State Cannabis Director to Step Down as Governor Orders Overhaul

The departure of Chris Alexander, an architect of legalization in New York, follows a report that was critical of his leadership.

The head of New York State’s cannabis agency will step down at the end of his three-year term in September as part of an overhaul of the embattled agency, Gov. Kathy Hochul said on Friday.

The governor made the announcement at a news conference in Albany where the official, Chris Alexander, the executive director of the Office of Cannabis Management, was notably absent. It came after a task force found a startup-like culture at the agency contributed to “confusion, difficulty and delay” in the rollout of the state’s legal market, according to a report released on Friday.

The report was ordered by Gov. Hochul in March after she declared the rollout a “disaster.” It cited inexperience among the agency’s leadership as one of the critical factors undermining the agency’s ability to expand the market with more licensed retailers and deliver the promised benefits of legalization.

However, at the news conference on Friday, Gov. Hochul insisted her changes were not about assigning blame.

“It’s about pointing O.C.M. in a new direction and implementing solutions that work for everyone,” she said.

Mr. Alexander was attending a meeting of the Cannabis Control Board, which oversees his agency, and could not be reached for comment on Friday. The Office of Cannabis Management did not immediately respond to an email seeking comment.

Speculation about the departure of Mr. Alexander, an architect of the law that in 2021 legalized recreational cannabis in New York, had been brewing since the governor began publicly expressing her disappointment with the rollout. Both critics and supporters of the agency saw the review as the justification for a change in leadership, and reports circulated suggesting that she had asked Mr. Alexander to step aside.

“The governor has been tremendously embarrassed by this,” Jeffrey Hoffman, a cannabis lawyer, said. “I do think that once this report comes out, there’s going to be very serious discussions in the halls of power of what kind of changes are going to be made,” he added.

The review paints the clearest picture yet of a licensing process that has been criticized as clunky and opaque. and of an embattled agency. It also outlines ways to clear roadblocks that have helped the illicit market steal the advantage the state had intended for small businesses and people who were harmed by the war on drugs.

There are just 122 recreational dispensaries open across the state, while officials say the number of illicit shops in New York City alone has nearly doubled to 2,900. At the end of April, more than 5.600 applications, mostly for retail and craft businesses that submitted them as far back as August 2022, were still waiting to be reviewed.

The report describes a licensing team that is understaffed and a scattered review process that leaves applicants in the dark. It recommends doubling the number of staff members devoted to licensing, developing a public dashboard to show the status of licenses and issuing formal denials rather than leaving applicants in limbo.

Jeanette Moy, the commissioner of the Office of General Services, who led the review, said that 90 percent of applications required corrections, a staggering figure that underscores the complexity of the process and the inadequacy of the agency’s guidance to employees and the public.

“We have to fix the process. We have to clear the backlog. We need to get these legal cannabis stores up and going,” she said in an interview.

The report acknowledged that the agency had worked quickly under difficult circumstances to get the legal market up and running. But a “perceived uniqueness of the agency’s work” is “a significant cultural roadblock to its willingness to adopt processes and systems that have proved successful elsewhere.”

As a result, the state has lost months of time and millions of dollars that were spent developing several software systems that could have been adapted from other agencies, the report said.

But the report immediately drew backlash from critics who said it painted an incomplete portrait. Some said it omitted or glossed over the role of the governor, the Legislature and the many lawsuits against the agency in the challenges facing the cannabis program.

“I know for a fact that the executive director was consistently asking for more staff and more help, and they were completely ignored,” State Senator Liz Krueger, a co-author of the cannabis law, said. “So I feel like the governor should have done this 18 months ago. And I wish that they had listened to the agency.”

At the Cannabis Control Board meeting on Friday, members expressed frustration that they had not seen the report before its findings were published by The New York Times.

Adam W. Perry, a business and employment lawyer who sits on the board, said that it was unusual that the board was not allowed to review the report and give feedback.

Ms. Moy’s review did not look at one of the most significant obstacles to the rollout, which was the state’s failure to deliver on promised low-interest loans and leased storefronts for the first 150 licensed dispensaries. Fewer than 30 dispensaries have opened with the assistance.

The idea had been suggested of the state Dormitory Authority, who received approval of Gov. Hochul to set up a loan fund over the objections of the Office of Cannabis Management. The fund struggled for months to secure just one investor, and when it did, the loan terms it offered dispensaries were criticized as predatory.

The fund’s failure forced the Office of Cannabis Management to pivot to issue more licenses than initially planned, which fueled lawsuits from people and businesses that had been left out of the initial round of licensing.

The current waiting list includes 1,200 business that submitted applications last fall and spent thousands of dollars to secure properties where they intended to set up shop. Regulators promised them an expedited review, but that was impossible because the cannabis agency had the capacity to vet only 75 applications at a time, Ms. Moy said. Regulators also denied an additional 309 applications without telling the applicants, some of whom have waited almost two years for a decision, the report said.

The Office of Cannabis Management already appears to be making some changes based on the review. For the first time on Thursday, the agency recommended that its board vote on denying some licenses — a move that Ms. Moy said was aimed at giving those applicants “closure.” But at a meeting on Friday, the control board set the issue aside.

The board approved a policy, proposed by the agency at the behest of the governor’s office, that would require regulators to review all 1,200 of the applications from people who have secured locations before moving on to the remaining applicants.

Critics say the policy gives people with the resources to obtain real estate an unfair advantage over those who have a harder time getting funding and leases or mortgages. The applicants who would be at a disadvantage are more likely to be low-income applicants from neighborhoods hit hardest by arrests, whom the cannabis law gives the most priority in licensing. But supporters say the move is necessary because the state urgently needs to open more stores.

Grace Ashford contributed reporting