New York's burgeoning cannabis industry has the potential to be four times the size it is now, the acting head of the state's regulatory agency says.
The state’s 500th dispensary opened last week in Rochester. State lawmakers legalized marijuana nearly five years ago, and the rollout has been rocky. But Felicia Reid, acting director of the Office of Cannabis Management, said New York could potentially support 2,000 dispensaries – if the state takes the necessary state action to support the marketplace.
Reid laid out her vision for what’s to come, and offered perspective on what has happened to date, during an extended interview with WXXI News. The interview took place at the newly opened Green Comfort on South Clinton Avenue, the 20th dispensary to set up shop in Monroe County.
The following interview transcript has been edited for clarity and length.
WXXI: Five hundred, that's a pretty big accomplishment. We’re closing in on three years since the first one opened. This is a milestone.
Where do you think the plateau is? How many do you think can feasibly be able to operate?
Felicia Reid: Numbers will always differ depending on how the market develops. But we've seen some analysis, both internal and external, that New York state can comfortably support around 2,000 dispensaries. We're a quarter of the way there. When I joined the agency, there were only a handful of dispensaries, and to see how many have opened really says a couple of things to me -- which is one, yeah, it's our job to make sure that licenses are getting out there, but to see entrepreneurs taking the initiatives, hitting the ground, running, developing community, developing support, developing infrastructure. A lot of this is their work.
We're a small part of it in terms of the license and getting licenses out there. But just seeing the ways in which dispensary owners are running with the opportunity is incredible.
WXXI: When you came on, it was kind of towards the tail end of this period of real struggle for the state agency to get stuff off the ground. There was a number of legal challenges, but the more acute ones are kind of in the past, unless you feel differently about that.
Felicia Reid: I think that's not to be unexpected. And the reason I say that is we have a new industry for New York state, an entire body of law that's been untested, entire regulatory framework that's been untested. When you look at other agencies that have had laws and regs and rules in place for decades, they're more settled in their practice. This is all new. There's always going to be a pressure test of the agency and its structure, and that often comes in our particular society through litigation. What I'm starting to see now is litigation move in different ways. I've been really heartened and emboldened by some of the recent victories. This is just part of the process of standing up an industry and standing up an agency.
WXXI: Did you see a need for any kind of restructuring at OCM, or to try to get its footing better, to deal with some of these challenges?
Felicia Reid: I've been working in state operations for almost a decade, which sounds crazy to say, but there are certain expectations as a matter of state agency and certain infrastructure as a matter of agency that didn't quite exist, and they're not the sexiest parts of an agency. Let me tell you, when I say, like, ‘Oh, I've put in place an audit and internal controls,’ no one's like, ‘Ooh, wonderful, tell me more.’ But it's really necessary, because that holds the agency accountable to what it says it's supposed to do, not just internally, but for our external partners. This agency has always had a really great attitude and perspective on engaging with communities, but there needs to be more of that. Engagement was a really big part of what we have developed over the last several months, whether it's with communities, families, licensees, or even people who are tangential to the industry.
WXXI: There is a lot of bureaucratic work that takes place behind the scenes at OCM to make sure the industry thrives, and trying to reach a goal that is pretty big and pretty impactful of trying to undo the harms of criminalization, particularly to Black and brown communities, particularly to poor communities. How are we doing with that?
Felicia Reid: I think the new question for the agency is not just making sure that there is equity representation across our licensure. That's incredibly important. But what I want to know is, where is that business in a year? Two years? Five years? Ten years? If the picture looks different and the industry, long term, is no longer maintaining those goals, then I think we have to start thinking now about how to maintain that. One thing that I know, and I know a lot of business operators know, is when it comes to categories of social and economic equity, those folks are not always in the room where the capital is, where the resources are. If we really want to see this last throughout the time that we are blessed to be able to do this work, we have to figure out how to put structures in place and make sure those businesses can keep going.
WXXI: Is it about learning from the failures of other states? Virtually every state that legalized tried to have this equity agenda and schema in place that would undo those past harms of criminalization, and most of them failed miserably. What are we doing differently here? How do you maintain it?
Felicia Reid: You can either start with an equity perspective, or you could back into it. When you had a lot of these frameworks initially stand up, it was more about the business side of the market, the economic development side of the market, the getting the product to consumers, without particular concern for who was building the industry. The thing that's different about New York and with the (Marihuana Regulation and Taxation Act, the law which legalized recreational cannabis)is that it started with this really strong emphasis on equity from jump, and I am so thankful for that. I think that's what makes New York different. We have to think about, it's not just the licensure, it's also the building. And what does that look like when folks don't have necessarily access to capital?
WXXI: This is a big money industry. What do you think the potential is? I know there's so many numbers floating around, around out there of like, what the industry is valued at, but what do you think it is?
Felicia Reid: I think there's some knowns and unknowns. We don't know what may or may not happen at the federal level, and a lot of the federal restrictions are really challenging for businesses. But I think one thing I'm also clocking is that there's a lot of consumer demand, and it's not demand that is driven by force, but it's driven by curiosity. It's driven by need. It's driven by a sense of autonomy. I don't have a crystal ball. I really wish I did, but I think for us, it's really a matter of looking around and zooming out in terms of the environment that cannabis exists in, taking those lessons from other states, looking even beyond our borders, to see in terms of economic practice and market development, what has worked, what hasn't, and also thinking about reframing of power structures.
WXXI: The argument that I see made a lot, is that the trend downward in drinking in the younger generation is to a pretty good degree attributed to legal cannabis. What do you think the market is right now? What are the products people want here?
Felicia Reid. On the adult-use side, we're seeing a lot of interest in pre-rolls, particularly infused pre-rolls. There seems to be a historical focus on product formulations on potency. For folks who are experienced cannabis consumers or understand the plant in its wide scope, it's not just about potency. There's so many other aspects of the experience that drive engagement with the product. What we'll start to see is consumers shift from this very particular focus on potency, which I always wonder whether it's consumer-driven, or whether it's market-driven, to other experiences that are offered by different cannabinoids or by different terpenes. That level of sophistication will come in terms of experiencing cannabis for particular needs.
There are many other types of consumers who are looking for many different things that aren't necessarily about getting as high as possible, but more about the experience.
WXXI: Walking into a place like this, the array of things, if 16-year-old me could see it... it’s unimaginable. It's mind-boggling. It is an industry now that is breeding innovation. How much can you really do with it? I think we're kind of finding that there's always something new you can do with it.
Felicia Reid: I think early on, people saw consumption as, you know, a smoke-filled room, but now it’s about something very, very different in product, representing diversity and engagement. But I'm really interested to see what some of the processors, particularly, are coming up with and creating by really listening to what those consumers are saying and creating things that are adaptive to lifestyle.
WXXI: What's your preferred consumption? What do you like?
Felicia Reid: It depends. I've gone all over the place in terms of my experience. I started out in law school, with straight flower. My favorite was blueberry muffin, that was my strain of choice. These days, I'm much more an edible person. It just fits my lifestyle a little bit better. I’m always very, very focused on New York born and bred brands. So, edibles for right now, sometimes flower pre-rolls. I do love a good dog walker (a small joint). I have a dog, so it's appropriate.
WXXI: We were hoping to get a portrait of you smoking a joint.
Felicia Reid: *laughs* So many people want that. I'm very much a stickler for not consuming on the job.
WXXI: Worth a shot. More serious now, earlier this week, we saw the federal move to ban THC for hemp-derived products, which was included in the 2018 Farm Bill. That has built a real cottage industry that puts your position and OCM in an interesting spot. It is competition to the New York state legal marketplace. At the same time, a federal crackdown could turn into a new industry entering the dispensary marketplace here. What do you think the effect on the legal marketplace in New York that kind of move would be?
Felicia Reid: Anyone's reaction to the federal bill depends really on your perspective. I think it's an opportunity. I like to think of things as an opportunity. I think New York has had a really strong legislation around hemp, but I think this is an opportunity to take a beat, look at what's happening, look at how the market's developing, because we also regulate that on our hemp side, and figure out what makes sense. I know there are a lot of public health and safety concerns around some of the products that are hemp-derived and testing, packaging, accuracy and dosage. Those are all things that we want to be able to see. There's a way to take the development that has happened in the hemp space and put regulation around it in a way that mostly protects consumers and New Yorkers but also makes sense for entrepreneurial ambitions.
WXXI: Are you worried about any other threats from the federal administration?
Felicia Reid: We're not in a culture that loves to say I don't know, but I think it really requires us being really smart about how we're attempting to predict and have a sense of control. There are a couple things with the federal government that I would love to see happen. I'm not sure if they will, because I think one week it's like, ‘Oh, they're going to do this,’ and next week, it's something else. This week, it was hemp, and we weren't necessarily expecting that. Trying to work with the team to navigate some of the possibilities and opportunities is really important. One thing I didn't love to see with this most recent legislation was just the gutting of language around veterans and the ability of Veterans Affairs doctors to prescribe medical cannabis in states where it's legal. I've heard and sat down with so many veterans who really see cannabis as a critical part of their healthcare, of their ability to navigate post-service. To see that sort of prohibition get gutted out of that language was really challenging for them.
I would love to see legislation really recognize that cannabis is legitimate business and get to safe banking and more financial flexibility for businesses who operate at 20 to 30% higher cost because they don't have access to financial resources that other businesses do.
It really depends on how folks understand this industry and the economic development and opportunity of that industry. I'm not super encouraged by what I'm seeing, because there just seems to be so much stagnation and so much fighting. But it also might be a function of the overall stigma that hangs over this industry, where there are folks who don't necessarily see it as legitimate industry, legitimate business. That’s a lot of work that we as regulators have to do. I don't know how long it's going to take, but I think time really will be the determinant factor here
WXXI: Last year, we did a story on cannabis farmers not being able to make a return on their investment into their farms and into their product. Is there a long-term fix for that?
Felicia Reid: From the regulatory perspective, we're always concerned about whether there is sufficient supply to meet demand. Back in 2022, there was a ton of supply, and because of injunctions and various things around licensing, there was nowhere for it to go. There was a mismatch in terms of how the market developed. Now we're looking at how demand is developing and seeing that there is a need for more cultivation in the market.
One of the things that I love about cultivation is that, we talked about innovation earlier. I'm in the horticultural world, and to see the development of genetics, of land races, of different things that are adapted specifically to New York's environment, not just indoor grow but adapted specifically to this environment so that growers can create really good product. I'm really heartened to see it. We have to keep going at our cultivation licensure, because I want to see their innovation and their work and the things they know how to do have a place in this market.
WXXI: You said earlier that this is a new agency dealing with a new industry, and you're now at the head of that. It's a very influx industry right now, and an influx agency. So what drew you to it?
Felicia Reid: The short answer is, I love a challenge, apparently, or I'm a masochist. I spent a lot of my career working with youth and families in juvenile justice. I've seen the legacies of the War on Drugs. I've seen the marginalizations of people I care for deeply, both at work, but also in my family. I often thought in that work, what needs change in order for these folks to have a different ending to their story? What needs to change socially, politically, perspective-wise, to allow folks who are some of the most talented, insightful, capable people I've ever met, who are behind razor wire, what needs to change to allow them to participate meaningfully?
I spent a lot of time reading the MRTA when I was thinking about the proposition of this job. Seeing that the people that the MRTA was supposed to benefit were the people that I worked with every day, but in a very different way, in a more economic development way, and the idea that these folks are infinitely capable and have infinite problems, but need to be given the opportunity to go somewhere.
I know there are a couple of licensees who are family members of kids I know who are currently incarcerated. There's a really tight connection between the things that I care about and the people I care about and this industry. I want to see folks succeed. I want to see folks get the opportunity that, without this legislation, they would never have. I don't forget that every single day.
Even if we only licensed one person who had been impacted negatively by the War on Drugs, that's a trajectory changed.
People often frame it as the state is giving opportunities to criminals. People are more than the things that they did. And I think the obligation that we have, that I have, that I want to see with this agency, is that we actually recognize that and do something about it.
