State policy seeking to right the wrongs of the past by prioritizing recreational weed licenses for those with past convictions is a step in the right direction, advocates said this week.
New York’s first cannabis dispensaries are slated to open by the end of the year, which is months ahead of the summer 2023 launch date cannabis officials had pointed to in the past, state officials confirmed Thursday. And under the new licensing regulations, people convicted of a cannabis offense before legalization in March 2021 would have a head start in the entrepreneurship process, as would the family members of those with such convictions. In an unprecedented attempt to address historic inequities, that cohort would be the only group eligible to apply for the first round of retail licenses in New York, officials said.
Ernesto Castillo is one applicant who might benefit from New York’s new regulations. Castillo, 36, grew up in Upper Manhattan and spent years building a marijuana delivery service with his partner, Joel Collado, that covered all five boroughs.
He said he spent three years behind bars for marijuana possession and faced stigma from friends and family. But he also said he wants to be recognized for his entrepreneurship and has been preparing to enter the legal industry for a long time.
“Once things got serious on the West Coast, I realized change was inevitable,” Castillo said. “I realized change was coming to the East Coast as well. It was just about connecting the dots.”
Castillo said he would like to open a dispensary in Washington Heights. But he added that he is interested in other aspects of the industry as well such as distribution. He said he hoped there would be more resources available to people who are working to transition to the legal industry from the so-called “legacy” market.
“These hundred licenses going to impacted people is a good step, it’s a great step,” Castillo said. “But it’s definitely not over.”
The policy to prioritize that group would likely garner between 100 and 200 licenses, according to Chris Alexander, executive director of the state’s Office of Cannabis Management. That would likely be just a fraction of the industry as the state has not set an upper limit for the number of overall licenses.
Colorado, for contrast, doled 1,500 adult-use business licenses just seven years into legalization, according to The Denver Post.
But prioritizing these 100 to 200 businesses would represent one of the first concrete steps that New York officials have taken to deliver on the promises of equity and inclusion that were made in the Marijuana Regulation and Taxation Act, the law that legalized cannabis in March 2021. The law called for half of licenses going to so-called “social equity applicants,” a category that includes not only those who have been impacted by prohibition, but also distressed farmers, disabled veterans and women- and minority-owned businesses.
"New York State is making history, launching a first-of-its-kind approach to the cannabis industry that takes a major step forward in righting the wrongs of the past," Gov. Kathy Hochul said in a statement on the measure known as the Seeding Opportunity Initiative.
Hochul passed a bill last month that aims to make it possible for New York hemp farmers to transition to marijuana cultivation in time to have product ready for these early dispensaries to sell.
The dispensary licensing regulations will now undergo a 60-day public comment period, after which the state will open up applications to those eligible.
“In New York we acknowledge the need to move quickly, but also the need to do it right,” Alexander said at a press conference on the initiative Thursday. “We acknowledge that if we want a different outcome for our equity entrepreneurs, we have to take a different approach.”
Other states have implemented their own measures to promote greater equity and inclusion in the cannabis industry, but they have not always been successful. Advocates said New York’s plan goes further and shows a willingness to experiment with new approaches.
“This is about innovation,” said Kassandra Frederique, executive director of the Drug Policy Alliance, a nationwide nonprofit. She and other advocates said they hoped there would be similar equity provisions for other types of licenses, such as those for cannabis cultivation or delivery.
Frederique said that creating opportunities for diverse groups to enter the industry has often been an afterthought during legalization in other states.
“What's exciting is that [New York is] attempting to stand the industry up with the people most impacted,” she added. “That's different.”
In New Jersey, officials said they are also prioritizing equity when considering recreational cannabis license applications. But the state missed its planned launch date for its cannabis market in February. It is now facing pressure to allow existing medical marijuana companies — which have come under fire for a lack of diverse ownership — to be the first to sell cannabis to the general public.
The dispensary licensing regulations proposed by New York’s Cannabis Control Board Thursday will now undergo a 60-day public comment period, after which the state will open up applications to those eligible.
Setting businesses up for success
The state is taking measures to ensure that these businesses are successful. State regulations specify that, in addition to involvement with the justice system, the first retail applicants must have prior experience running a successful business or nonprofit organization.
Alexander said he is confident there will be many New Yorkers who fit the criteria of having a cannabis record and business experience. But he added that people can still be denied licenses based on other types of convictions, depending on the circumstances.
The state is offering additional support to these early applicants, including help with leasing property.
In New Jersey, a lack of available space for cannabis businesses posed a challenge for applicants. And Hochul has proposed including $200 million in the state budget to provide capital to social equity applicants through a mix of public and private funds.
Still, financing remains tricky in the cannabis industry because the drug is still federally illegal. Advocates for underrepresented entrepreneurs said they are seeking to identify and create other funding opportunities as well.
“We aren’t just waiting [for the state funds],” said Domingo Estevez, chair of the Public Safety Committee in Manhattan’s Community Board 12, which represents Washington Heights and Inwood.
Estevez said he is working with a group called Dignity and Justice Now to launch a campaign to raise money for a fund that will support legacy applicants like Castillo. Others said they are working to set up programs to provide legal services and other assistance to those who are trying to enter the cannabis space.
“Businesses are going to need more than one funding source in order to be successful,” said Gia Morón, president of Women Grow, a company that hosts educational events for aspiring cannabis entrepreneurs.
She said she was encouraged by the existing cannabis companies that have created incubation programs for startups. She also referenced new opportunities such as the BIPOC Cannabis Pitch Fest, which the cannabis investment firm Arcview is co-hosting later this month.
But despite highlighting the ongoing need for outside resources, Moron said she was optimistic about New York’s efforts to give a leg up to those who have been directly impacted by cannabis prohibition.
”This is an industry that has been built on the backs of people who have been incarcerated for this,” Moron said. “They absolutely should have the first crack at being able to open up a legal business in a regulated market in New York state.”
Correction: A previous version of this story misstated the committee Domingo Estevez chairs for Manhattan's Community Board 12.