ALBANY, N.Y. (NEXSTAR) — On Thursday, the New York State Office of Cannabis Management (OCM) released a report on its progress in rolling out the Marijuana Regulation and Taxation Act (MRTA). It outlines financial impacts, social equity challenges, and recommendations for the future, and you can check it out for yourself at the bottom of this story.

"The rollout initially was slow and I think it was a little chaotic," said Lorraine Collins—the Director of the Center for Cannabis and Cannabinoid Research at the University of Buffalo's School of Public Health and Health Professions—when asked about the OCM report. "It's really unfortunate because one of the problems that arose, first of all—people were confused as to sources where they could get cannabis. And there was also a huge growth in illegal recreational sellers."

The Cannabis Control Board (CCB) creates and enforces rules for weed and provides guidance on cannabis industry issues. It approves regulations, applications, and licenses for cannabis businesses and oversees the OCM. The OCM manages daily operations, creates regulations, and carries out policies. The MRTA—S854A/A1248A—legalized adult-use marijuana in New York in March 2021 and created the CCB and the OCM.

The MRTA focused in part on repairing communities damaged by historic pot prohibitions—particularly communities of color—earmarking 40% of cannabis tax revenue for them. The report covers the industry's social justice impacts, economic development, and public safety.

Recommendations

The report also includes some recommendations for the industry and the government moving forward. For example, it suggests that OCM should launch campaigns to educate New Yorkers about the industry and keep kids away from drugs. It further suggests creating a program with the latest on production numbers and consumer preferences so businesses better understand the local market.

Collins agrees that the state can improve. She stressed the need for strong regulation but pointed out federal restrictions that impede meaningful research and potentially delay discovering medical applications. "There are so many hoops that we have to jump through that progress is slow," she said. "One of the reasons why cannabis was designated as Schedule I was the notion that it had no medical uses. Well, guess what? We have evidence that it does have medical uses."

And despite being legal in New York, smaller cannabis retailers still can't get financial help from mainstream financial institutions. Like Collins said, "As long as cannabis is Schedule I, banks really are restricted in getting involved in cannabis businesses."

Economics

The MRTA aimed to make money for the state, strengthen the agricultural industry, and create a regulated cannabis market that offers jobs with low barriers to entry. Among New Yorkers who use weed, 52% are only recreational, 34.5% are both medical and recreational, and 13.5% are only medical.

"When you consider that most other states that have transitioned from medical to adult-use tend to dwarf the Empire State in terms of early-year sales and tax revenue numbers, the report is more sobering," said Jeremy Unruh. He's vice-chair of the New York Medical Cannabis Industry Association and the senior vice president of public and regulatory affairs at PharmaCann, one of the state's 10 licensed medical cannabis companies.

From $2.2 million in January 2023, monthly retail sales peaked at $97.4 million in August 2024. All told, retail sales revenue—the total gross profit at all legal dispensaries statewide—hit $160 million in 2023. That includes $10 million from Cannabis Grower Showcases, representing over a hundred retailers at 60 events in 40 cities.

Since the market's launch, total historic retail sales revenue had reached $653.9 million as of mid-September 2024. And by mid-September, retail sales revenue hit $493.2 million in 2024. As of June 30, 2024, total state revenues—New York's share of that retail sales revenue—had hit $142 million.

The CCB reports issuing 1,342 adult-use cannabis licenses and having provisionally approved 362 more, with over 200 dispensaries running right now. That number includes outlets that cater to medical marijuana patients. By Sep. 15, 2024, 24 medical-only dispensaries and 10 mixed-use dispensaries also operated statewide.

"If the state wants the medical program to survive, there must be a clear benefit to being a medical patient," said Unruh. That would include lowering the cost of medical cannabis, letting patients possess more weight at a time, and simplifying how someone becomes a medical patient, he said.

The Fiscal Year 2025 budget simplified some weed taxes, including lowering the medical cannabis excise tax to 3.15%. In terms of financial impact, the report recommends finding even more ways to lower costs for medical patients. Officials at OCM and CCB are also considering waiving some fees for certain licensees.

Public health and safety

The report said that, in 2022, 14.9% of New Yorkers 18 and up said they'd used cannabis in the previous month—with 7% using at least 20 days per month—even though the legal age is 21. About two-thirds of New Yorkers who used cannabis in 2023 bought from legal sellers, while 11% reported growing cannabis at home. That leaves about 22% who admitted to shopping on the black market that year.

The MRTA aimed to transform the marijuana conversation from one about law enforcement into one about education and public health. Weed officials focus on research of safe products that don't promote underage drug use or driving while impaired. And they posit that increasing staff to monitor compliance with regulations and teaching about safe storage techniques would lead to better public health outcomes.

"Are we monitoring cultivation? Are we doing rigorous testing of the cannabis that are in stores? Are we making available enough labs and ways of getting cannabis products and testing cannabis products?" asked Collins. "People [selling marijuana] are making [health] claims that are not substantiated by any kind of research."

With strict production, testing, labeling, and public education standards, OCM said they've gotten over 9,000 incident reports related to public health:

• 8,537 concerns about a cannabis business
• 266 concerns about a cannabis product
• 164 adverse health events (80% involved products not regulated by OCM)

Social equity and justice

The MRTA's socio-economic justice program—The New York Social and Economic Equity Plan (SEE)—aimed to make whole those people who'd been penalized by the previous approach to marijuana. From 1980 to 2021, Black people accounted for 57% of 1.3 million arrests, while Hispanic people made up 25%. Black New Yorkers were also arrested for weed 15 times as often as White New Yorkers, though for Hispanic New Yorkers, the rate was 7.5 times higher than for White defendants. Over 245,000 arrests led to convictions, with 62% of those for Black people and 21% for Hispanic people.

The MRTA automatically struck from the record any past marijuana convictions so that affected communities could rebuild. Not satisfied with only expungements, the MRTA also had the goal of preventing any more arrests over cannabis going forward. According to the report:

• 400,000 marijuana convictions are eligible for expungement
• 200,000 convictions were sealed
• 107,000 convictions awaiting sealing were suppressed
• 24,400 people don't have a criminal record any more

As of September 15, 2024, CCB awarded 54.7% of licenses to SEE applicants—individuals from impacted communities, businesses owned by minorities, businesses owned by women, distressed farmers, and veterans disabled in service—exceeding a 50% goal. Of those, according to the report:

• 43% were women-owned
• 38% were minority-owned
• 8% were distressed farmers
• 8% were service-disabled veterans
• 5% were members of disproportionately impacted communities

But, "The rules were complicated, and some portion of the people who might have been appropriate for these licenses were at a disadvantage because of the complications," Collins said. "It wasn't just, 'Oh, I was in jail, give me a license.' It was a complicated process."

The report recommends educating New Yorkers with a marijuana-related rap sheet about getting it expunged. It also recommends connecting SEE licensees or applicants low on funds to grants or low-interest loans.

Law enforcement on the black market

"While the state was engaged in the intellectual exercise of building the perfect marketplace, the existing illicit market was allowed to take root," UNruh said.

Per the OCM report, a thriving legal industry depends on thorough policing of illegal sales. Regulating the market keeps consumers safe, so shutting down unlicensed sales of untested marijuana has been and remains a priority for New York's marijuana regulators.

"The state thankfully has begun to address the black market," Collins said. "All of us should be very thankful."

She stressed the importance of ongoing and rigorous enforcement. Meanwhile, the report recommends teaching municipalities about what kind of enforcement powers they have against unlicensed businesses.

OCM officers inspected 1,341 sites between May 2023 and September 2024, yielding 1,135 violations and 345 closures for noncompliance. They seized roughly 13.7 U.S. tons of unlicensed products with an estimated street value of $119 million.

Environmental sustainability

In line with the climate resiliency goals of Gov. Kathy Hochul's administration, the MRTA prioritizes environmental concerns. For example, following an executive order mandating zero-emission vehicles at state agencies by 2035, OCM has 17 electric vehicles and two plug-in hybrids.

OCM recommends reviewing whether they can modify child-resistant packaging requirements that add unnecessary plastic to landfills. They also recommend incentivizing sustainable packaging, promoting energy-efficient equipment for all cannabis growers, and establishing a deposit or recycling program specifically for cannabis containers.

"It's a tough area, and part of it is that the technologies to manage the challenges of climate are also still developing," Collins said. "We don't have a robust set of technologies that are easy to apply."

Take a look at the report below: