State cannabis regulators outline licensing gains, warn illicit market still dominates

Acting Director Felicia Reid told the joint fiscal committees that the Office of Cannabis Management (OCM) has reorganized licensing and increased approvals since she took the job, but cautioned that illegal sales still account for the majority of the market.

"By late summer of last year, OCM coordinated a light touch needs assessment of our people, processes, and technology," Reid said, summarizing a series of operational changes. "We have hired nearly 50 new staff ... and we welcome Governor Hochul's proposed $5,000,000 to support additional hiring and licensing, compliance, enforcement, and legal."

The OCM chief said the agency has grown its licensing staff, implemented a single point of contact for applicants, and doubled the licensing team to address long delays. Reid said those steps helped the office “move almost 193% more licenses through to the cannabis control board for approval” after June 2024, while maintaining social and economic equity goals.

Why it matters: Reid and other witnesses told legislators that the state’s regulated market is growing — but not fast enough to displace the illicit market. That leaves patients and social-equity operators vulnerable to unfair competition and public-safety risks.

Compliance, enforcement and illegal stores. Reid described new compliance tools, including a Trade Practice Bureau inside OCM's enforcement apparatus to pursue business malpractice such as diversion, license-stacking and unfair contracting practices. "The Trade Practice Bureau ... will be going after malpractice across our licensees," she said. She added OCM enforcement teams had conducted thousands of inspections and issued findings and corrective-action plans. Several legislators and industry witnesses pressed for faster closures of multi-site illicit operators and for stronger ability to seize ill-gotten gains.

Social-equity rollout and the DASNY fund. Legislators, members of the public and industry groups pressed the agency about a social-equity financing program run through DASNY. Several speakers called the DASNY fund a failure for many entrepreneurs, and asked the legislature and DASNY for an audit and reforms. Reid said OCM is advancing the community grants program and that the agency’s priorities include supporting cardholder licensees, improving communications and staffing, and reviewing the DASNY program’s results.

Patients and medical access. The New York Medical Cannabis Industry Association told lawmakers many medical patients cannot safely substitute adult-use retail products for medical formulations. Acting Director Reid and medical-industry witnesses urged repeal of the medical excise tax, statutory fixes to simplify certifications and a move toward pharmacy-based certifications and potential insurance coverage to improve patient affordability.

Legislative requests and next steps. Witnesses — including licensed retailers, farmers and processors — urged the legislature to: increase OCM enforcement funding and investigative capacity; authorize private rights of action or targeted asset forfeiture for large illegal operators; reform or audit the DASNY social-equity lending fund; and clarify proximity/protection rules for retail dispensary siting. Lawmakers asked for follow-up data on licensing counts, enforcement actions and the status of pending regulations.

What’s next: Reid said OCM is continuing outreach and site visits statewide, and will return to the legislature with more licensing and enforcement data. Industry groups and some legislators said further statutory changes will be needed to close loopholes and stabilize the licensed market.