A woman walks past a smoke shop in New York City on June 16, 2023, with a marijuana leaf displayed in the window.

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Coss Marte’s marijuana dispensary in Lower Manhattan has already cost him over $1 million, and it’s not even open yet.

Because of his previous marijuana-related convictions, he received the coveted dispensary license last year. It was part of New York’s Conditional Adult Use Retail Dispensary (CAURD) program, which previously limited retail licenses only to this group.

But now, as the state tries to jumpstart the slow-moving rollout of legal marijuana, Marte’s business is one of hundreds in limbo and possibly on the verge of ruin as the state prepares to release general licenses.

“I could go bankrupt,” Marte said.

In addition to the obstacles to finding locations and the financing needed to open dispensaries, lawsuits have prevented most CAURD licensees from getting their businesses off the ground.

On Tuesday, the state’s Cannabis Control Board voted for new regulations that would expand New York’s slim market for legal weed by allowing a broader range of applicants. The state has struggled to open enough dispensaries and meet demand amid regulatory hurdles and a thriving illegal market.

“Today marks the most significant expansion of New York’s legal cannabis market since legalization, and we have taken a monumental step toward our goal of providing New Yorkers across the state with access to safer, regulated cannabis,” said Chris Alexander, CEO of The Office of Cannabis Management (OCM) announced this in a statement on Tuesday.

Entrepreneurs who have already received a license feel left behind.

New York prioritized retail licenses for people convicted of marijuana offenses before weed became legal in 2021. This is part of a restorative justice effort aimed at giving those affected by Prohibition a chance to gain a foothold before large corporations enter the industry.

But lawsuits from medical marijuana and veterans groups have suspended the program and prevented New York regulators from issuing additional licenses or opening stores on existing licenses. The groups argue the program is unconstitutional.

As a result, only 23 of these licensees have opened for business nationwide. The vast majority, over 400, were unable to open. There are now around 1,500 unlicensed companies operating in New York City alone.

Tuesday’s announcement made no mention of these licensees or the legal challenges to their legitimacy.

“This could mess up my whole life,” Marte said. “Maybe I won’t be able to come back from this.”

“Monumental” change or a “nightmare”?

Starting in October, license applications will be available to the general public as well as to large multinational manufacturers and medical companies for retail, cultivation, processing and distribution.

The move will pave the way for major players — including Columbia Care, Cresco Labs, Curaleaf, Green Thumb and Ascend Wellness Holdings — to get in on the action.

The new framework is expected to be a boon for the state’s fledgling legal market, which needs more dispensaries to increase sales and tax revenue.

According to the Cannabis Control Board, the state’s licensed dispensaries reported total sales of over $70 million at the end of August. New York’s recreational market is expected to generate over $1 billion annually by 2025 and grow to $4.41 billion by 2030, according to New Frontier Data, a marijuana research firm. The company noted that this puts it on par with states like California, which have generated $4.51 billion so far this year.

By expanding eligibility requirements to enter the legal industry, New York is back on track to achieve those goals, said Jeff Schultz, a marijuana attorney at Foley Hoag.

“This is monumental,” Schultz said. “New York needs hundreds of retailers open to meet existing consumer demand and shift all products tied to the supply side of the current market.”

Marte, who received a CAURD license in April 2022 after serving a prison sentence for drug trafficking, said he invested hundreds of thousands of dollars in opening his dispensary in Manhattan’s Lower East Side.

However, despite the pause and ongoing litigation, Marte has not been able to open and its location remains empty.

When contacted by CNBC, the OCM said it could not comment on pending litigation.

“I just want to express on behalf of the office my continued commitment to the success of these licensees,” Alexander said of the CAURD companies on Tuesday. “We will continue to work diligently.”

The uncertainty still haunts Marte.

“It was an opportunity that was a dream,” he said. “And now it’s become a nightmare.”

Source : www.cnbc.com

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