ALBANY – State lawmakers in Albany on Wednesday passed a bill to extend cannabis cultivator licenses for one year, avoiding a potential disruption of the state’s fledgling cannabis industry.
When the cannabis industry first started, the state issued one-year conditional licenses to cannabis cultivators, which were set to expire Thursday. Because the state’s cannabis industry has developed slower than expected, state lawmakers have now extended those licenses before the end of the legislative session on June 8.
Currently, cultivators — the people who grew the state’s first legal cannabis plants — are allowed to sell their product to processors and cannabis store owners. If their conditional licenses were allowed to expire, they would’ve no longer been allowed to sell and the industry’s supply chain would be completely disrupted.
The bill for an one-year extension passed both the Assembly and state Senate Wednesday. It now awaits a signature from Gov. Kathy Hochul. Her office did not immediately respond to requests about whether she plans to sign the bill into law.
Don Andrews, owner of Upstate Canna Co. in Schenectady, said if state lawmakers hadn’t passed an extender, the cannabis supply chain would have completely broken down. Andrews was issued one of the first dispensary licenses to sell cannabis last fall.
“The supply chain would have been ruined if that’d happened, because there’s these cultivators with all this product out there – and there haven’t been enough dispensaries out there for the product to go around,” Andrews said.
A federal lawsuit was also settled Tuesday which has halted the state from issuing licenses to dispensaries in the Finger Lakes, Central New York, Western New York, mid-Hudson regions for several months.
Peoples-Stokes said after speaking with the state Office of Cannabis Management officials, she expects the delayed licenses to be issued by September.
“Based on our conversations with [OCM] staff, as well as [state Cannabis Control Board members], they anticipate getting more licenses in the hands of people for adult dispensaries by September.
The bill to extend the licenses was sponsored by Assembly Majority Leader Crystal Peoples-Stokes, D-Buffalo, and state Sen. Jeremy Cooney, D-Rochester.
Looking forward, Andrews said one of largest problems he’s heard from colleagues is the so-called “Potency Tax.” It is paid by distributors, or store owners, and increases the tax on cannabis sales based on the THC potency. Then-Gov. Andrew Cuomo was a proponent of the tax when the legislation first passed while he was in office.
“It’s been a huge thing for everyone in the industry, because it would lower the price on product for everyone and potentially bring a lot more revenue to dispensaries. Because a lot of people are comparing prices to Massachusetts and [the illegal market].”
Cooney said eliminating the tax is one of his priorities, as well. Peoples-Stokes said she still hopes it could be something that’s passed before the end of session, which ends June 8. Both have introduced similar legislation that would eliminate it.
“Before we leave session this year, I’ve already introduced a bill. I don’t think there should be a tax,” she said. “I think the illicit market has an advantage over licensed businesses because of it.”
Included in this year’s state budget were new laws to help combat illegal cannabis storefronts in New York City, which have become a problem in the city.
“Let’s say I want to buy a [cannabis] gummy with a higher potency that costs ‘X’ amount of dollars at a state cannabis-licensed dispensary, but I can get for so much cheaper with just as much potency in the legal market,” she said. “And that’s what we don’t want to have happen. The unregulated market doesn’t collect tax revenue, which reinvests into the community. And, quite frankly, just the fact that these products are tested for product safety!”
She added she believes cannabis laws should be aligned with liquor laws – New York State does not tax alcohol sales based on alcohol content.
Cooney said he is happy this issue was addressed, but as the market grows and expands, more tweaks will be needed.
“I think we need to recognize that [Conditional Adult-Use Retail Dispensary] licenses were not able to be opened up as fast as we’d like to see them across the state.”