Audit faults NYS office for problems in rollout of legal cannabis market

ALBANY — Inexperienced leadership, a haphazard management structure and poor customer service hindered the rollout of New York’s legal cannabis market, overwhelming applicants with “confusion, difficulties and delays,” according to an audit released Friday.

A special task force examining the state Office of Cannabis Management found multiple problems have contributed to a bungled rollout of licensed shops, allowing illegal pot shops to fill the void and thrive.

Gov. Kathy Hochul released the report Friday while announcing the current executive director of OCM, Chris Alexander, would be let go in September when his appointment term expires.

The governor — who also is under fire for the poor launch of the program — announced steps she said will “overhaul” the cannabis office, ease the backlog of pending license applications and shutter more of the thousands of illegal shops around the state.

She also said the state, recognizing how the delays hurt, would create a $5 million fund to administer “micro grants” to assist some of the first retail licensees.

The audit released Friday was conducted by Jeanette Moy, commissioner of the Office of General Services, who found numerous structural and operational problems. Among them, the audit found:

• 1,200 applicants have secured a business site, but still are awaiting OCM reviews before they can get a license.
• 90% of applicants failed to obtain licenses, which illustrates a lack of clarity from the state about what was required and what steps needed to be followed.
• OCM had determined 309 applications should be denied — but failed to notify the applicants, leaving them in limbo.
• Nine staff members handled each application but no single person was in charge of seeing it through — unlike some other state agencies. This wasted time and left no one accountable.

OCM itself has numerous vacancies but failed to even post job listings to begin hiring. So the task force, through the Office of General Services, has posted the openings.

New York legalized recreational marijuana in March 2021 under then-Gov. Andrew M. Cuomo. Under investigation for sexual harassment allegations and other issues, Cuomo resigned in August 2021, with Hochul moving up from lieutenant governor to replace him.

Cannabis regulations were slow to be put in place, as was staff. A New York goal of awarding the first batch of licenses to certain qualifiers, including “justice involved” individuals — someone who had a past marijuana conviction — became the subject of litigation, holding up license awards for a period.

By early this year, OCM had received more than 7,000 applications and issued more than 500 retail dispensary licenses. But just over 80 have opened — instead of the hundreds officials had planned on approving by now.

Many industry insiders, applicants and lobbyists have complained OCM functioned more as an advocacy group than as a government administrative agency.

Hochul said her inner staff would take a larger in managing and reshaping the cannabis office.

“Today is not about finger pointing. It’s about pointing OCM in a new direction,” Hochul said. She said the overhaul would include:

• Adding staff to license teams, appointing one person to shepherd an application and promising the completion of applications within 90 days.
• Launching a state trooper-led task force to target illegal suppliers and illicit stores. This will include adding 150 investigators working to “padlock as many illegal stores as possible,” said Chris West, first deputy superintendent of the state police, at the news conference.
• Creating a $5 million pool of micro grants for licensees whose operations were delayed by the litigation. The grants may be used to reimburse qualifying initial costs.

Advocates welcomed the initiatives, while wishing they had occurred sooner.

“The report makes important recommendations for improving the licensing process, many of which are long overdue,” said Britni Tantalo, president of the New York Cannabis Retail Association.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy