The medical marijuana industry braces for budget fallout

Medical marijuana companies operating in New York are sounding the alarm about language they claim Gov. Kathy Hochul is quietly trying to insert into the final state budget.

The industry is bracing for the codification of a $15 million licensing fee for medical marijuana companies to operate in the recreational market, a business opportunity that some of these operators have been eying for a decade as they set up shop initially to serve medical marijuana customers. The companies have already sued state cannabis regulators over their effort to impose a $20 million licensing fee to enter the recreational marketplace, which they expected would subsidize their services for medical marijuana patients.

“If they codify this fee at $15 million, we won’t have a medical program within three months,” said Katie Neer, who is of counsel at Dickinson & Avella and represents the New York Medical Cannabis Industry Association.

It’s her understanding that the the governor is “insisting” on the fee structure and wouldn’t negotiate with the state legislature on the issue. Democratic lawmakers have advanced language to support the medical marijuana industry, such as tax changes and granting reciprocal coverage for out-of-state patients.

“I would offer to [the governor] the same that I have offered her team, which is full, unfettered access to financial statements, balance sheets, income statements, etc, for the existing operators to demonstrate what’s feasible and what’s feasible, but still meaningful, is a $5 million fee for the three co-located stores, paid in reasonable amounts over a period of time,” Neer said.

“And so if 20 operators had the regulatory clarity that that transition fee was $5 million and they had the certainty to know it was going to get them three co located stores, I feel confident that they could go figure that out and afford that fee, and the state would collect $100 million to go ahead and implement their social and economic equity obligations, per the law,” she said. “The way they’re playing this, I think they at most get $6 million in additional fees paid to them, and that’s it. And they will kill the medical program,”

A spokesperson for the governor would not address questions about marijuana polices that might end up in the budget or how her administration planned on meeting the needs of medical marijuana patients in New York.