ALBANY, N.Y. — New York’s legal cannabis market is being stymied by inexperienced leaders who treat the state licensing agency as a “mission-driven” startup rather than a government office, according to an internal investigation released Friday.
The report details several problems at the state’s Office of Cannabis Management, including constantly changing licensing rules, poor transparency and the lack of enforcement mechanisms, all of which have stalled the legal market and allowed illegal retail establishments to flourish.
Gov. Kathy Hochul, who has called the state program a “disaster,” ordered a comprehensive review in March in hopes of addressing the cascade of bureaucratic stumbles and legal problems plaguing the agency.
“There are deep-seated problems at OCM, problems that have limited OCM’s 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 position in the fall and that officials would begin a series of reforms to fix problems in the state’s cannabis office.
The state legalized marijuana sales with social equity in mind, reserving the first round of retail licenses for nonprofits and people with prior marijuana convictions, an effort to repair the damage done by the war on drugs.
But the process was soon beset by lawsuits, a slow rollout and other hurdles. In one case, a judge temporarily blocked parts of the program for months after finding that state regulators had created licensing rules that did not comply with the law legalizing marijuana.
The state has opened just over 120 legal cannabis dispensaries since sales began in late 2022, while thousands of black market stores have popped up. The problem is especially pronounced in New York City, where unlicensed retailers can operate with impunity, often from glittering storefronts on seemingly every block.
Lawmakers this year strengthened local officials’ ability to close illegal stores, a move to correct a bureaucratic roadblock, and at one point Hochul urged Google and Yelp to stop offering illegal stores online .
The report found that the agency struggled to balance its social equity framework with the mundane administrative tasks of a government agency primarily charged with licensing. “Since its founding, OCM has operated as a mission-driven policy start-up but has struggled with the transition to a mature regulatory entity,” the report said.
The investigation found that most agency executives had little experience leading regulatory agencies and changed licensing processes so frequently that an estimated 90% of applications required corrections because potential retailers could not keep up with the rules.
In one case, the agency wasted a lot of time creating a unique mapping program when similar software existed within the state government and was offered to the agency.
The report details a series of policy solutions to address the agency’s problems, such as hiring more staff to process licenses, streamlining the application process and holding public “listening sessions” to identify problems, among other things.
“One of the great successes of this task force is its ability to point out the problems, where I think we all knew at some level that things weren’t working the way they should,” said Jeanette Moy, the state commissioner. Office of General Services charged with leading the review.
“Everyone wants OCM to be successful. We want it for their workforce, we want it for the leadership and we want it for the New Yorkers who want to see this industry thrive.”