealing than records of proven success. Too many qualified applicants have been boxed out due to this system, and the cracks are beginning to show.
The Assembly’s One-House Budget proposal includes a Cannabis Rescue and Relief Fund of $80 million to offset cannabis-related expenses plaguing cultivators and processors, but there are no guarantees this money will help. Estimates show that by the end of the fiscal year, New York will have experienced a net loss of over $203 million since the program’s inception. If this were a private business, the doors would have already been closed.
Unsurprisingly, Gov. Hochul recently announced a review of the program after acknowledging it has been a “disaster.” She’s right: 7,000 applications are in front of the state, yet only about 83 stores are open. Jeanette Moy, the commissioner of the Office of General Services (OGS), has been tasked with expediting the process and getting more shops open in the coming weeks. But is OGS really the right vehicle to tackle these challenges? Perhaps an independent, third party is better suited to identify and mitigate these problems.
Since the 2021 Marijuana Regulation and Taxation Act was passed, New York has been at a loss to get the legal cannabis market up and running properly. The delays in the application process and the overflow of illegal shops are just a fraction of the problems we are seeing.
As I said from the beginning of the state’s legalization effort, which I had voted against, a gray market was inevitable, and whenever state government tries to establish regulatory oversight of an industry, there are two guaranteed results: doing business here is going to become more onerous and less profitable, and they will turn to the politicians to bail them out. While we’ve seen neighboring states such as Massachusetts create functional, profitable programs, New York’s has been mired in dysfunction. The economic impact of this mismanagement is growing in the wrong direction. It’s not too late to get this program back on track, and I hope the governor takes seriously how detrimental the initial implementation has been to our state.