Cannabis Experts Hope Hochul, OCM Approve Regulations in Q1 2022

by Michael Nocella

By now it’s clear that official regulations for retail cannabis won’t be under New Yorkers Christmas trees this year. But interested stakeholders might begin to see drafted regulations surface for public comment early in the new year.

Vice President of the New York Cannabis Growers and Processors Association Kaelan Castetter, General Counsel for Lantern Katie Neer, and Osbert Orduña, CEO of The Cannabis Place, an advocate and planned adult-use license applicant recently discussed how things are looking on the cannabis front in New York at the moment.

The Latest on Regulations

One thing they all agreed on: things won’t start to pick up until the Office of Cannabis Management (OCM) and Cannabis Control Board roll out drafted regulation languages for public comment.

In a webinar hosted by Grown In Editor Mike Fourcher, all three experts agreed that should happen sometime in quarter one of 2022.

“I think the OCM has been hustling to get staffed as quickly as they can,” Neer said. “They’ve obviously been dealing with a good amount of disruption, and have been working on that transition. Hopefully we can get things going early next year and drop some regulations during that first quarter. I would love if it was February or March when we were seeing some regulations to respond to and public comments going. I think it would be smart if they dropped regulations in chunks of subject matters rather than waiting to drop it all at once. They have enormous amount of work to sift through.”

Orduña suggested that Governor Kathy Hochul could be motivated to have at least some regulations out for public comment to create momentum for her campaign to run for governor next year.

“I think that June 2022 is a big date on Governor Hochul’s agenda,” he said. “Because of that, I think the Governor’s going to want to have a win and a feather in her cap in the form of having regulations on the table.”

Added Castetter: “February is maybe an aggressive ask for the OCM, but I think it could happen. I think by the end of quarter one, we will sell drafted regulations. Then we’ll see about four or five months of rule-making process and public comment period, which is 60 days. I think we’re looking at the latter half of next year in terms of when the application process will actually be open.”

Including the Legacy Market

In addition to waiting for regulations to be passed, the trio shared thoughts on how the OCM will prepare for integrated the legacy cannabis market that’s already operated without regulations in the state.

Orduña and Castetter both pointed to Long Island and Western New York where there is a robust amount of underground cannabis business, and its presence won’t just disappear when the regulated market surfaces.

“One of the big challenges they have on their plate is how to do that in a way that invites the legacy market in the regulated space,” Neer said. “The legacy market is super competitive and super sophisticated. It’s very well run. There are really high-quality products that are very convenient and at a good price point. So how does a regulated market compete with that? How does the marketplace convince the consumer to come to the regulated market? That’s all a huge undertaking.”

Orduña agreed, and said if mishandled, the newly regulated market would suffer consequences when it debuts.

“Cannabis has always existed,” he said, “and will continue to exist in the underground market. Lot of entrepreneurs who are bringing the business to life before it’s even illegal. The State will need to get going if they don’t want to see what’s happening in California with the legacy market competes with the regulated market.”

The Application Process

The third talking point during Grown In’s webinar surrounded the licensing application process itself. Once the regulations are finalized and the OCM begins actually accepting applications, what then?

“What will they look for and what will they prioritize?” Orduña pondered. “They need to sort out the social equity definitions, and how applicants will and can become social equity certified. Whatever that process is going to look like in New York, I think needs to be outlined and defined in regulation. That’s very important because I think everything else flows from there. I am concerned with the fact that there’s some talk of a lottery system. I don’t agree with that at all. I think that does harm to the whole social equity standpoint. I don’t think that would provide the most viable candidates.”

Castetter said that if regulations surface sometime in quarter one in 2022, we could see the first applications being approved by quarter one in 2023. But that still leaves so many questions to be answered, such as who, how, and how many, businesses will be being approved.

Added Neer: “The mechanics of how they’re issuing these licenses is also going to be a huge part of this process. There’s a lot of talk – are there going to be license caps or not? That’s a huge decision point that these regulators need to make. It’s not in the statue yet. You see that in other states that have gone through this, but not in New York yet. And I think that’s by design. They want that flexibility to kind of push and pull economic levers to make very competitive and robust and equitable marketplace emerge in New York.”

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