New York to probe sputtering legal marijuana program as storefronts lag, black market booms

ALBANY, N.Y. (AP) — New York will evaluate its troubled recreational marijuana licensing program after lawsuits and bureaucratic stumbles severely hampered the legal market and allowed black-market sellers to flourish, Gov. Kathy Hochul ordered Monday.

The review will focus on ways the state can speed up license processing times and allow businesses to open faster, as well as a top-down assessment of the Office of Cannabis Management's structure and systems.

Hochul, a Democrat, has described the state's recreational marijuana rollout as a “ disaster." Just over 80 legal shops have opened since sales began at the end of 2022.

The state's legalization law reserved the first round of retail licenses for nonprofits and people with prior marijuana convictions. It also set up a $200 million “ social equity ” fund to help applicants open up shops, all in an effort to help those harmed by the war on drugs get a foothold of the state's marketplace.

But the permitting process was soon beset by legal challenges and the so-called equity fund struggled to get off the ground, stalling growth of the legal market.

In the meantime, unlicensed storefronts opened up all over the state, especially in New York City, with the problem becoming so pronounced that Hochul last month asked such online entities as Google and Yelp to stop listing them online.

Still, state regulators have had trouble dealing with the overwhelming volume of applications. The Office of Cannabis Management has just 32 people reviewing license applications but has received about 7,000 applications since last fall, a spokesman said.

The assessment of the program was also announced days after a top official at the cannabis agency was put on administrative leave following a report from New York Cannabis Insider that alleged the agency had selectively enforced rules to punish a marijuana processor.

The state's review will embed Jeanette Moy, the commissioner of the state's Office of General Services, and other state government officials, in the cannabis management agency for at least 30 days. The group also will come up with plans to improve how the agency functions and set performance metrics moving forward, according to a news release.

“We have built a cannabis market based on equity, and there is a lot to be proud of," said Chris Alexander, executive director of the Office of Cannabis Management. "At the same time, there is more we can do to improve OCM’s operations and we know Commissioner Moy, a proven leader in government, will help us get where we need to be."