New York now has more licensed recreational marijuana dispensaries than any state along the East Coast, save for Massachusetts. However, after three years of troubling rollouts, New York’s recreational cannabis market has gained speed, notably with the opening of around 50 licensed dispensaries.
However, even with this progress, the 85 legal dispensaries are outnumbered by more than 2,000 illegal shops, which are the targets of complaints that not only involve them derailing sales from legal dispensaries but that they sell to children and attract criminals as well.
This uneven and unregulated selling scheme has left many people frustrated with the government’s response to the problem, especially as the state’s promise to deliver a $5 billion market to diverse small businesses and those harmed by anti-marijuana policies.
James Stephenson, a co-founder and chief executive of wellness brand OHHo—who sell cannabis-infused chocolates, gummies, and seltzers—was quoted as saying, “They need to get a handle on that quickly. You can’t have one set of people playing by the rules.”
While illegal shops multiplied by the dozens, legal dispensary openings have been delayed for months due to lawsuits, the rule-making process, and the state’s promise to finance the leasing and renovations of the first 150 licensed facilities. Only ten stores have been in operation with the state’s help, while 375 dispensaries are still waiting to open their doors even after months of being licensed.
Governor Kathy Hochul, who has been disappointed with the state’s lack of progress, recently ordered a review of the Office of Cannabis Management, which handles the rollout. She has also proposed legislation expanding the power of local authorities to punish illegal shop owners and the complicit landlords who own those properties. She has also introduced measures to slash taxes that drive up the price of legal taxes. These changes have substantial support in the State Legislature.
However, for owners of legal dispensaries—many of whom are veterans, people of color, and even women and nonprofits—the number of illegal shops in place is causing them great struggle. Legal shops and state-licensed dispensaries sold about $150 million last year in New York, and shops in New Jersey, where recreational sales began eight months before New York, brought in $673 million.
The uneven balance between legal and illegal sales has not gone unnoticed. Both local and state authorities have raided dozens of illegal stores, issued millions in fines, and sent hundreds of letters to landlords to pressure them to evict businesses selling without licenses. However, unlicensed retailers are undeterred, often reopening within hours or days of raids and contesting fines in hearings that can take months to resolve.
The need for assistance for legal businesses had grown since last fall, when the Office of Cannabis Management received 7,000 license applications. Around 4,800 applicants qualified for not just loans but grants, many of whom are required by law to support businesses owned by low-income people with prior arrests, women, minorities, veterans, and distressed farmers.
With the uneven balance still in place, legal shop owners are still finding themselves in a bind when dealing with both the systems in the state and those manipulated by illegal sellers.
