How NY Plans to Ramp up Its Cannabis Rollout

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Brian Lehrer: Brian Lehrer on WNYC. As you probably know, New York State legalized recreational cannabis sales back in March of 2021, but so far there are only about 12 aboveboard shops that are open statewide. Who does this hurt? Farmers who in some cases are sitting on thousands of pounds of legal cannabis that they can't sell to retailers. One solution that's currently being floated would allow growers to sell cannabis at farmer's markets, maybe even some events like music events too. It's still all in the early stages, but joining us now to discuss how the state plans to remedy what some are seeing as a slow rollout of legal weed, including how it'll manage a crackdown of unregulated shops, is none other than Chris Alexander, the inaugural executive director of the New York State Office of Cannabis Management. Director Alexander, thanks for joining us. Welcome back to WNYC.

Chris Alexander: Thanks for having me

Brian Lehrer: Listeners wondering if we have any cannabis growers out there. Are you sitting on product and worried about where you're going to offload it and if you're going to have to take losses for what the state told you you could now legally grow? 212433 WNYC 212-433-9692. Any licensed shop owners out there who don't have open storefronts yet? What would you like to share about the rollout? Have you tried getting aboveboard but haven't been approved yet? That's another group that could call in. 212433 WNYC for anybody connected to this, 212-433-9692. Director Alexander, the rules for farmer's market sales as being drawn up here, one of your colleagues has called the New York Cannabis Growers Showcase are not set in stone I see, but can you briefly describe the vision here to start out?

Chris Alexander: Yes. I'd like to take a couple of steps back and just take a proper analysis of the issue here.

Brian Lehrer: Sure.

Chris Alexander: It's definitely spot on. The slow rollout of the dispensary component of the supply chain has definitely led to some issues up the chain. When we started this exercise about 18 months ago and really a year ago, giving our farmers the opportunity to grow and be the first operators in the adult-use market, the intent was to make sure that they were able to build lasting, sustainable businesses and in many cases save their family farms. We've tried to, and continue to remain flexible and create creative solutions to problems that are coming up in this nascent industry. The concept of the farmer's market, which came from the farmers themselves, who are really creative and really committed to the success of the broader program is something that has some challenges and there's quite a bit to work through there.

It's not at all a final program, but it's representative of the fact that we at the Office of Cannabis Management, we at the state, and the government have a true commitment to making sure that the farmers who are the backbone of this program are successful. We're going to keep trying to find creative solutions. We know there are product issues in terms of making sure the supply chain is flowing. Also, the biggest and really key solution is just opening up more dispensaries, which we remain diligently focused on, and excited to see more of those open in the coming months.

Brian Lehrer: I'll get back to those, where people might see dispensaries open and how soon because it does seem pretty stalled. What about the vision for the farmer's markets? Are you planning to roll something out this summer?

Chris Alexander: I can't speak to that full detail. There's a lot to work out both from the legal side, our regulations require sales occurring from a storefront at this moment. There'd be some action that needs to take place in order to make that option a feasible one. It's a lot of details still the work through. We are looking at definitely the most efficient ways to support the farmers and making sure they're able to offload that product or really to get into stores, which is the key goal here.

It's still a little bit premature but definitely something that we've looked at and really, again, just shout out to the farmers who are coming up with really strong solutions and the team being responsive to those solutions as they're being proposed and really trying to do their due diligence and figure out what is the most efficient way to support these farmers at this crucial time?

I want to flag too. This is a moment. We are just pretty early months into this exercise of building New York's legal market. There's of course been hiccups as there always will be when you're doing something that's never been done. Normally most states have started with their existing operators and largely the existing medical operators who are a little bit more well-resourced and well-capitalized. We decided to start with the small farmers knowing that there was some risk there, but it was important that those in the agriculture sector, who had some of those family farms that were having a hard time, got a real opportunity to participate here. They've grown some excellent product. It's currently lining the shelves of the 13 dispensaries that we have, 14 opening on Friday, or 15, sorry. Two more on Friday coming.

We're trying to adapt to the situation, locating, building out, securing these dispensaries has taken a bit longer than anticipated. We've created the option for individuals to go on their own and secure the locations on their own and given them some support as they do that. That has of course created those issues upstream. We're going to keep working through figuring out the concept of the farmer's market. I don't think really it's one that's fully baked yet but it's something that we've definitely explored as a solution, but again, staying focused on getting these dispensaries open.

Brian Lehrer: Robert in the Bronx, you're on WNYC with Chris Alexander, executive director of the New York State Office of Cannabis Management. Hi, Robert.

Robert: Hi, how are you? I'm a real estate broker with Keller Williams, and I've been approached by a number of cannabis licensees looking for spaces. As you know, about, I think it's almost two years ago now, the state let municipalities opt in or opt out of whether or not they would allow for cannabis sales. Right there, that puts a limitation, especially up in Westchester and in Putnam County, for example, I think there's only one community that allows or that opted in to sell cannabis. Many of the issues are--

Brian Lehrer: I think nowhere in Nassau County if I'm not mistaken, Director Alexander, you can correct me on that if I'm wrong. Robert, go ahead.

Robert: Then the other issue is where a municipality has designated where cannabis sales are allowed. In many cases, they follow the same guidelines as alcohol sales in terms of proximity to houses of worship or schools or playgrounds, and so that limits it, or they may have designated an area that is essentially in the boondock and the current makeup or zoning of that area. I'm thinking of one town in particular that I won't mention, but it's all office parks and warehouses. Lending itself to being a cannabis dispensary, retail dispensary, is almost impossible. Plus in many of those cases, the buildings are heavily mortgaged, which is an issue too, because cannabis is not legal on a federal level. Let's say your mortgage is held by a bank in the Midwest where cannabis may not be allowed, and they find out that your tenant is a cannabis dispensary, although legal in New York state, it's not legal where they are and they could call the note.

Landlords with mortgaged buildings, of course, don't want to take that risk. Then there's also the security issues associated with cannabis because it is an all-cash business, no credit cards allowed, and so they are much higher risk for robberies and it means more increased security. That can also have a negative impact on, let's say you're a strip mall and your other tenants are a pizza parlor or a hairdresser or a shoemaker, whatever. They may not be so keen on having lines around the corner to purchase cannabis.

Brian Lehrer: You're putting a lot of really interesting detail out there for our listeners. Let me jump in for time. Robert, is the bottom line here that for you as a commercial real estate broker, you would like to make some of these matches between licensed individuals to open dispensaries and the landlords, but there are all these obstacles that you're laying out?

Robert: Absolutely. In fact, I got a phone call the other day, which I was a little bit surprised as the guy had not done his homework. He called about a listing of mine in Northern Westchester and he said he has a license. I said, that community he has opted out. Oh, well, then what about two or three other communities he mentioned, and they had also opted out? I think first things first, if you've gotten the license, you better know where it's going to be allowed.

Brian Lehrer: Where you can do it. Robert, I'm going to leave it there, but thank you very, very much. Well, Director Alexander, that was quite a description drilling down on what you were saying before, the problem has been getting dispensaries open.

Chris Alexander: Yes, I think Robert highlighted a couple of the challenges that both the state and individual licensees are experiencing with securing these locations. The distance from a church or a place of worship and a school is in place similar to what's in place for alcohol. We also have an additional distance requirement of dispensaries being distanced from one another that also has created some complications but is one that is really important both from a public health standpoint in terms of the concentration of these businesses, but also on an economic standpoint and then, of course, the mortgage issue with the landlords. These are all some of the reasons that this project, one that the governor announced in February of 2022 was complicated. You know what I mean?

I think the big thing that we've seen now is that, one, the state has remained focused on executing on that mission. What I've communicated to licensees is that this program is just a certain form of support. It's not all that we are doing to commit to your success and so where we find the hiccups and the challenges we'll pivot and find another solution. Exactly right. Robert hit it square on the head in terms of some of the challenges related to opening up these dispensaries. What I will say about the local authorizations, our municipal regulations are not yet final, but they do speak of some of the restrictions and requirements for localities in zoning. For example, we want municipalities to treat our cannabis businesses like other normal businesses. For example, bars and et cetera that do have access to normal commercial areas.

We don't want and do not believe it's reasonable to push our cannabis businesses to industrial-only zones or office spaces in the way that Robert was articulating. That's something that we are doing a lot of education on with municipalities across the state something that definitely has also created a bit of a challenge for our operators.

Brian Lehrer: He talked about some of the commercial neighbors, pizza places, whatever, who might not want a cannabis dispensary in the same strip mall or something like that. We've even seen that on 125th Street in Harlem where there was a plan for a dispensary near the Apollo Theater, and some of the local businesses pushed back. This, whether it's in a strip mall in the suburbs or on 125th Street, surprises me a little bit because I would think that whether it's a pizza place or a whatever that's trying to sell stuff, that they would be happy to have the additional foot traffic that a cannabis dispensary would bring in. How do you understand the opposition in the case of 125th Street merchants or other neighboring potential merchants?

Chris Alexander: Yes, I think it's different in every municipality and every neighborhood. We have definitely opened up dispensaries where the local business operators are there at the opening. They're helping to cut the ribbon. We opened a dispensary in Ithaca. The entire economic development team from the city was there along with almost a significant amount of local businesses along the commons, so it's been different. There are definitely places where folks are still dealing with a significant amount of stigma tied to cannabis and cannabis use. We've tried to, in our regulations deal with some of the--

Brian Lehrer: They're worried about crime. They're worried about harder drug use, either causing behavior problems or just being sold black market, and harder drugs being sold on the street nearby because they think they'll have a customer base.

Chris Alexander: I don't think much of those criticisms are based in reality. We've seen across the country as dispensaries open up crime is reduced in those areas and those communities where adult-use dispensaries open up. I think the key thing for us from my standpoint now here as the inaugural executive director is not just designing the agency and the program, but it's also changing a lot of hearts and minds still and showing folks that the businesses that we're building, the operators that we're having to operate them really are ones that communities should welcome. That speaks to why there is a community input component of opening up these dispensaries. We want these community businesses to be well-received. We are doing quite a bit on the public health and public education side.

We've just wrapped up our second massive public education campaign called Why Buy Legal, which is really educating folks of the difference between the illicit market and the regulator market and the type of products and the operators, et cetera. We have a lot of work to do in terms of education. We're doing that on a day-to-day basis but really as it relates to-- It goes back to what I was saying at the start of this, the more regulated legal businesses that folks get a chance to see actually operate, they'll learn what we've been saying for many years as we've worked on this issue, is that the sky doesn't fall when we allow adult-use cannabis sales. People are using cannabis, why not have them use safer tested products?

Why not have operators running those businesses be ones who are existing small business operators who are small farmers, et cetera?

That's what we've built here in New York. Now, it's just about turning the page as we've learned some of the challenges in doing what we've been doing. Now, it's just about executing at a high level.

Brian Lehrer: Few more minutes with Chris Alexander, executive director of the New York State Office of Cannabis Management as we talk about the difficulty in getting dispensaries open and the possible interim solution of having legal cannabis products sold at farmer's markets and other events. If they can get the growers who've got all this legal supply that they can't sell anywhere involved in the right way. Amanda in Baldwin, you're on WNYC. Hi, Amanda.

Amanda: Hi. Good morning. I just wanted to speak about a point that the real estate agent had mentioned. I don't necessarily think that all legal cannabis stores are all-cash. I've bought at a legal cannabis store, and I've used my credit card. Also, there are places in Nassau County, particularly the City of Long Beach that has opted out of the ordinance of letting a cannabis shop open in that area. I really watch a lot of the New York Cannabis Department, your commissioner there. I think that they really need to lean into the mental health side of it. There are so many people that I know who have medical marijuana cards that use it for cancer, arthritis, so many things. I think they need to lean into that and let people know that there's an option there. Also, I buy cannabis, there are a lot of stores that are always out of products for whatever reason.

Brian Lehrer: Interesting. Amanda, you put a few questions on the table there. One, can we clarify the credit card thing? My understanding from what I've read is that because of the federal illegality, you can't use a credit card, but you can use cash or a debit card.

Chris Alexander: Thanks, Amanda, for the comments. I fully agree on highlighting the benefits of medical cannabis. I'll jump into that, but I'll start with the purchasing. Yes, largely all of our legal stores take cash and debit cards. I am aware of at least one store that is also able to take credit cards due to a relationship with the financial institution. It is not widespread that everybody takes a credit card, but all of our businesses do take debit cards at this time as well as cash. [crosstalk]

Brian Lehrer: Go ahead. Finish that thought. I'm sorry, I interrupted.

Chris Alexander: No, I was just saying it's not cash-only how it used to be back in the days in Colorado and the early states, so we are definitely allowing debit transactions.

Brian Lehrer: She's in Baldwin. She talked about sales not being allowed in Long Beach both in Nassau County. Was I right before that all of Nassau County has opted out?

Chris Alexander: I believe so. I'll double-check as well. There was a significant amount of opt-outs on the island. What we've seen though, and what we've been encouraged by is the communications that we've had from the localities, from their local economic development teams, all really engaged in learning about how the cannabis businesses are rolling out their type of interaction with the community, the type of security measures, et cetera. We've been able to do quite a bit of education. I'm excited to see around November and leading into the end of the year, how many of these municipalities repeal their opt-out after seeing some more stores open up. We do have a dispensary opening up in Long Island soon. I'm excited to see that operation get up and running.

Brian Lehrer: Where is that if you can say?

Chris Alexander: I believe it's in Farmingdale.

Brian Lehrer: A little further out. What are the two that you said are opening Friday?

Chris Alexander: I know there's one in Syracuse, and I will check with the team on the second one. I believe there's another operation opening on Friday, but starting with the one in Syracuse will be the full dispensary opening. One will be a delivery-only.

Brian Lehrer: To come back to the farmers market proposal to finish up, it sounds like you didn't want to announce very much about it. We did see one of your colleagues John Kagia, if I'm saying his name right, pretty extensively quoted in High Times magazine. One of the things that he said was that there would be rules, such as that it would take a coalition of three of the licensed growers, and at least one licensed retailer who may not have a dispensary storefront yet to come together to host these farmers market placements, or at other venues that I presume would be outdoors, some even perhaps at concerts is what I read in one article. What can you tell us about those rules as you're developing them or what people might expect or when would we know if this is going to happen?

Chris Alexander: Yes. I wouldn't say rules as we're developing them. I think the big thing is just making sure that legally, we're allowed to carry out that type of activity. As I said earlier, we are a very forward-facing agency. The coalition, really, are folks who got us to this point as a state. The farmers, the advocates, everybody. We regularly are interacting and engaging. We're always problem-solving real-time. This is a proposal. It is not one that is fully fleshed out, as I know, John, heavily he caveated it during his comment, but looking also for input from the farmers on what would be a great approach to solving that problem outside, again, of the main focus of opening up dispensary. It's about engagement, it's about problem-solving as a community, as cannabis is communal. That was what was going on there.

As I said, from my perspective as the executive director here, we just got to make sure that everything is in line with our statute. Of course, just to make sure that legally we're able to do what we want to do in terms of problem-solving. We put forward dozens of solutions so far to other problems that we've experienced along the way on this journey so far, some of which came to fruition and some which did not. It all, I think, points to the spirit of creativity that we have both in the OCM team but also in the cannabis community at large.

Brian Lehrer: Work in progress. If I could throw in one last thing here. I feel bad for the farmers because they were told by the state that "You can apply for these licenses to grow cannabis." They got the licenses, they invested to grow the crops, and now the crops have nowhere to be sold. It makes me wonder if some of the illegal smoke shops that you're trying to crack down on are actually selling legally grown product. Do you know, and how does the shortage of dispensaries interact with the crackdown on the illegal shops?

Chris Alexander: Yes. I would say absolutely not. Our farmers, they have a true commitment to the regulated market. I would say yes, there are a lot of farmers and I feel for them, and I work with them in partnership every day. There's definitely a lot of folks who are in a bad spot right now. What I think too, though, is also true, is that this is a long-term plan. This is a long-term commitment by our small farmers to really, again, not just be the first operators, but to be long-standing operators. We've licensed 200-plus small farmers, and they will be a significant component of our market moving forward forever. I know that this initial year, this initial couple of months, this first growing season, really we're just starting our second now, first growing season was painful. I think what we're trying to do is make sure that those businesses survive that season.

As we now know, it normally takes across the cannabis market, this is true nationally, six to 12 months for a cannabis dispensary operation to go from licensure to operational. We are just getting into that six-month window for most of our licensees. Of course, for our folks issued in November, they are just past that, but the majority of our licensees are just hitting that six-month moment and so I do expect a significant increase in dispensary openings over the next three months or so, the next several months. What I would say again is we are committed to supporting them. We are regularly in communication with them, and we're really trying to find solutions that will be most effective to make sure that those businesses remain viable and really successful moving into the rest of this exercise.

Brian Lehrer: Chris Alexander, executive director of the New York State Office of Cannabis Management. Thank you so much for coming on with us again and answering folks' questions. Appreciate it.

Chris Alexander: No problem. Thanks for having me.

 

 

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