Global Ganja Report

The Empire State and Big Sky Country, although seemingly on opposite sides of America’s political divide, now each face the opportunity—and the challenge—of crafting a post-prohibition cannabis economy on the principle of justice for all.

Two states to have recently legalized cannabis provide a study in contrasts in the question of equity.

In New York, concrete steps are being taken to shape a market model that corrects the social injustices of prohibition and the “war on drugs.” However, advocates are watching with a critical eye to assure that these programs will be implemented in a meaningful way.

In Montana, the challenges appear to be greater. Those most excluded from the state’s economy—the Native Americans—are having to fight their way in to the cannabis market.

Hochul talks the talk
It is now a year since New York state passed the Marijuana Regulation & Taxation Act (MRTA), perhaps the most progressive and far-reaching cannabis legalization statute in the country. Democratic Gov. Kathy Hochul—who faces a challenge from a field full of progressive candidates in June primaries head of the November election—is building on MRTA’s measures for restorative justice.

On March 10, Gov. Hochul announced that the first 100 retail licenses to sell cannabis will go to those with marijuana convictions as part of the MRTA-envisioned Social & Economic Equity program.

Chris Alexander, executive director of the state’s Office of Cannabis Management, told the New York Times that by focusing early on “those who otherwise would have been left behind,” New York is in a “position to do something that has not been done before.”

Alexander said he expected between 100 and 200 licenses to go to people who were convicted of a marijuana-related offense pre-legalization, or who have “a parent, guardian, child, spouse, or dependent” with a marijuana conviction.

Hochul is asking the state Legislature for $200 million in this year’s budget to be spent on finding, securing and renovating storefronts for cannabis retailers. These initial dispensaries should be up and running by the end of the year, or in early 2023, if the proposed regulations are approved by the Cannabis Control Board.

The Times spoke to one hopeful applicant—Baron Fajardo of Harlem, who was first arrested for cannabis when he 16. Six more such arrests followed as he moved from smoker to dealer. “As a person you feel down, a little bit defeated, like ‘Oh, I got a stain on my name,’” said Fajardo, now 34. “Now, that stain is actually the same thing that can help you.”

Hochul made her announcement of the program two days after New York state's Cannabis Social Equity Coalition held a rally outside the state capitol building in Albany to press the governor on the question.

The coalition is concerned that Black and other minority entrepreneurs are already being overlooked in an industry model supposedly “designed to redress what Black people have been made to endure” under cannabis prohibition, Mika’il DeVeaux, the group’s chairman, told the Albany Times-Union.

“We have been asking for provisional licenses since early 2021,” DeVeaux said.

The first step toward provisional licenses was taken on Feb. 22, when Hochul signed a “conditional cultivation bill” that will allow hemp farmers to grow marijuana for the legal market this year.

“I am proud to sign this bill, which positions New York’s farmers to be the first to grow cannabis and jumpstart the safe, equitable and inclusive new industry we are building,” Hochul stated then.

Assembly Majority Leader Crystal Peoples-Stokes added: “[W]e...are beginning to undo the devastating impacts over 90 years of unequal enforcement of marijuana prohibition had on too many lives and communities. MRTA ensures that the legal adult-use market will be centered on equity and economic justice for communities of color and individuals that have been harmed most by the War on Drugs in the State of New York.”

She stressed that the new legislation calls for a Social Equity Mentorship Program, to bring prohibition-impacted communities into the cultivation sector. “The temporary conditional licenses authorized by this bill will ultimately help realize the vision and goals of the MRTA,” Peoples-Stokes said.

But will she walk the walk?
Despite such verbiage, the advocates for an equity model in the Empire State have reason to be concerned. Big Bud is certainly poised to assume a dominant role in the market.

Cresco Labs, a Chicago-based cannabis company, announced March 23 that it is acquiring New York-based Columbia Care to form what will be the largest company in the US cannabis industry by revenue and the second largest in terms of retail footprint. As New York’s Gothamist notes in its coverage of the announcement, Florida-based Trulieve has 158 dispensaries, giving it the No.1 title for retail space.

The $2 billion deal will give Cresco a foothold in 17 states. “This is how you turn brands like High Supply, Cresco and FloraCal into Miller High Life, Coca-Cola and Johnnie Walker Blue Label,” Charlie Bachtell, Cresco’s CEO, crowed to Bloomberg.

Cresco and Columbia Care, both publicly traded, already hold medical marijuana licenses in New York, and each has four dispensaries across the state. The two companies have already gobbled up valuable real estate in New York City ahead of the opening of what will certainly be the state’s most lucrative adult-use market.

Cresco, operating under the brand Sunnyside in New York, plans to open its first adult-use retail outlet in Brooklyn’s hipster-haunted neighborhood of Williamsburg, while Columbia Care has its flagship shop near Union Square and a second in Downtown Brooklyn. Columbia Care also holds a medical license in New Jersey, another state on the countdown to the first legal adult-use sales.

A slew of other industry giants already have operations in New York state, and Gothamist reports that “big names like the DIY-maven Martha Stewart, the Rockefeller family, and Constellation Brands (the liquor giant that owns Corona and Svedka) will likely have a stake.”

Meanwhile, a long-anticipated crackdown seems to be imminent for the unregulated “gray market” that has been thriving in New York City—often Black and Latin legacy operators that have been setting up shop in storefronts or on tables set up in parks.

Washington Square, in the heart of Manhattan’s Greenwich Village, has been the city’s premier location. Sales of pre-rolls and edibles—just barely disguised as promotional give-aways with a purchase of other merchandise, such as baseball caps with a cannabis-leaf logo—has been tolerated there since last spring.

But Captain Stephen Spataro, commander of the NYPD’s local Sixth Precinct, now tells The Village Sun that his officers now are taking a “zero tolerance” approach to cannabis vending. Pointing to some unfortunate instances of violence around the tables in the park, Spataro warned of the dangers of an unregulated market.

Another story in The Village Sun foresees an imminent end to the storefront “cannabis clubs” that are operating on a similar basis at a few locations around the city.

“Initially, there will be very heavy civil fines — $25,000 to $250,000,” predicted East Village attorney Stanley Cohen. “Then forfeiture of cars, houses and other licenses. You need licenses to open a store in New York.”

“It might not be for six months or a year, but it’s going to happen,” Cohen said. “They’re serious about this shit.”

And it isn’t just in the big city. Such stores are starting to proliferate in Upstate locales too. In the college town of Ithaca, in the scenic Finger Lakes region, they are called “sticker stores”—because they ostensibly give away cannabis with purchase of a (very overpriced) decal sticker. But in late February, the city administration issued a “clarification that unlicensed cannabis sales remain illegal in New York.”

And the state Office of Cannabis Management announced Feb. 8 that it had “sent letters ordering businesses suspected of illegally selling cannabis, including the practice of ‘gifting,’ to cease and desist those operations or risk the opportunity to get a license in the legal market as well as substantial fines and possible criminal penalties.”

Challenges for cannabis on Native American lands
Then there’s the dispute over the legality of cannabis operations on New York state’s Native American lands. About a dozen cannabis retail outlets have opened on the St. Regis Mohawk Reservation, also known as Akwesasne, along the St. Lawrence River in the far north of the state. They are operating without any “sticker” subterfuge—but asserting their rights on grounds of indigenous sovereignty.

“I think this is a relief valve for our visitors, our friends, our families,” William Roger Jock, a partner in the reservation’s Good Leaf Dispensary, enthused to the Associated Press in March. “We have been stepped on for so long and to have something like this happen, it’s almost liberating.”

The Saint Regis Mohawk Tribal Council adopted an adult-use ordinance last June that allows issuance of cannabis business licenses to tribal members. The council openly said in a prepared statement to the AP that “there is a short window of time for tribally-licensed cannabis businesses to open ahead of other areas in New York state.”

But some shops have opened without licenses from the tribal government. Jock and others say their operations are approved by the Longhouse, a traditional leadership structure on the reservation that serves as a kind of parallel government.

The smaller operations approved by the Longhouse will soon face competition from a new “superstore” called Budders, which is on track to open along the reservation’s main strip, with a license from the “official” tribal government.

The Cayuga Nation, in the Finger Lakes region, also operates several retail shops along Cayuga Lake, and is now planning to branch out into cultivation.

As local Syracuse.com reports, the Cayugas say they will begin indoor grow operations in a 15,000-square-foot building under development on their Gakwiyo Garden property, south of the village of Seneca Falls.

But the Cayugas are at present bitterly divided between the “official” and “traditional” tribal governments. And on New Year’s Day this year, a retail cannabis outlet in Seneca Falls that had approval of the “traditional” government was shut down in a raid by the “official” government’s Cayuga Nation Police Department.

Further west, the Seneca Nation of Indians has established its own Cannabis Department, and is running retail outlets in and around its reservations at Allegany and Cattaraugus, with names like Good Leaf and 420 Rez Bud.

The good news is that it looks like the state government is staying out of it. Wrote the New York Times in a profile of the operations at Akwesasne last September: “For their part, the New York State authorities seem to be taking a hands-off approach to the early entrepreneurs on the St. Regis reservation, noting that such businesses are legal on federally recognized, sovereign tribal land.”

Bottlenecks in Big Sky Country
In a February opinion piece for amNY, Stacey Webb, co-founder and chief equity officer of The Pantheon Collective, an LGBT majority-owned cannabis start-up in the Adirondack Mountains, took stock of New York’s responsibilities as an example for the nation: “According to the 2021 Census, just over 42 percent of the US population are members of the BIPOC [Black, indigenous and people of color] community. Yet, less than 3 percent of legal cannabis businesses reflect ownership by BIPOC individuals. This gap is far too wide and makes it glaringly obvious that existing plans for inclusion are currently insufficient.”

Webb pointed out that “of the 37 states who have some form of a legalized cannabis program (medical and/or adult-use), only 13 of these states have rolled out some form of a social and economic equity program. This represents a mere 27 percent. Of those, only New York and Massachusetts have developed programs which specifically name the BIPOC community as a benefactor of these programs for inclusivity.”

Voters in Montana approved a cannabis legalization initiative in 2020, but there have been no provisions for equity. Of course, these two states are a study in contrasts. The US Census says that New York has a population of some 20 million, of which a combined 37% are Black or Latin—the two communities most impacted by the oppressions of prohibition. Native Americans, another traditionally marginalized group, constitute but 1%.

According to the US Census, Montana has just a little over 1 million people, of which some 4% are Latin and less than one percent Black. But Native Americans constitute 6.7% of Montana’s population—a far more significant share.

And in Montana, the law actually includes provisions that limit the participation of Indian tribes in the legal cannabis economy. One indigenous nation that wants to get in on cultivation is currently lobbying the statehouse to change the law.

The Crow Tribe, who have a large reservation just south of Billings, voted to enter the cannabis industry with its own tribal ordinance in April 2021. “We’re moving forward. We’re diversifying our economy throughout the tribe. Coal was the name of the game for the tribe for a while, but for good business we have to diversify within the reservation,” tribal chairman Frank White Clay told the Billings Gazette at the time.

The state regulations then being drawn up by the Legislature granted one cannabis business license to each tribal government, but the state’s eight recognized tribes have been slow to respond. This is because, in the words of the Helena Independent Record, “hurdles emerged from the law’s fine print.”

Adult-use cannabis sales topped $12.8 million just in their first month, January 2022. The following month, Crow Nation representatives testified before the state Economic Affairs Interim Committee in Helena.

“The intention is there to help the tribes, but the follow-through failed,” White Clay told the committee.

While other cannabis businesses are free to expand their footprint throughout state, licenses, tribal enterprises are far more restricted. Such enterprises are allowed to operate a single combined cultivation and retail site within 150 miles of the borders of the reservation in question.

Operating off-reservation is a means of dodging potential problems with the federal government, which still considers cannabis an illegal drug and asserts jurisdiction on the reservations of federally-recognized tribes. The 150-mile limit also allows tribes to enter the market in more populous areas of the state. But it is still a limit not faced by other businesses. And it isn’t the only one.

Some have already been addressed. House Bill 701, the legalization enabling law passed by the statehouse last April and signed by Republican Gov. Greg Gianforte the following month, only allowed issuance of “Tier 1” licenses to tribes—the smallest cultivation capacity level. The law allowed general license-holders—not tribal ones—to start at Tier 1 and scale up to expand capacity. In December the Economic Affairs Committee, with approval of the Department of Revenue’s Cannabis Control Division, voted to reject that rule, and later approved a revised rule allowing tribes to similarly expand their capacity.

But Crow officials in their February testimony asked lawmakers to further revise the rules—allowing tribal businesses to operate on the same terms as any other cannabis business.

They also called for a provision allowing the state to enter into “compacts” with tribal governments, allowing indigenous nations to operate a cannabis business on their own terms—not the state rules. Such “compacts” are already in place for tribal tobacco and alcohol businesses.

In his testimony, Crow Tribe secretary Levi Black Eagle noted that Interstate 90 and Highway 212 intersect at the heart of the reservation, and that most of traffic passes through in the summer tourist season.

“If we’re unable to take advantage of an economic opportunity such as that, it would be wrong,” he told lawmakers, according to the Independent Record.

New York and Montana alike have the opportunity to take timely action to assure that cannabis legalization lives up to its promises, for a more just post-prohibition world.

 
Cross-post to Cannabis Now

Image: Jurist

 

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