Business
Confusion, uncertainty in New York amid fallout from cannabis audit and resignation of key regulator
Published
7 months agoon
Even as New York’s nascent legal marijuana market continues to slowly progress, with more dispensaries seeming to open each week, there are still thousands of business licenses hanging in limbo, without any clear idea of when or how things may change for stakeholders.
That uncertainty has only worsened in the past month, industry participants told Green Market Report, after a scathing state audit blasted the Office of Cannabis Management’s handling of the adult-use market rollout. That was paired with Gov. Kathy Hochul announcing she wouldn’t reappoint OCM Executive Director Chris Alexander in the fall.
The audit news teed up Alexander’s resignation a few weeks later, and his last day is Friday, after which no one yet knows who will be in charge at the agency or how things may change going forward, despite Hochul’s calls for reforms to speed up the licensing process and deliver more government transparency.
That has left a lot of stakeholders wondering what to expect next, given that there were a number of specific policy recommendations in the audit from the Office of Government Services, but no communication from the OCM or CCB since May 10 on whether any or all of those will be adopted.
“It’s all question marks. The governor’s office hasn’t made any statements about what they plan on doing,” said Aaron Ghitelman, a former spokesperson for the OCM who left in March to work in cannabis public relations. “It’s kind of been radio silence.”
Leadership vacuum
One of the most immediate questions is who will step into the leadership void created by Alexander’s departure – and even Ghitelman agreed that there’s no clear successor waiting in the wings. Instead, he said, it’s likely that Hochul will appoint an interim executive director to take over for a few months, and then get a full-time replacement installed in the fall. Whoever does replace Alexander will have to be confirmed by the state Senate.
At the same time, there’s uncertainty as to whether Damian Fagon, the OCM’s chief equity officer, will be reinstated after being put on administrative leave following allegations of retaliation against a New York marijuana entrepreneur.
Not knowing who will be in charge creates its own set of questions about how the OCM will proceed and which policies will get top billing, sources agreed.
“I think there’s a lot of questions about who’s making decisions” at the OCM, Ghitelman said. “Are decisions purely being made from the governor’s office, from people who frankly don’t know the difference between sour diesel and oregano? Who are just doing whatever they can to avoid the next negative article?”
A question of ‘continuity’
Damien Cornwell, the president of the Cannabis Association of New York, said he hopes state regulators will act with urgency to implement some of the policy changes suggested by the OGS report. But he emphasized that there are no answers to be had yet.
“That’s the biggest question: It’s one of continuity. What are we doing different or better to move the market forward?” Cornwell said, adding that “lives depend on this summer.”
“One of the things we’re most concerned about is … that they have a plan, an actual plan, that they can accomplish the goals they set out,” Cornwell said.
If there is a plan, it’s yet to be shared with anyone, Cornwell said.
Meanwhile, retail permit applicants continue burning through cash, paying rent on properties that haven’t been authorized to sell regulated marijuana, and many farmers are still awaiting word on whether they’ll be granted license transitions to expand their canopy. Farmers in particular, Cornwell said, are in danger of “losing the summer” planting season if they can’t get a response soon enough.
“We’ve got a lot of people who had inspections weeks and weeks ago, and they haven’t heard anything back from the OCM. The concern is, who’s running it?” Cornwell said.
Changes on deck?
Cannabis consultant Joe Rossi, a principal of Park Strategies, said he expects changes made from the OGS report – such as staffing up the OCM and speeding up the pace of licensing – won’t happen overnight, but that many will eventually be adopted.
“The governor vowed to eliminate the bottleneck of license applications, streamline the application process, communicate rule changes to the public, create internal controls and performance indicators, and properly staff the agency,” Rossi said. “That’s what we’re all waiting for. … This thing got blown up and it needs to get put back together.”
There’s a huge range of policy and procedural changes that could be made, sources agreed. That includes the possibility of the OCM and CCB simply awarding retail permits to the 1,850 would-be dispensary owners who applied by the November deadline last year with a location locked down, as long as they meet certain criteria.
If that happens, however, it’s unclear what it might mean for 4,303 more retail permit applicants who applied by the December deadline without shop locations already under lease, said attorney David Feder, particularly after Alexander and the OCM previously asserted they would only give out a few hundred retail permits from last year’s batch of applications.
“I think all of the people from December who applied for provisional licenses may wind up getting zilch,” Feder said, emphasizing that that’s a guess based on signs from Hochul’s office that many applicants would be getting a refund of their application fee.
It’s also not clear when there may be another chance for members of the general public to apply for New York marijuana business permits, Ghitelman said.
“There’s a chance we don’t see another license application window open until 2026 or 2027, which will continue to hamper the growth of the industry,” Ghitelman said.
There’s also a question of whether the OCM will be beefing up staff, perhaps bringing in new recruits or transfers from other state departments, a suggestion from the OGS report. Regulators may also, if they have enough manpower, assign a case officer to each application, which New York cannabis attorney Benjamin Rattner said would be “huge.”
But it’s also quite possible, Rattner noted, that the OCM and CCB will push back on the OGS report and make minimal changes. That possibility is arguably heightened by what Ghitelman described as a crisis of morale at the OCM. He said Hochul’s office is scrambling to convince workers to remain on the job.
“One of the most interesting things will be to see how OCM’s licensing process changes, if at all,” Rattner said. “With Chris Alexander leaving and reports that Damian Fagon is going to be leaving, it further advantages people who already have licenses and are dealing with getting open.”
Ghitelman said that the bottom line is Hochul’s office fumbled the proposed transition and didn’t have its ducks in a row to actually get the OCM staffed up and poised to truly accelerate the licensing process and the takeover from the thriving illicit market.
“There’s a chance it speeds up. There’s a chance it slows down. I really think it could go either way,” Ghitelman said of the pace of licensing. “I would not put much money on it speeding up dramatically any time soon. Maybe after the summer.”
Feder said that he’s hopeful, however. “The market is going to improve for everybody, because the New York market is going to be a monster. The only question is, when does that take place? How long do we have to wait?”
Green Market Report reached out to the OCM for this story, but it declined to provide any substantive updates.
Some answers may be forthcoming at the CCB’s next public meeting, which is slated for Tuesday, June 11.
Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
You may like
-
Cannabis companies, big and small, collapsed in 2024
-
Appeals court ruling deals blow to Cannabis Commission – Cannabis Business Executive
-
Virginia lawmakers renew push for legal cannabis marketplace – Cannabis Business Executive
-
Massachusetts regulators order single-lab testing to combat cannabis lab shopping
-
Cansortium completes merger with RIV Capital, plans to scale up in New York
-
The Daily Hit: December 19, 2024
Business
Cannabis companies, big and small, collapsed in 2024
Published
8 hours agoon
December 23, 2024
As 2024 winds to a close, the year may well be remembered as one in which the U.S. marijuana industry got a serious wakeup call, with several big-name companies flaming out in spectacular fashion, while plenty of smaller operators also quietly closed up shop.
Even as more state marijuana markets continued their new rollouts – from New York to Ohio to Missouri – the sun set for the last time on several big marijuana names, including MedMen Enterprises, High Times, StateHouse Holdings and Slang Worldwide, all of which just a few years ago seemed poised to become national cannabis brands with impressive portfolios.
Instead, this year the bill came due for a lot of the industry. A few big-name cannabis failures kicked off the reckoning in 2023, such as the major distributor Herbl in California, which had such a web of connections and so much outstanding debt that its ripple effects went on for months. And when those bills arrived, a number of cannabis companies found they were unable to pay.
However, the big players were far from the only casualties this past year; there were also plenty of smaller businesses that went bankrupt or into court-appointed receiverships for various reasons, including Unrivaled Brands, Irwin Naturals, Delta 9 Cannabis and Revolutionary Clinics.
But it wasn’t all bad news for the industry. It’s also worth highlighting the high-profile turnaround of California-based cannabis delivery operator Eaze, which took a wealthy patron to save the business from its troubles.
Eaze even told shareholders in the fall that it was prepping to lay off all employees and close down by the end of the year, before its new owner, billionaire James Henry Clark, resuscitated the company with $10 million of his own money in November after buying the business at auction in August.
Here’s a rundown of some of the high-profile cannabis collapses of 2024 and how they went bust.
MedMen Enterprises
MedMen was by far the highest-profile washout of the year. Originally a darling of the California medical marijuana boom prior to going public in 2018 (CSE: MMEN), the former unicorn formally filed for bankruptcy in Canada and a court-appointed receiver in the U.S. in April, after the company ran up nearly $600 million in debts during a multiyear expansion push that ultimately proved fatal.
Warning signs existed for years before MedMen’s collapse. Founding CEO Adam Bierman suddenly relinquished control of the struggling business in 2020, amid mass layoffs at the multistate operator and ongoing sale of assets in a desperate attempt to right the financial ship. Co-founder Andrew Modlin also resigned at the time.
Even so, four years of a revolving C-suite and new corporate strategies came to naught, and MedMen’s former national empire – which spanned seven states and more than two dozen retail dispensaries – has been resigned to the auction block.
High Times
High Times’ foray into the actual marijuana plant-touching business came to a ruinous conclusion this year when its assets went up for auction after it couldn’t repay a $29 million loan.
The original stoner magazine, which dates back to 1974, pivoted from cannabis media directly into selling marijuana in 2020 with the purchase of 10 California dispensaries from Harvest Health and Recreation for $80 million in a combination cash-and-stock deal.
The parent company, Hightimes Holding Corp., never truly found its footing in the tough California market and endured critical press for years as it struggled. Hightimes Holding Corp. tried to go public in 2023 via a complex intellectual property deal with Lucy Scientific (Nasdaq: LSDI), but that fell apart after a lawsuit from U.S. securities regulators alleged fraud and illegal stock promotion by CEO Adam Levin, which resulted in a settlement of more than $500,000.
High Times was ultimately forced to begin selling off dispensaries and assets this year to settle a $29 million debt to ExWorks, under the management of a court-appointed receiver.
StateHouse Holdings
Originally known as Harborside – a major part of cannabis activism in Northern California during the height of dispensary raids in the Bush and Obama years – StateHouse earlier this year was relegated to bankruptcy in Canada and a court-appointed receiver in the U.S., driven by a lawsuit over $116 million in debt owed to one of its creditors.
Harborside was rebranded as StateHouse in 2022, three years after it was taken public in 2019 by brothers Steve and Andrew DeAngelo, who said later they were forced out by what they described as a hostile takeover. After the DeAngelos were removed, new company leadership went on an acquisition spree, purchasing three companies in the span of a year and rebranding in a bid to become a more powerful overall California brand.
But the move backfired, and it proved too much too quick. StateHouse found itself unable to repay loans from creditor Pelorus Fund, and Pelorus filed suit in September to force StateHouse’s hand.
StateHouse has since been put up for sale, and the receiver in charge is taking bids for assets until Jan. 15, 2025.
Slang Worldwide
At its height, Toronto-based Slang Worldwide distributed cannabis goods to 2,600 dispensaries in 15 states. But in November, the company declared bankruptcy in Canada and entered a receivership in the U.S., after seven years in the marijuana trade, and reported pared-down operations in only Colorado and Vermont.
Slang drew far less media attention than MedMen and High Times, and its quiet path to insolvency arguably more reflects the broader troubles of the U.S. and Canadian cannabis industries in general. After ambitious expansion for several years, Slang was forced to pull out of several key markets, including California, Oklahoma and Oregon, in 2023 as conditions worsened for it and other operators.
More trouble appeared on the horizon as recently as fall 2023, when Slang essentially put itself up for sale when it retained PGP Capital Advisors to evaluate its options.
The bottom line was the company didn’t have $17 million with which to repay creditors when at least one loan comes due in 2025. Slang formally entered bankruptcy in Canada on Nov. 26, according to receiver B. Riley Farber’s website, and a meeting of creditors was scheduled for Monday this week.
In a trustee report, Farber wrote that Slang had just $107,325 in total assets, including $52,529 in cash, against $27.2 million in debts to various creditors.
Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
Business
Appeals court ruling deals blow to Cannabis Commission – Cannabis Business Executive
Published
11 hours agoon
December 23, 2024
Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
Business
Virginia lawmakers renew push for legal cannabis marketplace – Cannabis Business Executive
Published
12 hours agoon
December 23, 2024
Author: mscannabiz.com
MScannaBIZ for all you Mississippi Cannabis News and Information.
Cannabis companies, big and small, collapsed in 2024
Appeals court ruling deals blow to Cannabis Commission – Cannabis Business Executive
Virginia lawmakers renew push for legal cannabis marketplace – Cannabis Business Executive
Massachusetts regulators order single-lab testing to combat cannabis lab shopping
Cansortium completes merger with RIV Capital, plans to scale up in New York
The Daily Hit: December 19, 2024
Legal cannabis brands find their footing in New York
Oregon Cannabis: State of the State (2024) – Cannabis Business Executive
Marijuana activist leaders optimistic for progress in 2025
cbdMD posts lower annual sales, mixed fourth quarter
Vireo nabs $75M through 120M new shares, goes on acquisition spree
The Daily Hit: December 18, 2024
Organigram eyes global cannabis growth after Motif deal
Farm Bill extension leaves hemp industry intact for now, including intoxicating products
Cannabis predictions for 2025: Low prices, high taxes, and hash
Bat Feces Used to Fertilize Cannabis Is Linked to 2 Deaths – Cannabis Business Executive
Cannabis Potency Testing Needs to Be Done the Right Way for Consumer Protection – Cannabis Business Executive
Charlie Fox opens largest northeast dispensary in Times Square
Massachusetts regulators advance social cannabis consumption rules
MediPharm Labs sells Ontario facility for C$5.5M as part of streamlining plan
2024’s weed award winners and where to buy them
The Daily Hit: December 17, 2024
Ohio marijuana market continues maturing with new rules
Weedmaps co-founders bid to take company private
Mississippi city official pleads guilty to selling fake CBD products
Free delta-9 gummies from Bay Smokes
May 2024 Leafly HighLight: Pink Runtz strain
Connecticut Appoints The US’s First Cannabis Ombudsperson – Yes there is a pun in there and I’m Sure Erin Kirk Is Going To Hear It More Than Once!
People In This State Googled ‘Medical Marijuana’ The Most, Study Shows
5 best CBD creams of 2024 by Leafly
New Study Analyzes the Effects of THCV, CBD on Weight Loss
Alert: Department of Cannabis Control updates data dashboards with full data for 2023
Curaleaf Start Process Of Getting Their Claws Into The UK’s National Health System – With Former MP (Resigned Today 30/5/24) As The Front Man
Horn Lake denies cannabis dispensary request to allow sale of drug paraphernalia and Sunday sales | News
Thailand: Pro-cannabis advocates rally ahead of the government’s plan to recriminalize the plant
Press Release: May 9, STIIIZY and Healing Urban Barrios hosted an Expungement Clinic & Second Chance Resource Fair
Ohio legal cannabis buyer’s guide to 2024
Marijuana Rescheduling: Why Opponents Have No Idea What They Are Talking About
President Biden Announces Federal Government Will Reschedule Cannabis in ‘Monumental’ Announcement
Monitoring Weed’s Business Landscape
Medical Cannabis changes to take effect July 1
Majority of Texans Now Support Legalizing Pot for Adult Use
Benefits of Kratom: Uses, Effects And More
Australia: Legalise Cannabis MP Sophia Moermond quits party over offshore wind farm opposition
Cannabis lab files appeal with Mississippi State Department of Health
DeSantis Likely To Veto Hemp Bill that Would Limit THC, Sources Say
Planet 13 reports $6M loss in first quarter, preps for Florida expansion
Senator Cory Booker Visits Sacramento Cannabis Giant Amid Decriminalization Push
Trending
-
Mississippi Cannabis News8 months ago
Mississippi city official pleads guilty to selling fake CBD products
-
Bay Smokes6 months ago
Free delta-9 gummies from Bay Smokes
-
California8 months ago
May 2024 Leafly HighLight: Pink Runtz strain
-
Breaking News7 months ago
Connecticut Appoints The US’s First Cannabis Ombudsperson – Yes there is a pun in there and I’m Sure Erin Kirk Is Going To Hear It More Than Once!
-
Mississippi Cannabis News8 months ago
People In This State Googled ‘Medical Marijuana’ The Most, Study Shows
-
best list5 months ago
5 best CBD creams of 2024 by Leafly
-
cbd7 months ago
New Study Analyzes the Effects of THCV, CBD on Weight Loss
-
California Cannabis Updates8 months ago
Alert: Department of Cannabis Control updates data dashboards with full data for 2023