New York City's fresh fall air has a distinct scent, and this year that scent is pot. Many city streets have also taken on a new look, with marijuana and cannabis products being sold out in the open everywhere. New York legalized recreational marijuana in the spring of 2021, but the state is still in the process of issuing licenses to legally sell it, which makes the situation... confusing. Some stores are still not being issued licenses by 2024 for reasons that are unclear, even though free trade MJ is already available. So the BB team and I recently took a little tour of cannabis stores in NYC to try to figure out what's going on.
A Tarot card reader sold me a pre-twisted joint from a table in Washington Square Park, warning me to be wary of other sellers who might not know what they were talking about. A question worth pondering for another day, on both entrepreneurial fronts of my merchant. Later, I bought something edible from a tobacco shop, though it wasn't clear to me or the guy selling it what it was. CBD? Just regular marijuana? Synthetic stuff that could hurt me? Maybe the tarotologist was right.
We were impressed by a visit to a store on the Lower East Side decorated with stamps in the shape of marijuana leaves on the facade. Outside, a sign read, «This dispensary is not a bar .... or this ... sorry». But already in the fine print it said, «We sell pot». There we purchased food and talked to the guy behind the counter about his plans for the store. When a group of teenagers came in to make a purchase, he turned them down — probably because of my presence (the official age for purchase is 21). He seemed optimistic about the future of his business. We didn't tell him about the competitor whose store was visible from his, nor that marijuana trucks were showing up on city corners.
A Tarot card reader sold me a pre-twisted joint from a table in Washington Square Park, warning me to be wary of other sellers who might not know what they were talking about. A question worth pondering for another day, on both entrepreneurial fronts of my merchant. Later, I bought something edible from a tobacco shop, though it wasn't clear to me or the guy selling it what it was. CBD? Just regular marijuana? Synthetic stuff that could hurt me? Maybe the tarotologist was right.
We were impressed by a visit to a store on the Lower East Side decorated with stamps in the shape of marijuana leaves on the facade. Outside, a sign read, «This dispensary is not a bar .... or this ... sorry». But already in the fine print it said, «We sell pot». There we purchased food and talked to the guy behind the counter about his plans for the store. When a group of teenagers came in to make a purchase, he turned them down — probably because of my presence (the official age for purchase is 21). He seemed optimistic about the future of his business. We didn't tell him about the competitor whose store was visible from his, nor that marijuana trucks were showing up on city corners.
We didn't discuss the biggest threat such stores face — the fact that their operations are not entirely legal. New York City currently issues licenses for adult-use retail cannabis sales.
David Holland, an attorney specializing in cannabis law, added context: «This is New York, there are always people to whom if you give an inch, they'll take a mile».
The marijuana situation in New York is complex and confusing. There are many legal issues that need to be resolved between legalizing marijuana in the state and actually getting products on the shelves, which takes time. The state has placed a high value on social justice in this process, trying to support the people who have worked in the legal industry and have been most affected by the war on drugs. This was well-intentioned, but not always successful, resulting in many people losing access to an outdated market, including those who had been selling cannabis and marijuana for years.
Now, a so-called «gray market» has emerged across the state and city in the form of smoke stores, dispensaries, trucks and grocery stores selling cannabis. Some of them have set up a gifting scheme where you pay $60 for a sticker or other token item and receive pot as a gift, since gifting marijuana is now legal in the state. OCM argues that it's not really a legal gimmick because, according to them, the sticker isn't worth $60, but some advocates, including Holland, disagree. Nevertheless, many people continue to buy the product.
Law enforcement efforts to crack down on the activity have proven a bit difficult because neither state officials nor local authorities want the NYPD to raid stores and make arrests.
«The idea of arresting black and brown bodega owners is a political nightmare» — said Jesse Campoamor, chief architect and negotiator of the Marijuana Regulation and Taxation Act (MRTA), New York's landmark cannabis legislation. But if unregulated, they could create another political nightmare. Once retail licenses are terminated, unless some sort of enforcement action is taken against these gray market participants (who some sources believe are essentially engaged in a «cash grab»), those who go the legal route may be doomed to fail.
This is an incredibly complex situation with no clear heroes or villains. An early win — such as getting one of the legal stock licenses — doesn't preclude a possible loss.
«The first mouse gets the trap, the second mouse gets the cheese» — Campoamor said. What's not obvious right now is who the first mouse is —the gray market guys or the first licensees — or what the trap looks like.
New York was doing everything it could to legalize cannabis
On March 31, 2021, then-Governor Andrew Cuomo signed the MRTA into law in New York, paving the way for the regulation of medical cannabis and adult-use cannabis across the state. However, he was slow to start implementing the law, leading to a significant delay in creating the Office of Cannabis Management (OCM) and recruiting staff to put the regulations into effect.
«Cuomo chose politics» — noted Melissa Moore, director of civil system reform at the Drug Policy Alliance. It wasn't until Cuomo resigned in the summer of 2021 and Governor Kathy Hawkul took office that things began to move forward. «She did more than Cuomo did in about a week after taking office» — Moore added.
A month after Houckul took the oath of office, she appointed Chris Alexander as OCM's executive director, and the agency began hiring and expanding its staff. The state first issued licenses to growers, then processors, and in late September began closing the application process for retailers. More than 900 applications for conditional adult retail dispensary (CAURD) licenses were submitted by the company, which had planned to issue a total of 150 licenses.
New York sought to issue its initial retail marijuana licenses with social justice in mind, although this was a bit unsustainable. Applicants had to have a «criminal history», meaning they or their families had to have been convicted of a marijuana-related crime in the past (if the case was dismissed or certain arguments were presented, it was ignored). Also, candidates had to have owned at least 10% of a profitable business for two years.
The problem with the Venn diagram is that because of the many structural barriers, stigma, and racial disparities, few people with criminal records due to marijuana go on to profitable operations, at least in a legal sense. Many black market operators can be profitable, but this is not taken into account.
We met Brian, who has been in the black market for a long time and runs a delivery service in Brooklyn and Queens and is one of the closed for-profit operators. He's been arrested frequently for marijuana use and served jail time, but he can't meet business standards. He feels that if it were not for this requirement, he would be happy to apply. He is not satisfied with the current system and believes everyone should be given a chance. «I'm just sitting back and waiting for my chance» — he said.
From a bureaucratic perspective, one can see the logic behind the parameters that determine an application. The Hazardous Substances Management Committee (OCM) sought to avoid analyzing hundreds of thousands of applications, preferring to give preference to applicants with a track record of successful entrepreneurship, which they believe increases the chances of a successful cannabis business.
Christina Buccola, a New York-based legal professional and co-founder of the Bronx Cannabis Hub, assisted people through the application and licensing process. She encountered many people wanting to participate in the CAURD program, but not all of them were able to do so. About 30 applications were submitted on her behalf, and she described the whole process as «crazy» because of all the problems that arose.
We met Brian, who has been in the black market for a long time and runs a delivery service in Brooklyn and Queens and is one of the closed for-profit operators. He's been arrested frequently for marijuana use and served jail time, but he can't meet business standards. He feels that if it were not for this requirement, he would be happy to apply. He is not satisfied with the current system and believes everyone should be given a chance. «I'm just sitting back and waiting for my chance» — he said.
From a bureaucratic perspective, one can see the logic behind the parameters that determine an application. The Hazardous Substances Management Committee (OCM) sought to avoid analyzing hundreds of thousands of applications, preferring to give preference to applicants with a track record of successful entrepreneurship, which they believe increases the chances of a successful cannabis business.
Christina Buccola, a New York-based legal professional and co-founder of the Bronx Cannabis Hub, assisted people through the application and licensing process. She encountered many people wanting to participate in the CAURD program, but not all of them were able to do so. About 30 applications were submitted on her behalf, and she described the whole process as «crazy» because of all the problems that arose.
«Due to various reasons, the applicant pool was very limited. Collecting the necessary documentation was only part of the process, but it required a tremendous amount of effort. Even I, as an experienced lawyer, found it tedious» — she wrote in an interview.
Hope for retailers
CAURD originally had only 150 licenses for 900 applications, and there were always more losers than winners in each drawing. However, the winners received significant winnings, including access to a place to do business, not just licenses. These licenses gave access to turnkey stores, thanks to a $200 million cannabis welfare fund that was supported by both public and private entities. This fund was used to build and renovate storefronts, purchase equipment, and the costs were covered by license holders through conversion to credit.
New York City's mayor, Eric Adams, invested $4.8 million dollars for fiscal year 2023 to support the city's cannabis industry. He created Cannabis NYC, which will be run by the NYC Department of Small Business Services, to help entrepreneurs in the industry.
https://www.nyc.gov/office-of-the-m...ess-services-new-initiative-equitably-grow#/0
Eric Adams stated that Cannabis NYC will boost the city's economy by helping New Yorkers get licensed and master starting and successfully running a cannabis business. He also emphasized the importance of bringing capital to the economy by providing opportunities for success for those who have faced legal challenges due to cannabis. The new project is designed to create jobs, grow small businesses, and provide justice for communities affected by «war on drugs» policies.
Advocates generally think this funding is a good thing, but it's just the beginning. The money will dry up quickly. «Where's the real mechanism to help these people?» — said Joseph A. Bondi, a criminal defense and cannabis business attorney in New York who also serves on the national board of directors of the National Organization for the Reform of Marijuana Laws (NORML). «It's one thing to say you have $200 million to fund these programs, and it's another thing when someone picks up the phone».
«Dirty business» doesn't mean bad business
Most of the people interviewed were critical of New York's attempts to legalize cannabis. They argued that decriminalization and legalization efforts would be flawed either way.
Vickiana Reyes, coordinator of the cannabis education program at Medgar Evers College and head of the Legacy CORE Foundation, expressed concern that many people were unable to apply for CAURD for 2022. She was also concerned that licensed businesses would have a hard time getting funding to purchase goods and fill their shelves, even though they would receive loans through the social capital fund. «Where will they find the money?» — she questioned. This could lead to them having to make deals with dubious lenders or creditors on discriminatory terms, or losing control of their stores.
Brian, an experienced entrepreneur, shares the concern that retail license holders could face setbacks. «They will have to compete with all the other businesses that currently don't pay taxes. Is it realistic that these CAURD candidates will be prepared for a legacy of generational wealth? Or for generational debt?» — he said.
Holland, a cannabis legal expert, argued that there are better methods of legalization that would capture more of the legacy market more quickly. «One option is to legalize the current market and issue licenses to absolutely everyone who has requested one» — he said. Alternatively, an amnesty program for legacy operators could be introduced. «If you announced an amnesty, it would have a pretty significant impact on a lot of people».
Bautista, who has been a strong supporter of marijuana legalization in New York, acknowledges that the current system has its flaws, but he believes it's minor. «No other state has really sought to achieve social justice and develop a legacy market» — he said. Instead, other states have tried to «alienate and exclude» the legacy market.
Now, police can no longer use the smell of cannabis as a basis for stop and frisk. The stigma that many have felt about marijuana in New York City and across the country is diminishing. Those communities that have been hit harder by the war on drugs are getting a chance for some improvement. A few months ago, I watched an elderly woman smoking a joint on a subway car at night and offered it to a group of four young men. Smoking on the subway is banned, of course, and probably many people were uncomfortable with that. But it was interesting to see what was happening.
Bautista, who has been a strong supporter of marijuana legalization in New York, acknowledges that the current system has its flaws, but he believes it's minor. «No other state has really sought to achieve social justice and develop a legacy market» — he said. Instead, other states have tried to «alienate and exclude» the legacy market.
Now, police can no longer use the smell of cannabis as a basis for stop and frisk. The stigma that many have felt about marijuana in New York City and across the country is diminishing. Those communities that have been hit harder by the war on drugs are getting a chance for some improvement. A few months ago, I watched an elderly woman smoking a joint on a subway car at night and offered it to a group of four young men. Smoking on the subway is banned, of course, and probably many people were uncomfortable with that. But it was interesting to see what was happening.
«It's nice to see people today who come to me not to discuss bailing their loved ones out of jail or avoiding jail, but to ask how they can best position their business, get a license, brand a product or raise capital» — Bondi (a lawyer) said. He also noted the continued interest many people have in the legacy market, where for some, «being a pirate is more fun than being in the Navy».
With that as a backdrop, it's hard to say where the debate and legislation around marijuana is headed, especially in New York. Many states have legalized or decriminalized marijuana, but it remains illegal at the federal level. President Joe Biden recently announced pardons for thousands of people federally convicted of marijuana possession and announced a possible revision of its legal status, which is now equal to that of heroin. However, that doesn't change anything for retailers at this point.
Even legal retailers have to operate in cash or debit, and they don't have the same tax advantages at the federal level as other businesses. Also, legal marijuana is taxed while illegal marijuana is not, making the latter more accessible and cheaper for consumers and recreational sellers.
No one knows what the end result will be. There's a lot of money in play, and there are a lot of unanswered questions. What's happening on the streets of New York looks like progress, even if it's uneven and imperfect.
The general outlook on the lives of cannabis clerks can be summed up in one sentence: «You're too happy to be stressed, things will get better later, and always choose happiness». The cannabis industry, like any other industry, is in turmoil. What's left ahead is a little bit of structuring and moderate control. Think of it like regular alcohol, but several times better and a thousand times safer for the body.
With that as a backdrop, it's hard to say where the debate and legislation around marijuana is headed, especially in New York. Many states have legalized or decriminalized marijuana, but it remains illegal at the federal level. President Joe Biden recently announced pardons for thousands of people federally convicted of marijuana possession and announced a possible revision of its legal status, which is now equal to that of heroin. However, that doesn't change anything for retailers at this point.
Even legal retailers have to operate in cash or debit, and they don't have the same tax advantages at the federal level as other businesses. Also, legal marijuana is taxed while illegal marijuana is not, making the latter more accessible and cheaper for consumers and recreational sellers.
No one knows what the end result will be. There's a lot of money in play, and there are a lot of unanswered questions. What's happening on the streets of New York looks like progress, even if it's uneven and imperfect.
The general outlook on the lives of cannabis clerks can be summed up in one sentence: «You're too happy to be stressed, things will get better later, and always choose happiness». The cannabis industry, like any other industry, is in turmoil. What's left ahead is a little bit of structuring and moderate control. Think of it like regular alcohol, but several times better and a thousand times safer for the body.