Reuben McDaniel III, one of the most influential figures in the rollout of the state’s trouble-laden legal cannabis initiative, told Gov. Kathy Hochul’s office Wednesday that he is resigning from the board that regulates and approves licenses for the program, according to two sources with knowledge of his decision.
The resignation is expected to be formally announced at a meeting of the Cannabis Control Board in Buffalo on Thursday. The sources said McDaniel is only resigning from his board position at the Office of Cannabis Management (OCM).
McDaniel, who was appointed by Hochul to the five-person board in September 2021, also serves as the CEO of the Dormitory Authority of the State of New York (DASNY), another key player in the state’s plans for launching a legal cannabis market.
DASNY has contracted with a private investment firm to raise $150 million to provide financing for ready-to-open stores meant to give licensees who were convicted under the old drug laws a leg up in the legal marketplace.
Because McDaniel was involved in both approving retail licensees as a member of the OCM board while also overseeing the agency assisting licensees with locating storefronts, many considered the dual positions a conflict of interest.
McDaniel has repeatedly recused himself from voting on approving the retail licenses because of his role at DASNY.
Reached by phone for comment on Wednesday evening, McDaniel said, “I’m not speaking to a reporter,” and hung up. The Office of Cannabis Management said it could not confirm McDaniel’s resignation.
A spokesperson from Hochul’s office did not immediately return a request for comment about the resignation.
McDaniel stepped into his role in 2019, when former Gov. Andrew Cuomo first appointed McDaniel as the then-interim CEO of DASNY. McDaniel had worked at the financial services firm Raymond James, and served as chairman of the Atlanta Public School Board.
DASNY has come under fire in recent months as its promises to cannabis retailers have remained largely unfulfilled. While New York state has pledged $50 million for the social equity fund supervised by the Dormitory Authority, it’s unclear if that fund has raised any private sector money toward its $150 million promise.
While OCM has awarded more than 200 retail licenses so far, only 13 stores across New York state are currently operating, including three that are only doing deliveries.
DASNY’s process for helping to secure, fund and approve locations for retail cannabis shops has been widely criticized as obscure and confusing. Meanwhile, the illicit market, which offers cheaper prices because its product isn’t subject to state taxes, has flourished with more than 1,600 weed stores in New York City alone, by some estimates.
Last month, seven “justice-involved” retail-store licensees sent a letter to Hochul, McDaniel and OCM Executive Director Chris Alexander criticizing the fund for rejecting sites suggested by the licensees, and for other actions they say have kept them from opening their dispensaries.
A few days later, the Cannabis Association of New York, which represents hundreds of members in the state’s cannabis industry, expressed its support for the letter.
Last Tuesday, the Office of Cannabis Management and the Dormitory Authority held a heated meeting for weed retailers at CUNY Law School to address the grievances in the letter. The comments of state officials did little to quell concerns.
“This entire process has been catastrophic,” licensee Carson Grant told state officials. “Everything about the onboarding process has been extremely unprofessional and to me downright shady.”
At the end of Grant’s comments, McDaniel approached him to shake his hand and offered to meet with him one-on-one, which only inspired renewed shouting from other licensees. McDaniel left the meeting early.
Update, June 15, 2023: Just before the OCM board meeting in Buffalo adjourned on Thursday afternoon, McDaniel formally announced his resignation effective immediately. He thanked the governor for appointing him to the position, adding that he still is committed to helping weed retailers open storefronts through his position at the Dormitory Authority. “Those of you who have put your blood, sweat and tears in this — it will be a wonderful day when we all get this right,” McDaniel said. “It will take time.”