New York Announces Where The First Legal Cannabis Store Will Be Located

Soon, New Yorkers will be able to buy cannabis products from a legal store for the first time since the state legalized adult-use sales in March 2021.

The first legal cannabis dispensary run by a social equity applicant that will open in New York will be located at 248 W. 125th St., within a stone's throw from the historic Apollo Theatre, in the Harlem neighborhood in New York City.

The announcement came on Monday, December 5, from Reuben R. McDaniel III, president, and CEO of the Dormitory Authority of the State of New York (DASNY).

During a meeting, McDaniel announced that the DASNY Authority had signed its first lease for a property located in Harlem, NYC.

Quoted in local media outlet The City, McDaniel said, "The design team had finished preliminary plans for the 2,800-square-foot space and that construction would start soon after DASNY approves a final project." He did not, however, specify who would operate the dispensary.

New York regulators issued the first 36 conditional licenses in late November to those who applied to the Conditional Adult-Use Retail Dispensary (CAURD) program. The program is geared towards applicants who directly or indirectly experienced cannabis-related convictions or arrests, have run a successful business for at least two years, and can demonstrate a significant presence in New York.

Although the announcement of the first legal cannabis dispensary run by a social equity applicant in the state has been welcomed by the community, doubts still remained about whether New York regulators will be able to open other cannabis stores by the end of 2022.

New York's Gov. Kathy Hochul said in October that 20 legal dispensaries would be open by the end of 2022.

However, such a goal looks unlikely due to several delays that occurred during the implementation of cannabis legislation, especially regarding securing locations for the dispensaries through the DASNY and finding the money to support the CAURD program.

To date, only one cannabis dispensary has opened for business. This dispensary is operated by the nonprofit organization, Housing Works, and opened on December 29th. The second dispensary, which is being run by a social equity individual in Harlem, has not yet opened at this time.

DASNY, working with the real estate brokerage CBRE Group Inc., was expected to find 150 locations suitable to open up cannabis dispensaries designated to CAURD applicants. The organization struggled to achieve that goal within the parameters given by the state. Finding properties at least 1,000 feet from a school, park, child care center, or house of worship and 500 feet from a town residential district is not as easy as it may seem.

The Dormitory Authority selected ten firms in November that have been awarded bids to design and build the first adult-use retail cannabis dispensaries to be opened in New York.

To design and build dispensaries destined for CAURD applicants, New York created a $200 million Social Equity Cannabis Investment Fund.

DASNY appointed Social Equity Impact Ventures LLC, a private venture team that included former NBA player Chris Webber and entrepreneur Lavetta Willis, to manage the fund and raise $150 million from private investors.

But local media Syracuse.com recently reported that both Webber and Willis had "strong financial ties and potential conflicts of interest " with cannabis brand Cookies. Furthermore, the venture apparently failed to raise money for New York's cannabis fund.

These issues delayed keeping to the schedule to open legal dispensaries across the state.

As a result, New York regulators changed some rules governing the acquisition of the sites for dispensaries in New York, disrupting the rollout of the legalized cannabis marketplace.

Initially, the winners of the CAURD program were supposed to receive turnkey locations ready to use as cannabis stores provided by the DASNY through a leasing agreement.

Following these developments, New York's Office of Cannabis Management (OCM) announced on December 9, that it will allow that the state's first cannabis dispensary operators to secure their own locations. This marks a breakthrough in the regulations while also confirming the obstacles that DANSY has faced in finding sites and the money to support the batch of the legal dispensaries.

In a press release in which the OCM announced the rules related to cannabis retail delivery, the agency informed the CAURD applicants that they can now "submit for approval their own proposed location for their retail store and may still qualify for financial support for renovations from the Social Equity Cannabis Investment Fund" operated by the DASNY, which "will continue the work of securing retail locations and locations will be matched with licensees as they become available."

While this update promises more freedoms for potential business owners to have control over their operation, the move may further complicate and delay the rollout of the first batch of dispensaries in the state amid the frustration of CAURD applicants.