What’s Happening in the New York Cannabis Industry?

If you stay up to date with any cannabis news resources periodically, you can see how quickly and chaotically cannabis legalization occurs in each state.

Any state or municipality that votes to decriminalize cannabis and offer medicinal or recreational use in their area knows this process is not simply a “one and done” type deal.

Especially because the U.S. cannabis industry is growing in a country that still deems the plant federally illicit, there are many hurdles and variations in which these states are handling their new cannabis policies and legal market.

Already a larger state in size and population, New York has been establishing a legitimate cannabis market for all since its adult use legalization last year.

But as of last month, there are only 3 legal cannabis dispensaries currently operating in the state – with an additional 30 cannabis licenses underway.

Read on to get the latest update on the recreational cannabis industry in New York.

New York’s Social Equity & Slow Legalization Rollout

In 2016, the state of New York legalized medical cannabis use. While a sturdy medical market was progressing in the state, New York legalized recreational cannabis use for those over the age of 21 in 2022.

With this move, the New York State Cannabis Control Board immediately announced the approval of a total of 36 cannabis business licenses for the Empire State.

A social equity policy was also implemented for New York’s new cannabis market, which prioritizes all business licenses to justice-involved individuals within the state. This includes people who have had a cannabis conviction or a close family member who has been impacted by the War on Drugs. These thoughts and efforts behind New York’s cannabis social equity policy reflect the possibility of an industry with inclusion and equality. 

However, between structuring the state’s regulatory framework, the timeline for license applications, a federal court ruling against licenses issued in certain counties, and other internal adjustments, the rollout of this entire legalization policy has been stalled and tremendously slow.

Cannabis business owners and New Yorkers are not shy to express how this slow industry change is impacting the entire community.

“New York seems to have some serious admin problems when it comes to the OCM, and their rollout has been terrible so far,” says Camille Bussiere, General Manager at JARS Cannabis. “I feel bad for all the farmers who invested time and money into their first 2022 crop and then had, and still have, practically no place to sell it.”

This pace has impacted the eager cannabis farmers and business owners ready and waiting to sell and advertise cannabis in New York while bringing the black market into the mix.

Cannabis in New York: Legal vs. Black Market 

With recent recreational legalization in motion, New York has opened the floodgates for new cannabis businesses, dispensaries, brands, and products to be marketed and sold. New York is currently seeing an influx of cannabis dispensaries and shops around each neighborhood’s corner.

On top of this influx, in January of this year, the state’s Cannabis Control Board approved an additional 30 retail dispensary licenses – now totaling the number of licensed operators that will be issued within the state to 66.

While New York has taken over a year to put guidelines in place for recreational cannabis retail and sales, corner stores and smoke shops began to sell illicit cannabis out in the open.

Bodegas, CBD stores, private lounges, and smoke shops are not just carrying options of cannabis goods, but offering brand names and assorted products that consumers are all familiar with and enjoy.

However, a lot of these stores and dispensaries have products that can be easily accessed and purchased but without the proper state taxation or legal documentation to sell.

Limited Legal Operators 

Considering this lengthy application process to be a cannabis operator in the state, the number of legally licensed dispensaries in New York is significantly lower than you’d expect.

As of February 2023, there are only 3 legal and licensed cannabis dispensaries operating in the entire state – two stores in New York City, and one dispensary upstate.

  • Housing Works Cannabis Company was New York’s first legal recreational cannabis dispensary to open in December 2022, at 4:20pm.
  • This cannabis dispensary is owned by the non-profit Housing Works and is on a mission to give back to the community.
  • All proceeds from this shop’s cannabis sales go towards funding services and advocacy for housing, healthcare, and people living with HIV and chronic illness.

These cannabis dispensaries and companies that are opening up in New York greatly reflect the state’s overall mission towards an equitable and impactful industry, even if there are just a few legal ones for now.

But for New York, the setbacks and slow cadence by state regulators have only caused a black market to make the cannabis gray area seem grayer.

Gray Area in a Black Market

As we’re seeing in most newly legalized states, the now-approved cannabis industry does not suddenly diminish the black market.

During the alcohol prohibition era, there were around 32,000 speakeasies illegally selling alcohol in NYC alone. Before cannabis legalization ever sparked in New York, imagine the number of underground cannabis lounges and smoke shops offering the herb.

Last month, New York City Sheriff Anthony Miranda and NYPD representatives reported an astounding estimate of 1,400 illegal shops open and selling cannabis products.

Whether they’re more upfront or discreet about the cannabis sales happening in their store, these locations are selling and distributing illegal product that has not been regulated for safety or has gone through the legal cannabis retail licensing process.

Not only have these unregulated cannabis shops become susceptible to robberies and crime, but they’re the target of NYPD raids and evictions happening throughout the city.

Between the very loose guidelines around recreational sales and the state’s emergence of a public black market, New York’s cannabis industry finds itself in a tricky situation.

As a newly legal cannabis state focused on a social equity approach to its market, the current punishable fine for these illegal cannabis shops is around $250 fine. This violation fee is not enough to deter violators and shop owners from completely ceasing their operations, leading many to pop up shops to make quick cash again somewhere else.

Despite state regulators’ slow rollout of recreational cannabis policy, retail shops and locations are rapidly popping up all around the city. What does this currently look like for New York consumers? How do they know they are purchasing from a reliable, legal retailer?

High Hopes for New York’s Industry

The social equity model New York has established is one designed to give back to communities and those criminalized for cannabis. Yet the combination of slow licensing and saturated illicit shops is causing an uneven balance and unsettling perspective for New Yorkers.

While regulators are proudly prioritizing a social equity policy designed to help minorities and those unjustly wronged by criminalized cannabis, the slow pace is igniting the black market and impacting the legal industry.

“Cannabis is unlike any other industry,” says Amy Chin, cannabis consultant and founder of Calm Better Days. “Federally, it’s illegal, so there are just way more layers of regulatory complexities. Most of these illegal shops are a cash grab. These illegal places confuse the new consumer who may not know where to start or may not even know they are in an illegal shop.”

Right now, it’s up to New York to continue to prepare and establish a structured plan for public cannabis retail. For the state’s cannabis industry to thrive, it will take consistent enforcement and regulation across the board.

The lack of professional resources for legal cannabis business owners and a surplus of illicit cannabis shops across the state has left cannabis owners roaming the new market lost and lawlessly.

Looking for more New York insights?

Browse the Cannabis Creative blog for more cannabis regulation and legalization news, and check out the Ultimate Guide to Cannabis Dispensary Marketing in New York for more information.