Cannabis regulators in New York revealed that at least 100 of the state’s first licenses for adult-use cannabis retailers will go to applicants with past pot-related convictions. New York Governor Kathy Hochul announced the policy on Thursday. It will also be applicable to those whose family members have been convicted of marijuana-related crimes.

Chris Alexander, executive director of New York’s Office of Cannabis Management told The New York Times that by concentrating on “those who otherwise would have been left behind,” the state is in a “position to do something that has not been done before.” He said that he expects between 100 and 200 of the first recreational dispensary licenses will be issued to applicants with convictions for cannabis-related offenses or to those with “a parent, guardian, child, spouse or dependent” with such a conviction.

“These ‘justice involved’ individuals will be eligible for four-year conditional retail licenses to sell cannabis in the adult-use market,” explained Michelle Bodian, co-chair of the hemp and cannabinoids department of the law firm Vicente Sederberg. 

“Creating an initial licensing round that prioritizes these individuals is intended to give them a first-mover advantage that helps them capitalize on what is expected to become one of the largest legal cannabis markets in the world. It is critical that those individuals and communities most heavily impacted by cannabis prohibition be given an opportunity to participate in this new industry.”

Under the Marijuana Regulation and Taxation Act, the landmark recreational cannabis legalization bill passed in New York last year, half of the state’s cannabis licenses for retailers, cultivators, processors and other other businesses were reserved for women, minorities, distressed farmers, veterans and “individuals who have lived in communities disproportionally impacted” by the failed War on Drugs. Alexander stated that social equity applicants have a better chance of succeeding in the market than more financially well-funded applicants.

“I could press the green button right now and have 40 dispensaries online,” said Alexander, referring to the state’s existing medical cannabis retailers. “But instead we’ve decided that the folks who have been most impacted actually have the space and the real runway to participate in a meaningful way.”

Social Equity Fund $200 million New York

New York policy makers’ decision to reserve recreational cannabis retail licenses for those with pot convictions is not the first step they have taken to foster an equitable cannabis industry in the state. Hochul had set aside $200million in January to establish a fund that would help applicants for social equity to cover some of the startup costs.

“New York’s legalized cannabis industry is in development, with the State expecting to issue licenses for adult recreational use,” the governor’s office wrote in a handbook detailing her budget proposals. “But the rise of what is estimated to be a $4.2 billion industry must create opportunities for all New Yorkers, particularly those from historically marginalized communities.” 

This fund was created to assist social equity applicants in finding, renting and renovating commercial properties that could be used for the development of recreational marijuana dispensaries. George Mancheril (CEO of Bespoke Financial) said Chronic News that the fund and this week’s announcement that initial retail licenses will be reserved for those with cannabis convictions “levels the playing field.” He contrasted New York’s plan with California, where social equity provisions have so far failed to make significant progress in creating a diverse cannabis industry.

“In California’s social equity program, we too often see licenses awarded to those negatively affected by the war on drugs but then they are set up for failure by being granted a license but not equipped with the capital to compete with their well funded competitors,” Mancheril said. “This NY social equity program is a great example of the learnings from previous states’ shortcomings to continue to improve the effectiveness of empowering these entrepreneurs.”

New York regulators’ decision to remove recreational retail licenses from social equity applicants was welcomed by activists in the cannabis industry and legal cannabis professionals. Kassandra Frederique, the executive director of the Drug Policy Alliance, said that New York “is taking a big swing” with the initiative.

“We don’t know what’s going to work,” she said, but “the thing that New York is showing here is that they’re willing to try and they’re willing to do things differently. . . . This is a real try towards achieving equity.”

Matt Hawkins, managing partner and founder of cannabis private equity firm Entourage Effect Capital, characterized the policy as “a step in the right direction to help legitimize the cannabis industry.” 

“New York is creating professional opportunities for people who have previous marijuana convictions and were impacted by The War on Drugs,” Hawkins told Chronic NewsIn an email. “It is encouraging for the state to take a strong stance on this.”