MAY NEWSLETTER UPDATE: POST-STATE BUDGET

A lot happened in the cannabis world over the past few months, and the months ahead are shaping up to be pivotal. We aim to keep you informed about important developments that could impact your access to quality medical cannabis products in the future. Below are highlights of what has occurred since our last newsletter. As always, we appreciate your ongoing advocacy and support.

1. Budget Recap: What Just Happened

Details: In closed-door budget negotiations, Governor Hochul succeeded in codifying a $15 million fee on medical cannabis operators seeking to enter the adult-use market — despite repeated warnings that the amount is both unaffordable and unsustainable. The fee, which far exceeds what any other state charges, threatens to bankrupt the already shrinking medical cannabis program and further reduce patient access to high-quality medical cannabis products.

The New York Post recently covered this development, interviewing Curaleaf CEO Boris Jordan, who laid out the consequences of the fee codification and how New York arrived at this moment.

NYMCIA’s Katie Neer and Ngiste Abebe also joined Cultivated’s Jeremy Berke for a wide-ranging interview about the fee, its impact on patients, and why it fails to reflect the economic and operational realities of the medical program. Watch the conversation here (at the 4:34 mark). Additionally, Katie appeared on Spectrum News’ Capital Tonight to discuss the situation further.

Why It Matters: Patient access to the medical program continues to erode due to dispensary closures and operating hour reduction. It’s distinctly possible that the entire program will have to be rebuilt from the ground up to remain viable. Here’s where things stand now:

Patient enrollment has dropped from 148,514 in March 2021 to just above 92,000 today.
Medical dispensaries have been forced to reduce hours or close altogether—only 31 remain statewide, down from a peak of 40. (The MRTA authorized up to twice that number).
Medical operators continue to face significant hurdles entrance into the adult-use market, cutting them off from the only viable source of revenue to support medical access.
Patients—including children with seizure disorders who cannot legally access adult-use cannabis—are now at risk of losing access to the specialized products they depend on

Following the budget’s passage, NYMCIA’s Abebe issued the following statement:

“It’s deeply disappointing that the Governor has chosen to pursue codifying a $15 million fee as a revenue source in this year’s budget. This decision ignores the economic realities of New York’s cannabis market — especially for medical operators already struggling to stay afloat — and amounts to little more than an accounting gimmick, as the revenue simply won’t materialize. Ultimately, it’s patients who will suffer, facing an even deeper access crisis as more medical dispensaries are forced to close. Patients’ disappointment will be shared by the social equity programs that these fees were intended to fund. New York has failed its medical cannabis patients over and over again. Without meaningful policy change, the entire program is now on the verge of collapse.”

2. A Post-Budget Silver Lining

Details: Despite recent setbacks, there’s pro-patient progress to report in Albany. State Senator Jeremy Cooney (D-Rochester) reintroduced a comprehensive medical cannabis bill that includes several long-standing legislative priorities championed by NYMCIA. Within days of its introduction, the bill passed the Senate and now moves to the Assembly for consideration prior to the session’s end next month.

Key provisions of the bill include:

Eliminating the excise tax: Although the tax was reduced in last year’s state budget from 7% to 3.15%, it still adds unnecessary cost for patients. Medical cannabis should be treated like any other medication and be tax-free.
Out-of-state reciprocity: This would allow patients visiting or working in New York to access medical cannabis as long as they have a valid certification from another state.
Extended patient certification: Extends the length of patient certification from one year to two years, reducing administrative burdens on both patients and providers.
Increased supply limits: Expands the amount of medical cannabis a patient can obtain to a 60-day supply, or the maximum allowed under New York’s penal law.

Why This Matters: Thanks to persistent advocacy by the medical cannabis community — especially from patients — we have managed to move the needle on these important policies. While the codification of the $15 million fee was a significant blow, it’s clear that many lawmakers don’t want to see the medical program fail. Passage of this bill in the Senate signals recognition that reform is needed. It’s not a cure-all, and there’s still more work to be done to ensure affordable, consistent access to medical cannabis and grow the patient base, but it’s a critical step in the right direction.

But we need Assembly Majority Leader Crystal Peoples-Stokes — the bill’s sponsor in the Assembly — to carry it across the finish line. Take action today to let her know that medical cannabis patients are counting on her to protect the future of the program.

TAKE ACTION

3. Checking in on the Illicit Cannabis Enforcement Effort

Details: New York City Mayor Eric Adams recently announced that the city has shut down approximately 1,400 illegal smoke shops since launching a major enforcement effort last May. At the same time, the number of licensed cannabis dispensaries across the five boroughs has climbed above 160, generating more than $350 million in legal sales.

However, enforcement efforts are running into legal roadblocks. State judges recently ruled that some of the city’s tactics — specifically warrantless searches of licensed hemp shops suspected of selling cannabis — violate constitutional protections. The city is appealing the rulings.

Meanwhile, a new concern has emerged: "inversion"— the illegal practice of licensed businesses sourcing cannabis from out-of-state suppliers or unlicensed growers to cut costs. Though prohibited under New York law, inversion has become an open secret in the industry.

State regulators are now investigating whether major cannabis companies, including Stiiizy — a top-selling brand — have sold cannabis in New York that was grown or processed out of state. The Office of Cannabis Management (OCM) is reportedly looking into whether products were funneled through a licensed Long Island processor to obscure their origin. Stiiizy and others deny these allegations.

Why This Matters: Illicit activity undercuts the core promise of legalization: a safe, transparent, and locally grown cannabis supply. If inversion is occurring, it not only jeopardizes consumer safety—since unregulated products may not undergo proper testing — but also undermines licensed growers who are already struggling to sell their oversupply. Without strong, enforceable guardrails, the legal market will continue to be undercut by bad actors operating outside the system.

4. More Cannabis in the News (NYS)

New York Post reported that the price of cannabis products in New York State has dropped as the adult-use industry has continued to boom, according to John Kagia, OCM’s executive director of market policy, innovation, and analytics. According to the agency’s analysis, prices for concentrates and vapes are each down 15% over the previous year, while edibles and flowered cannabis have decreased by 14% and 5%, respectively.
Newsweek reported that, according to new data from the Marijuana Policy Project, adult-use cannabis legalization has generated more than $20 billion in tax revenue across different states nationwide since sales first began in 2014. Since December 29, 2022, New York State has generated $21 million in tax revenue from adult-use cannabis sales.
OCM released a statewide report finding that New York generated more than $1 billion in retail sales of adult-use cannabis from more than 260 operational dispensaries statewide in its first two years of legal sales. The report also found the strongest retail sales were recorded in densely populated regions in the downstate area, particularly Manhattan, Queens and Long Island.
Cannabis Control Board chair Tremaine Wright announced that she will not leave her post after Gov. Kathy Hochul made the decision to eliminate her $229,000 annual salary in the state budget. She will instead receive the $260 stipend other board members get on days they attend meetings or events.
Operators of Hybrid NYC, a retail cannabis store, have filed a federal lawsuit against OCM challenging the constitutionality of a requirement in the law that legalized cannabis for all licensees to have labor peace agreements. Hybrid’s lawsuit, the first of its kind against New York, contends that the stipulation that the rules are intended to protect the “proprietary interests” of the state as an industry stakeholder is unlawful because New York cannot have a proprietary interest in the cannabis industry without violating the federal Controlled Substances Act.

Wrap-Up

The goal of this newsletter is to empower existing and prospective medical patients and adult-use consumers by giving you the resources and knowledge to effectively communicate your needs to policymakers, regulators, and elected officials in New York.

We will be in touch soon with more news and updates about New York’s cannabis programs. Thank you for your continued support in our mission to make medical cannabis more accessible and affordable for all patients.

Helping you stay up-to-date and act when necessary to protect and
expand access, affordability, and equity in the cannabis space.

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