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First cannabis retailers are approved, but none from WNY

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Cannabis farm tour

A cannabis bud at the Three Cord Ranch in Derby. 

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Monday was a historic day for the developing recreational marijuana industry in New York, but, for now, the Buffalo Niagara region was left out.

The first conditional adult-use retail dispensary licenses were granted by the state’s Cannabis Control Board to 37 applicants in New York, but none went to Western New York businesses or nonprofit organizations.

That’s because of a federal lawsuit that objects to the way New York is awarding the first retail licenses to New Yorkers who have been affected by the state's drug laws. That prompted a judge to block the state from issuing its first batch of licenses in five regions, including Western New York.

“The list doesn’t include anyone from Buffalo but I know we’re going to fix that as well,” State Assembly Majority Leader Crystal Peoples-Stokes said during a Monday meeting of the Cannabis Control Board.

“We’ll get through whatever these people want to do or try to do to us in the court system. It is kind of sad that it is 2022 and equity must be tried in court," she said. "But I know we’ll win this case and when we do, I’ll look forward to those lists including people from those regions that have been left out, including my beloved Buffalo.”

Twenty-nine dispensaries that have a stakeholder with a prior cannabis-related conviction or a family member with a conviction and eight nonprofit organizations with a history of helping the incarcerated re-enter society with job-training programs were selected to be the first retailers of recreational marijuana.

The state’s Cannabis Control Board also laid the groundwork for recreational marijuana regulation, proposing a 300-page package that outlined the rules the industry must follow. They focus on the application process, maximizing consumer choice, prioritizing small businesses and equity and emphasizing the importance of the community and environment.

“We’re rounding the corner and operationalizing the cannabis market is within reach,” said Tremaine Wright, chair of the board. “This is a monumental moment and represents the last leg of the cannabis supply chain that requires license-ship. Not long ago, the idea of New York legalizing cannabis seemed unbelievable.”

Maryland and Missouri have voted to join the other 19 states in America that have already legalized recreational weed, bringing the total up to 21.

Chris Alexander, executive director of the New York State Office of Cannabis Management, said the focus will now move to get licensees successfully operating and preparing for the approval of the next round of cannabis operators, which could include Western New Yorkers if the state is successful in its legal fight over the lawsuit.

The other regions affected by the lawsuit are Brooklyn, Central New York, the Finger Lakes and the Mid-Hudson area.

Alexander said they have reviewed over 900 applicants so far and there will be more under review before the next round of retailers are to be approved.

The first batch of approved retailers can begin delivery sales of cannabis as they are assisted in finding brick-and-mortar retail locations. This accomplishes the state’s goal of having the first cannabis retailers in business by the end of the year.

“Already family farmers across New York have grown and harvested the first adult-use cannabis in the state and our processors are hard at work transferring that harvest into a wide variety of products,” Alexander said.

The Michigan company that brought the lawsuit, Variscite NY One, said it meets the requirement of majority ownership by a "justice involved" person – someone convicted of a cannabis-related offense – but was excluded from applying for a license because it is not based in New York and its cannabis-related conviction occurred out of state.

While the case is pending, Judge Gary L. Sharpe from the U.S. District Court in Syracuse ruled the state cannot issue licenses in the regions cited in the lawsuit.

Up to 175 licenses will be granted in the first round, including as many as 150 to individual applicants and up to 25 to nonprofit applicants.

Cannabis Control Board member Reuben McDaniel said the board has been working to help cannabis retailers acquire their physical locations and provide tools for financing. Members are working with 10 firms to identify and open locations throughout the state for retail dispensaries. They’re also helping negotiate lease terms and assisting with banking and insurance.

The board’s proposed cannabis regulations would set up a two-tier marketplace, where businesses will be unable to hold licenses as both a supplier and retailer. The idea is to prioritize small business, create competition and reduce barriers to entry, while fending off bigger, dominant competitors, Alexander said.

The proposed rules also cover the application and license selection and renewal process; the role municipalities play in regulating cannabis businesses; key social and economic equity program provisions; environmental and sustainability standards; and operating requirements such as security, record keeping and transportation.   

“To have a true decentralized market, we need to understand who is coming in to invest,” Alexander said .

There will be a 60-day public comment period before the regulations are considered for approval. Board members said they have learned lessons from other states in helping create what they hope will be a sustainable industry.

“We still have a long way to go, but we are all focused on making sure cannabis is successful in the state,” Wright said.

The board also approved 16 additional conditional cannabis cultivator and processor licenses to bring that total to 277 and eight more cannabis processor licenses to bring that total to 32.

The board also approved revised packaging and labeling and marketing and advertising regulations. The revisions, which will go through a new 45-day public comment period, include requirements for child-resistant packaging and labeling that identifies products as containing cannabis with THC, a ban on marketing to people under 21 years of age, establishing testing procedures to ensure products are safe for consumption and creating more flexibility for licensees to build their brands.

BioTrax Testing Laboratory on Harlem Road in Buffalo was one of three laboratories approved as a cannabis testing laboratory.

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Michael J. Petro is a business reporter for The Buffalo News. The Buffalo State College graduate is a former sports writer who previously served as the editor of both The Sun and Buffalo Law Journal.

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