New York’s Legal Cannabis Program Plagued by Inexperienced Leaders, Report Finds

New York’s legal cannabis market has struggled due to inexperienced leaders who treated the state licensing agency like a “mission-driven” startup rather than a government office, according to an internal review released Friday.

The report highlighted several issues at the state Office of Cannabis Management, including constantly changing licensing rules, poor transparency, and a lack of enforcement mechanisms. These problems have stalled the legal market and allowed illicit storefronts to proliferate.

Gov. Kathy Hochul, who has labeled the state’s program a “disaster,” ordered the comprehensive review in March to address the series of bureaucratic stumbles and legal challenges that have plagued the agency.

“There are deep-seated issues at OCM, issues that have limited its ability to fulfill its licensing role,” Hochul, a Democrat, said at a news conference Friday.

The governor announced that the agency’s leader, Chris Alexander, would leave his post in the fall and that officials would begin implementing a series of reforms to correct problems within the state cannabis office.

The state legalized marijuana sales with social equity in mind, reserving the first round of retail licenses for nonprofits and individuals with prior marijuana convictions, in an effort to mend the damage done by the war on drugs.

However, the process was soon beset by lawsuits, a slow rollout, and other hurdles. In one instance, a judge temporarily blocked parts of the program for months after finding that state regulators had written licensing rules that did not adhere to the law legalizing marijuana.

Since sales began in late 2022, a little more than 120 legal cannabis dispensaries have opened, while thousands of black market shops have cropped up. The problem is particularly severe in New York City, where unlicensed retailers have operated with impunity, often from glittering storefronts on seemingly every block.

This year, lawmakers strengthened local officials' ability to shut down illicit shops, a move to correct a bureaucratic roadblock. At one point, Hochul pressed Google and Yelp to stop listing illegal stores online.

The report determined that the agency struggled to balance its social equity framework with the mundane administrative duties of a government agency primarily tasked with licensing. “Since its inception, OCM has operated as a mission-driven policy start-up but has struggled with the transition to a mature regulatory entity,” the report reads.

The review found that most of the agency’s senior leadership had little experience leading regulatory entities and changed licensing processes so frequently that an estimated 90% of applications required corrections because would-be retailers couldn’t keep up with the rules.

In one instance, the agency wasted significant time trying to create a unique mapping program when similar software already existed within state government and was offered to the agency.

The report outlines a series of policy fixes to address the agency’s problems, such as hiring more staff to process licenses, streamlining the application process, and hosting public “listening sessions” to identify issues, among other things.

“One of the great successes of this task force is the ability to point to the problems, which I think we all knew at some level that things were not working the way that they needed to,” said Jeanette Moy, the commissioner of the state’s Office of General Services, who led the review.

“Everyone wants OCM to be successful. We want it for their staff, we want it for the leadership, and we want it for the New Yorkers who want to see this industry thrive.”