The weed wait: Injunction, regulations slow recreational cannabis licenses
By Jaime Cone Hughes, Cortland Standard
Saws buzz behind the plywood exterior of the former Country Kitchen II in Cortland. Appointments to install security fences and cameras have been made. Business plans have long been completed.
When construction is finished in a couple of months, the project will turn into a waiting game for Paul Suits Jr. and his brother, Matthew Suits, as they stand by for approval from the state to open “the Apple Store of cannabis dispensaries,” LakeHouse Cannabis.
They may have to wait a while. Even though the state Office of Cannabis Management announced Thursday it would double the number of conditional adult-use marijuana dispensary licenses – to 300 from 150 –, an injunction brought forth by Michigan-based applicant Variscite on the argument that it is unconstitutional for New York to favor state residents over out-of-state candidates, was recently upheld.
That prevents the state from issuing licenses to dispensaries located in the regions where Variscite has submitted applications, including Central New York. The delay, say the Suits and industry advocates, could be months and may force the Suits to seek a license under a slower process that may take a year.
What LakeHouse plans
The retail cannabis establishment, owned by the local Suits family, will have high, open ceilings, concrete floors and a spacious sales floor. Large windows will cover the entire front wall, Paul Suits Jr., co-founder and CEO of the company, said at the construction site Feb. 13.
The Suits brothers walked the floors and pointed out coming features while construction progressed in the background. Customers will enter through glass doors into a waiting room where they relax until a sales associate is available.
A crucial part of the business model will be training employees to educate customers and assist them with finding the right product, Suits said, adding he hopes the “Apple Store” aesthetic will attract customers from a wide range of backgrounds.
“Whether it’s a soccer mom or a grandmother, we want them to be able to walk in and ask any of our employees what they would suggest,” Suits said.
The store will also offer online purchases.
66 licensed, 3 open
However, the state has not awarded LakeHouse a conditional adult-use retail dispensary license, the first retail license to be issued.
Sixty-six conditional dispensaries have been licensed so far, and three are now in business: two in Manhattan, and JustBreathe in Binghamton, which opened Feb. 10.
To qualify, the applicant must be justice-involved, meaning the dispensary must be operated by an individual who has been affected by the enforcement of the prohibition of cannabis, which includes those who have been formerly incarcerated.
“My father had a dependent who was affected, so that qualifies us,” Suits said.
The state Office of Cannabis Management has broken the state down into geographic regions. The Central New York region, into which Cortland falls, was slated to get seven conditional adult-use dispensaries.
That changed Thursday with the doubling of licenses – to 14 in Central New York.
Part of the impetus for the increase was feedback from applicants that they could provide their own retail space. Originally the program was designed to grant licenses to applicants who would then work in partnership with the Dormitory Authority of the State of New York to secure a retail space.
“In recognition of this strong pool of applicants, the ability of some of these individuals to bring their own locations and for us to stretch these resources further that the state has provided, and our desire to expand the market as quickly as possible we are expanding the program to 300 licensees,” Executive Director Chris Alexander said.
“Resources of the fund are not limitless,” Alexander added. “Under the expansion, the first group of 150 licensees will continue to have access to funds if they want it. Those who decline free up resources available – but not guaranteed – to the expanded group of 150 applicants.”
But the injunction remains.
“We are hearing that there won’t be much movement on that until sometime in the spring, May/June,” said Darren “Hal” McCabe, the director of government relations for the Cannabis Association of New York and mayor of the village of Homer, in an email Tuesday.
If they are not able to get a conditional adult-use license, the Suits will have to wait to get a regular retail dispensary license.
“It could be toward the end of the year,” Suits said. “It’s all a moving target.”
General licenses late this year
The state is taking public comments regarding cannabis regulations for general licenses.
“The OCM plans to begin general licensing in the second half of 2023,” said Trivette Knowles, a representative of the Office of Cannabis Management.
“We just submitted our comments to the regulations a few weeks ago, and then the OCM has 30 days (but really, as long as they want) to respond to the comments and to release revised regulations, which will then have a 45-day comment period, and then at least another 30 days before the final regulations come out, so that will likely be sometime in the summer, or even early fall,” McCabe said.
After that, the applications will be released for regular cannabis retail licenses. “Then there is the unknown of how they will score them, when they will announce, and how long that will take,” McCabe said. “I would be shocked to see any regular dispensaries opened before this time next year.”
No limit has been set on the number of general licenses that will be issued, Knowles said. Though the process may seem slow, he said the “first legal seeds” of legal recreational cannabis were planted only a year ago. A functioning supply chain needed to develop and from that perspective, a year really isn’t that long, he said.
‘I never thought…’
Suits said he is surprised to find himself in his current position.
He worked at WeWork for just over two years doing project management on their enterprise team, working with companies looking for large office spaces for more than 1,000 employees.
“They tried to file for an IPO (initial public offering) and then went through multiple rounds of layoffs, which made me realize I didn’t want to be there,” Suits said. “I came upstate with my father and brother. Two or three weeks later the state legalized cannabis.”
Suits developed a plan for his own cannabis business, and his father, who worked for 30 years as an executive at Suit-Kote, the heavy highway construction company, agreed to back the project and to serve as the company’s president.
“I never thought we would be trying to be legal weed dealers,” Paul Suits Jr. said with a laugh.
He said he has used marijuana to treat his own medical issues.
Security and safety
The building will be equipped with a fence around the sides and back, a state-of-the-art security system, and “more cameras inside than the KeyBank down the road.”
The state has yet to decide whether security guards will be required. Suits said he would like to minimize their presence.
Customers will have to provide their identification as soon as they walk in the door, and the store will keep a record of everyone who enters, Suits said. ID will be checked using a state-provided scanner and all transactions will be recorded and sent to the state.
Suits said everything for sale at LakeHouse will have been tested at a state-licensed lab to make sure it does not contain pesticides or other harmful chemicals.
“This ensures that customers are getting a quality product, not something made in someone’s bathtub, or something that includes metals,” Suits said.
Products must be tested at least twice before making it into the New York supply chain, Suits said. They must also meet state standards for packaging, which must be childproof and cannot include cartoons or advertise a child-friendly flavor.
“I definitely see us selling THC candies, but if a parent buys it, it’s on the individual who purchased it as soon as they step off the premises,” Suits said.
The Suits are prioritizing the sale of local products such as a gummy line from Cortland’s Florist Farms Regenerative Cannabis and THC beverages from Beak & Skiff apple orchard of LaFayette, which was one of the state’s first 15 licensed cannabis processors.
“We wanted it to be welcoming to the whole community. All demographics wanted,” Suits said. “We want to create an aesthetically pleasing place where anyone of any (legal) age can have a conversation and look around.”
