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New York poised to award first retail cannabis licenses to drug war casualties instead of big incumbents

By Steve Gelsi

New York launches applications for conditional adult-use retail dispensaries in a bid to address the wrongs of the War on Drugs

New York State has officially opened up its application process for retail cannabis dispensaries with plans to award the first 150 licenses to people who were imprisoned for cannabis offenses.

It's unclear, however, where the state's large cannabis operators that have been running its medical cannabis dispensaries fit in for now, in a market that could generate up to $15 billion a year in sales.

Unlike other states that awarded the first licenses to larger cannabis companies, the state is instead prioritizing local entrepreneurs who have been locked up for marijuana and also immediate family members of victims of the War on Drugs.

"We're doing what no other state has ever tried," said Chris Alexander, executive director of the New York State Office of Cannabis Management at a Thursday press conference.

Gia Moron, president of Women Grow, said New York is fostering "the most diverse and equitable market in the country."

The application process for the first retail licenses closes on Sept. 26.

Also Read: New York's new cannabis chief vows that half of legal licenses will go to social justice efforts

New York has already been talking to real estate brokers about securing retail locations for the adult-use licensees and even building stores, officials said.

To finance these businesses, the state has set up a $200 million social equity fund.

Cantor Fitzgerald analyst Pablo Zuanic said Friday it's unclear whether New York State's legal cannabis market will provide a "significant source of upside" for larger cannabis companies such as Curaleaf Holdings Inc. , Green Thumb Industries Inc. and Columbia Care Inc. , which is being acquired by Cresco Labs Inc. .

Multistate cannabis operators will be required to pay $20 million to support the state's $200 million social equity fund, Zuanic said.

It's not yet been determined which of the eight license types including cultivation, distribution and retail that medical cannabis incumbents will get, Zuanic said.

"For an established medical registered organization, at this stage it is not clear to what they will be 'grandfathered' [as] just cultivators, and let others do processing as well as wholesale distribution?" Zuanic said.

Ascend Wellness Holdings Inc. said earlier this week the New York market is not a priority currently as it scrapped its acquisition of MedMen's (MMNFF) New York properties.

Green Thumb Industries has sounded "bearish" on New York, although it's building a large cultivation facility in the state, Zuanic said.

Cresco Labs has sounded more upbeat due to the wholesale upside but only if they can play in a profitable and scalable manner but we are not sure this is known at this stage, Zuanic said.

After the initial 150 licenses, the state will sanction additional businesses. It's planning to have the first licensees open for adult use sales by the end of 2022.

While cannabis shares have been weak this year, the AdvisorShares Pure U.S. Cannabis ETF (MSOS) is up about 0.7% on Friday, even as the Nasdaq fell 0.5%.

Also Read: MedMen puts New York business on selling block after Ascend scraps deal

Correction: This story has been updated to remove the wrong firm name for Cantor Fitzgerald analyst Pablo Zuanic.

- Steve Gelsi

 

(END) Dow Jones Newswires

08-29-22 1324ET

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