The total number of legal marijuana companies that will be permitted in New York has for years been a moving target, but it appears that regulators are getting closer to figuring out where they’ll come to a stop. Despite the fact that the 2021 state law that legalized the plant included no specific caps on licenses, regulators are aiming to have only around 2,000 recreational dispensaries statewide.

That was part of the message to the cannabis advisory board on Friday from John Kagia, the Office of Cannabis Management’s policy director, as the supporting body was working on a policy recommendation on license caps to the Cannabis Control Board, which has final authority on business permits. At the close of the meeting, the advisory board signed off on a draft letter that urged the CCB to cap the number of retail permits at 1,600, not including microbusinesses, which may also choose to open retail shops or remain completely on the supply side of the market.

That figure appears to be roughly in line with what the OCM is already targeting.

Kagia told the advisory group on Friday that the OCM’s plan for the so-called “December queue” of applicants – of which there were originally more than 5,000 a year ago for various license types – includes awarding permits for another 1,000 retail shops, 100 microbusinesses, 150 processors and 60 distributors, with at least a temporary moratorium on new cultivation permits but an overall goal of roughly 500 licenses on the supply side of the industry.

The cultivation moratorium, Kagia said, is appropriate because New York is already on pace to have a supply glut of over 1 million pounds of marijuana by 2030. The state will have an estimated demand of 2 million pounds, he said, but a “conservative” estimate is that legal operators will have the capacity to grow at least 3 million pounds.

Thus far, Kagia recapped, there are only 264 operational recreational dispensaries, but more than 1,000 retail applicants have obtained “proximity protection” for their proposed sites, which creates a 1,000-foot buffer zone for dispensary competitors who are also looking for real estate.

The CCB has also given full approval to at least 224 conditional adult-use retail dispensaries (CAURDs), 294 adult-use dispensaries, and 225 micro businesses which may include retail.

“While these numbers are aggressive – we’ll be talking about retail, micro and CAURDs, we’re talking about a total of 2,500 licenses issued – we’re estimating that roughly 500 of those folks won’t be able to open. So we’d be looking at roughly 2,000 stores open by the time all of this is done,” Kagia said.

“If we were to get 2,000 retail stores open, it would put us closer to 10,000 people-per-store, and that puts us right in line with some of the most mature and competitive markets, in the range of Colorado, Maine and Michigan,” Kagia said, explaining the OCM’s reasoning, and noting that the agency is trying to avoid market saturation.

If the OCM sticks to that goal, Kagia said, it will still likely take until June 2026 before the licensing work is completed, with its current rate of about 100-150 licenses per month.

“This isn’t going to be a blip-switching moment where all of these licenses are approved and operational simultaneously. This is going to be a long, drawn-out process,” Kagia said.

Several members of the advisory board expressed concern and said they were worried that the state could be setting up small business operators to fail, given the harsh market dynamics of the cannabis industry and the enormous contraction that has taken place in other states.

Board chairman Joe Belluck commented on one presentation slide from Kagia which forecasted the New York cannabis market potential nearing $30 billion in total sales by 2030, which contrasted sharply with market analysis from the OCM that has shown the average revenue per dispensary has already contracted by 50%, from about $900,000 per store a month to $450,000. That contraction will only continue as more legal shops open, Kagia said during his presentation.

“It reminds me of a television ad that says, ‘There’s $30 billion available,’ and when you contact them, yeah, there’s $30 billion available, but your piece of it is $150,” Belluck said.

“We’re stewards for this, and the CCB is a steward for this, and if it’s not done in a thoughtful, measured way, a lot of people are going to put their life savings and resources at risk. … When you see a number like $30 billion or $6 billion, it’s very easy for people to think, ‘All I have to do is open a store and it’s going to be easy,’” he said.

Board member Ebro Darden also argued that over-licensing by the OCM could wind up harming the same communities that the 2021 Marihuana Regulation and Taxation Act (MRTA) was designed to help – minorities who were targeted during the war on drugs.

“What we’re dancing around is the fact that … the more stores in the marketplace, the more it hurts the revenue per store. It needs to be said that whom that’s going to hurt the worst will be the licensees who are Black, brown, minority,” Darden said.

Kagia pushed back somewhat, however, and said that the OCM is approaching licensing with an eye toward creating a truly competitive market where not all licensees will survive, while also upholding the social equity goals of the MRTA.

“The office’s view is that we want this to be a robustly competitive market. The idea isn’t to create exclusive zones that allow an individual, one or two operators, to have full capture of the market. We want there to be competition,” Kagia said.

And, Kagia warned license hopefuls, “It is only going to get more competitive moving forward.”

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