New York legalized medical cannabis in 2014 and started its formal marketplace with only five licensed operators in the state.
The limitation on the number of licensed operators made it difficult for medical cannabis to make a notable impact in the state.
“As the author of the original Compassionate Care Act, which is the medical program, I’m not surprised that it hasn’t had that great of an economic impact, simply because the governor at the time was not a big fan,” New York State Sen. Diane Savino said of Gov. Andrew Cuomo, who has been in his executive role since 2011. “He was very skeptical about legalizing cannabis for medical purposes and he was greatly concerned that the program could lead to all sorts of problems, but he’s obviously changed his position since then.”
Savino said that the program’s original limitations created restrictions on a whole host of things—most importantly, patient access.
With only 20 operating medical dispensaries in a state with over 19 million people, it is no surprise that there was limited patient access at first. Since 2016, it has been expanded to 10 license holders, with 40 dispensaries statewide, she said.
According to the legislation, medical cannabis businesses must be vertically integrated. The thinking is that vertical integration allows one to have tighter control over regulatory compliance, but it also drives up the cost of running a cannabis operation, making it far more difficult for small businesses and entrepreneurs to get into the cannabis business, she said.
“More importantly, it’s an expensive business to stay in,” Savino said. “You have to have a lot of liquidity, you have to have access to capital, you have to have the ability to sustain yourself, and you can’t turn to traditional lending sources. So, when you have a vertically integrated market,