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As New York continues ramping up its adult-use cannabis market, some industry insiders are beginning to sound an alarm: Hundreds of social equity retailers may lose their permits soon if regulators don’t extend mandatory deadlines for those licensees to get open for business.

The problem, two cannabis lawyers explained, is that the first round of conditional adult use retail dispensary (CAURD) permits – which were issued starting in 2022 to “justice-involved” entrepreneurs who had some type of criminal cannabis conviction – will start expiring on Dec. 6, two years after the first handful of such permits were awarded, if nothing is done.

The situation

All marijuana business licenses have an initial one-year deadline to “operationalize” under the current industry rules, but the CAURDs were granted an extra year in the fall of 2023 due to a court-ordered pause on all licensing and dispensary openings, attorney Lauren Rudick said. The expirations will be on a rolling basis based on the actual date of issuance, unless the rules are altered by the Office of Cannabis Management or the Cannabis Control Board.

“The clock is ticking,” Rudick said.

Rudick shared multiple email confirmations from OCM staff to both her and one of her clients, CAURD licensee Albert Capraro – one of the very first 36 CAURDs – that stated unequivocally, “At this time no additional extensions will be granted.”

Instead, Capraro was told by the OCM his license will expire on Dec. 6. Rudick was also told via email by OCM staff, “At this time there is no additional extensions being offered.”

Because hundreds of the CAURDs have run into multiple roadblocks on their way to opening for business – primarily finding compliant dispensary sites and raising the millions of dollars necessary to fund build-outs – the same pool of equity-focused entrepreneurs now stand to potentially lose out on everything they’ve worked towards for two years, Rudick said.

“It is shocking. States are usually not in the business of taking licenses away. They want to help applicants to operationalize, particularly these types of applicants,” Rudick said. “They are the licenses that were the most impacted by failed drug policy that is at the heart of legalization here in New York.”

The numbers

The OCM confirmed in an email to Green Market Report on Friday that there have been a total of 533 CAURD permits issued, of which 210 have won final permits and another 323 are still actively working to get open.

That means 323 permits are in jeopardy, unless regulators act to lengthen their lifespans.

The OCM further said in an emailed statement that the agency “is aware that some Conditional Adult-Use Retail Dispensary licensees are approaching the expiration date prior to becoming operational. The OCM will be collaborating with the Board to explore potential solutions and will be reaching out to CAURD licensees with more information when it is available.”

As of Oct. 25, there are just 222 licensed recreational marijuana shops open for business in New York state, according to the OCM. Many of those are non-social equity licensees that were part of the November applicant pool last year.

Capraro, who said he was “ecstatic” when he first won a CAURD license in November 2022, recounted that he immediately ran into logistical problems with a building he owns in the town of Brookhaven on Long Island, because the municipality changed its zoning rules after he got his initial permit, making it technically impossible for him to pursue his original plan.

Although Capraro spent almost a year searching for a new location on Long Island, he’s been unable to find a legally compliant site thus far, which led him to email the OCM in September to request an extension until the end of 2025 so he could keep looking.

The OCM wouldn’t accommodate him.

“The state didn’t help me at all. The town didn’t help me at all, and before you know it, it’s two years,” Capraro said. “I was one of the first to get my license. Now I’m going to be one of the first to get their license taken away.”

Now, Capraro isn’t sure what will happen in the next few months, and he’s worried the past two years of work will have been in vain.

“It doesn’t make sense, and it’s very sad and sickening,” Capraro said. “They made this program for justice-involved people, and they’re going to be taking licenses away from justice-involved people because the state didn’t want to fight for them.”

Capraro said he was “heartbroken” when he received the OCM email asserting that he wouldn’t be getting another extension, and now he’s not sure what to do next, if anything.

But he said he knows one thing: If the OCM and the Cannabis Control Board don’t approve extensions and several hundred CAURD permits are allowed to expire, the state likely can expect a host of new lawsuits from licenseholders who have spent immense time and money to launch dispensaries.

“If they’re going to take away the licenses, a lot of CAURD members are going to sue the state,” Capraro said.

Next steps unclear

Regardless, Rudick said, the OCM and CCB should make their position on the issue crystal clear, so CAURDs can make informed decisions sooner rather than later, either by cutting their losses or doubling down. Capraro said he’s basically treading water until he gets a final decision from the OCM.

“If there is a different directive, please let these applicants know, because they’re trying to make crucial business decisions right now, and they’re wondering whether to further invest, or whether they’re done,” Rudick said.

Cannabis attorney Jeffrey Hoffman, who has also been working closely with several CAURDs, echoed Rudick’s concern and said he had raised the same issue with OCM staff earlier in October, at which point the agency indicated it’s aware of the issue and is trying to fix it.

“They tell me they’re going to take care of it. I hope that’s true,” Hoffman said. “The whole point of this was equity. I’m honestly not sure why they have deadlines at all… It just seems that we’re once again penalizing the people who always get screwed. I’d hate for us to do that.”

Hoffman noted that the OCM has done “amazing work” on social equity thus far, and he said he’d hate to see the agency’s legacy altered into one that was remembered for further disenfranchising entrepreneurs with criminal marijuana convictions. He anticpates that this is a topic that will come up during an expected Cannabis Control Board meeting in November – which has yet to be announced or scheduled.

While he thinks the board will grant broad extensions for CAURD permit holders, it’s not a done deal.

“Until it gets done, I’m not confident of anything,” he said. “It’s done when it’s done.”