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LIBN: Opt-out fallout

Friday, December 17, 2021

For those vying to open a cannabis business, the year began with such promise.

After the state legalized adult-use this spring, prospective entrepreneurs started making plans to open retail shops and consumption cafes that they thought would be welcomed additions to downtown business districts across Long Island.

However, many local elected officials weren’t so keen on the idea of cannabis stores in their communities and decided to exercise their right to opt-out of retail sales and on-premises use, significantly shrinking the number of sites that would be available to locate these new businesses.

In fact, while less than 15 percent of municipalities in the state have opted out of retail sales so far, more than half of the towns and villages with business districts on Long Island have already chosen to ban retail cannabis sales and on-premises consumption, with a few more expected to follow suit by the Dec. 31 opt-out deadline.

The result of all the opt-outs here limit opportunities for new cannabis businesses and puts a damper on projected economic growth, jobs and lucrative tax revenue that was expected to come with legalization.

A report from the Long Island Association released earlier this year predicted that legalization of adult-use cannabis would increase Long Island’s economic output by $878 million annually, while creating more than 7,300 jobs. But industry observers say the area’s widespread opt-outs will make those numbers nearly impossible to realize.

Nikki Kateman, political and communications director for Local 338, which represents about 80 percent of the state’s workers in the cannabis industry, has attended dozens of Long Island town and village public hearings over the last several months to make the case for not opting out of retail sales. As part of the union’s efforts, its members who already work in medical cannabis dispensaries around the state have shared their experiences and sought to educate local officials on how dispensaries really operate.

“We’re advocating that municipalities shouldn’t opt out, but we’re doing that by providing a very unique perspective and making sure folks are hearing what actually goes on in dispensaries and not necessarily what people think happens. I think that’s a big difference,” Kateman told LIBN. “There’s a lot of projection about the industry, so hearing directly from the source can help minimize some of those concerns.”

While polls have shown overwhelming support for cannabis legalization, Kateman said those who’ve spoken for and against opting out at the public hearings she has attended has been split about 50/50. She said many municipal officials expressed concern that since the state’s Cannabis Control Board only first met in September and has yet to set up its regulations, they’ve chosen to opt-out for now and take a ‘wait-and-see’ stance, since municipalities can always opt back in later.

“I’ve heard a lot of municipalities say we don’t have the regulations and it’s hard to make an informed decision so we can opt out now and we can always opt back in later. But that’s not always the easiest thing to do,” Kateman said. “It’s very plausible that municipalities are going to miss their opportunity because businesses that are going to be licensed are going to look to communities that are more accepting and tolerant, and we don’t know if there are going to be multiple rounds of licenses. So, there is the potential that if you’ve opted out, you may not see a cannabis business coming back in two years from now.”

The many opt-outs by Long Island municipalities are also a blow to the social equity initiative that’s an inherent feature of the state law and aims to prioritize licenses for small businesses owned by social-equity applicants who are minorities, women, disadvantaged farmers and disabled combat veterans. In fact, the state set a goal to have at least 50 percent of new cannabis businesses to be owned and operated by those applicants and plans to create an incubator program to facilitate that goal.

“By constricting where we’re locating businesses, you’re constricting opportunities for people to start their own businesses in their home communities,” Kateman said. “That’s going to make that goal the state has set, which is really important and was the vision for creating a restorative program, all the more difficult.”

Valley Stream resident Esther Lelievre, who has a background in finance and accounting and has worked for corporations and nonprofits such as the American Heart Association, helped form the Canna Equity Group, comprised of several prospective cannabis entrepreneurs seeking to open businesses here. She’s been discouraged by the many Long Island opt-outs and is hoping that the Village of Valley Stream decides to opt in when it votes on Dec. 20.

“For us in our group, we want to hire local. It keeps the stake in the towns and the villages that we’re in,” Lelievre said. “We want to help our own communities where we have a vested interest.”

A former cancer patient who says she benefitted from using cannabis, Lelievre said people need to look at the opportunities that the cannabis industry brings because it’s not going away.

“It offers a lot of opportunity for people to actually get full-time work,” she said. “Most cannabis businesses offer full-time work with benefits and decent pay, and that’s something that a lot of people need right now.”

Another member of her group, Jessica Naissant, is the owner of the Wake & Bake Café, a CBD store on Rockaway Avenue in Valley Stream. Naissant hopes to open a separate retail location in her community for adult-use cannabis.

A graduate of SUNY Old Westbury, Naissant was interning at a laboratory studying micro-organisms and preparing to go to medical school when she was severely injured in a car accident.

“I was in so much pain that I had to withdraw from the program. The doctors kept prescribing opioids and I was not a fan,” she said. “I was already a cannabis user and the CBD helped with the neuropathy, migraines and nausea that I was experiencing. So, I decided to open a business selling CBD products.”

Naissant says all of the opt-outs don’t help to heal the communities that have been impacted by the drug war.

“I was not surprised since Long Island is known for being very conservative and they’ve been misinformed for a very long time,” she said. “I used CBD to ween myself off of opioids and with the opioid crisis, I thought they would want to have cannabis as an alternative. At the end of the day, people are going to buy cannabis somewhere, so why not get the revenue in your own community?”

So far, just three towns in Suffolk County have not opted out of retail sales, including Babylon, Riverhead and Brookhaven. However, Brookhaven is restricting cannabis retail shops to industrial areas, which is likely to handicap entrepreneurs seeking to locate there.

One of those is Osbert Orduna, principal of Bellport-based The Cannabis Place and a construction contractor for state and federal agencies, who is planning to open a retail cannabis business in the town.

“Brookhaven wants to have its cake and eat it too. They want cash in on that 3 percent of tax revenue that will go to the municipality, but they want to basically zone us out,” Orduna said.

The entrepreneur pointed out that there are “countless empty storefronts at locations in historically under-utilized business zones” and that he would’ve liked to be in an area that afforded access to surrounding communities, a location that has parking and people can drive to and also get to by public transportation.

“Pick any community in Brookhaven, take one of these parcels that have sat vacant for months or years and all of sudden you’ve revitalized the space,” Orduna said. “A cannabis retail space like we want to do is a high-end space, very aesthetically pleasing, modern exterior and interior design, excellent lighting, security, all of things that provide for a safe and enjoyable experience for those 21 and over who wish to visit our establishment.”

Instead, Orduna says the town is creating a safety hazard by relegating retail cannabis businesses to an industrial area, where the rest of the industrial businesses are shut down after 4 p.m. or not open on the weekends or on holidays.

“People that are going to the cannabis shop are going to have cash in their pocket. That makes the customers and the business itself soft targets,” he said. “Cannabis sales are primarily cash transactions, which means the business will have cash on hand at any given point, so it becomes a potential target for robbery, especially since it’s off the beaten path and in a random industrial area so it’s not in the well-traveled business districts that receive more police attention. They’re setting up the retail cannabis industry for failure.”

Orduna, a disabled veteran who served in Iraq with the Marines, grew up in public housing projects in Queens and has first-hand experience with the consequences of unequal enforcement of drug laws when it comes to minorities and those with limited resources.

“I can’t even tell you how many times I was stopped by police as a young teenager, thrown up against a car and patted down for nothing other than walking down the street,” he said. “Dozens and dozens of times I was stopped and searched by police, and I wasn’t doing anything wrong, other than coming back from the store with a carton of milk or walking home from school or going to meet my friends.”

Orduna, who is a graduate of the Goldman Sachs 10,000 Small Businesses program and the Innercity Capital Connections program, says those incidents are an impetus for him wanting to open a legal cannabis business.

Click here to read more in the Long Island Business News.