After a shakeup at the state cannabis office, what’s next?

A critical report from the Office of General Services outlined a series of missteps taken by the Office of Cannabis Management as it struggles to open more licensed dispensaries in the state, prompting Gov. Kathy Hochul to ask OCM Executive Director Chris Alexander to step down when his term ends Sept. 1. In addition to highlighting a string of problems in the office’s operations, such as inexperienced leadership, opaque processes and a lack of communication and customer service, the report suggested remedies to improve the flawed program.

So where does the Office of Cannabis Management go from here?

“We’ve identified we have cancer. Now we have to decide going forward, what kind of radiation and chemotherapy we’re going to take,” said Joe Rossi, Cannabis Practice Group Leader for Park Strategies, a New York consultancy and lobbying firm.

Going forward, the report calls for:

• Consistent, uniform updates including regulatory bulletins and public dashboards.
• Statewide listening tours to gather feedback and insight.
• Adding staff and creating a strategic plan.
• Adopting best practices of other regulatory agencies.
• Giving applicants a single case manager on their file, as opposed to the nine OCM workers who worked on each application in the past.

The OCM also would complete future applications within 90 days, launch a map tool to locate licensed storefronts, and devote $5 million in state funds to reimburse those in the Conditional Adult-Use Retail Dispensary (CAURD) program, which was stalled by litigation, to help them offset eligible investments.

Rossi said he was “impressed” with the report, but said it doesn’t go far enough. More investigation needs to happen to explore the role of the Cannabis Control Board, whose job it is to oversee the program, and the Dormitory Authority of the State of New York, which was tasked with administering the New York Cannabis Social Equity Investment Fund, he said.

He praised Hochul for taking decisive action and said it spurred another big move by the OCM recently to give licenses to all qualifying applicants in the November licensing round, rather than limiting it to 250 licenses as it had originally intended.

“It was important that it got exposed. People were speaking at these meetings, saying ‘I can’t sleep for more than three hours at a time, I just need to know what’s going on with my application,’” he said. “Knowing they couldn’t just do the courtesy of letting these people know where they stood so they can cut bait or not in their lives and stop spending their 401(k)s, that was big.”

Damien Cornwell, president of the Cannabis Association of New York, said the report echoes what his group has long been saying – that OCM needs more resources, more support from across the government and a data-driven, transparent process that’s predictable and easy for the public and applicants to understand.

“As we move forward, we’re looking to Gov. Hochul to follow through on the recommendations of the report and deliver staff and resources to this fledgling agency as a multitude of challenges remains ahead, from preserving the CAURD program to updating the marketing and advertising regulations so our brands and retailers can better compete with the unregulated market, which we must shut down,” Cornwell said.

Joseph Calderone, president of the Cannabis Farmers Alliance, called the report “encouraging” and said it was “a long time coming,” but said that in focusing on the retail side of the industry, it didn’t go far enough.

“The supply side is equally or more important, especially this season with more dispensaries coming online. Retailers and processors are very worried there will not be enough supply for the industry,” he said. “Unfortunately, if there is not enough quality legal supply, consumers will continue to purchase untested and unregulated cannabis products.”

He called Alexander’s ouster “unfortunate” and said leadership changes can be disruptive, but said he hoped the next leader will keep the supply side top of mind. Cannabis farmers have said they are among the most harmed by the state’s slow rollout, producing millions of pounds of cannabis that went unsold because there were not enough stores open at which to sell it. Farmers have planted smaller crops this year because they lack money and because they fear a similar outcome.

“Farmers are the backbone of the industry but we have frequently been overlooked. There is a popular farm advocacy phrase, ‘no farms, no food.’ Well, that is true of cannabis as well,” Calderone said. “Without investment on the supply side, it will be impossible to have a sustainable industry and equally challenging to bring the illicit market into the fold.”

The Cannabis Regulators of Color Coalition − made up of cannabis policy regulators from California, Massachusetts, Illinois, Oregon, Connecticut and Oklahoma − condemned Alexander’s ouster and rejected the report’s findings.

It said all new cannabis regulatory agencies experience similar or worse challenges; said the report doesn’t support Moy’s accusations of Alexander’s incompetence; deflects criticism of Hochul and the Office of General Services; and called Alexander a “scapegoat.” The report also ignored problems with DASNY, it said.

“Most critically, the governor’s failure to prioritize the implementation of the state’s Social Equity Fund and ongoing defense of the Dormitory Authority of the State of New York have left hundreds of justice-involved retail licensees without expected support,” the group said in a statement.

The Dormitory Authority also was supposed to locate and build out real estate for licensees − a procedure that changed at the last minute. Finding real estate has been a major problem for licensees and applicants and is only getting worse as more dispensaries open and others are promised proximity protection.

Not reinstating Alexander “poses a grave threat to the process and integrity of equitable cannabis regulation in New York State,” the group said, and urged Hochul to reconsider asking Alexander to step down, saying his departure will further exacerbate challenges and delays in licensing, staffing, equity and overall regulation.

Alexander previously worked as counsel for the nonprofit advocacy group.

The state’s rollout of a legal cannabis market has been plagued by problems, and the pace of licensed dispensary openings has been painfully slow, filled with starts and stops. Three years after the plant was legalized in New York, just 127 dispensaries are open in the state – a dozen of them in Western New York.

The process has been marred by missed deadlines, regulatory missteps and rules that have changed with nearly every round of licensing. Licensing was halted twice by lawsuits against the CAURD program, when injunctions prevented the OCM from working on any new CAURD licenses or applications, and prevented new CAURD licensees from opening their doors.

The report concluded that Alexander’s inexperienced leadership contributed to the OCM failing to centralize licensing operations, duplicating technology that already existed and underspending its budget by $26 million. The resulting understaffing and unnecessarily complex processes – without supporting customer service to help applicants make sense of it – created a bottleneck at the OCM, which manages to approve an average of just 75 applications per month, according to the report.

With no one returning phone calls or answering questions, and with no updates on the status of applications, applicants and licensees have felt like they are pleading into the void, they have said repeatedly during pubic comment periods.

“[They] speak to the tremendous financial strain they are under, having liquidated retirement accounts, borrowed from family members and refinanced homes for a chance at participating in this market,” the report reads. “There have been media reports of adverse mental health effects on licensees.”

Tom Szulist, a licensed cannabis grower, is waiting for a microbusiness license to go through so he and partner Valentino Dixon can sell their Innocence Cannabis at a farm shop on Lake Road in Appleton. The space has been fully built out for months, but the last they’ve heard from the OCM was when it asked for their hours of operation in March. They sent that information, along with other emails that have been met with silence.

“Not a word,” Szulist said. “I’ve never seen so many people so financially committed and so left in dark as to how to proceed.”

He thought he would have his license months ago but, absent it, he has had to pivot. Instead of selling the cannabis he has grown at his own shop, which the microbusiness license would have allowed him to do, he will sell to other stores in the state.

It’s not the first time he has had to change course because of changing OCM regulations or a lack of communication.

“We can deal with delays, we can deal with setbacks but no communication? It creates fear and worry because you wonder if there’s something you didn’t do right or forgot to do. It creates all this stress and makes you think, ‘Is it really worth it all?’” Szulist said.

Alexis Heim, chief operating officer at Greenside Cannabis in East Concord, agreed the lack of transparency and communication has been exasperating.

“I would like to see more fluidity between licensing and compliance. If you have a question, it’s actually answered. If there is a problem, if I call them, I can actually speak to someone who will actually answer my question,” she said. “It seems like a very simple problem to solve, but a huge problem that we’ve encountered.”

At the same time, rules and guidance are always changing, she said. She is sometimes told one thing by OCM, then reads OCM guidance or rules that contradict it.

“I think we’ve all experienced the growing pains with OCM,” Heim said. “We are all frustrated. I think OCM is frustrated. The cultivators are frustrated. Everyone is frustrated and that just leads to a very unproductive community.”

“Extreme frustration” with the OCM’s lack of communication and shifting goal posts is a constant theme among applicants and licensees, leading to a “deep mistrust” of OCM leadership, the report said.

“OCM leadership has not taken accountability for challenges faced by those involved in the industry, such as the dire straits of small business owners attempting to enter the cannabis industry,” the report said.

The OCM made processes unnecessarily complex and didn’t have a framework to guide applicants and licensees through the process of opening a dispensary, the report said.

It’s what OCM critics have been saying all along.

“I feel like we could have written this report just based on what we’ve observed so far,” said John D’Angelo, a cannabis marketing professional and consultant who owns Case Study Labs.

Critics said they will be watching closely as the OCM moves forward.

“We’ve heard promises of reform before, and while the intention to streamline and clarify the licensing process is encouraging, the proof will be in the pudding,” D’Angelo said.