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NYS’s Legalized Cannabis Market Opens with Plenty of Uncertainties Creeping In
By: Hadassa Kalatizadeh
New York state’s legal cannabis market was slated to be fully operation by now.
As reported by Crain’s NY, the industry was in line to sell over $2 billion over the next few years alone— making it the biggest legalized market in the world. A slow start, delays in licensing and uncertain regulation, however, have led many uncertainties to creep in. Industry experts are worried that the smaller distributors still waiting for licenses may be in for a tough ride, in competing with larger distributors as well as unlicensed dealers. “This is a very optimistic time, but the business owner in me is very stressed out every single day on how I’m actually going to make this work,” said Brittany Carbone, a board member of the Cannabis Association of NY and CEO of Tricolla Farms, close to Ithaca. “There could be thousands of millionaires rather than a few billionaires created through the New York market, and the first step is getting more people licensed.”
The state has not officially set a limit to how many licenses they will award. It is estimated that in the first round, a total of 175 retail permits will be awarded– including 150 to individuals previously convicted in Marijuana-related crimes, as well as an extra 25 licenses for nonprofits. As per Crain’s, 903 applications were filed for the first round of retail licenses last year alone. So far, as of early January, the NY Office of Cannabis Management has given out a total of 354 conditional licenses—including to 279 growers, 39 processors ,10 registered organizations (ROs which are allowed to sell medical cannabis), and just 36 retailers. Those retailers include 26 new adult-use retail licenses for four boroughs of NYC and Long Island– each of which can open a maximum of three stores. Brooklyn retails stores are stalled due to litigation.
As per Crain’s, the later the licensees become operational, the harder it will be for them to compete in the market. This is especially true because in early 2025, the multi-state ROs will be allowed to sell in the retail market. The ROs, who currently sell wholesale, will have a major upper hand, because they will be permitted to brand their own product lines and have their own in-house supply chains. “That is not good, because the only way we can level the playing field is for the smaller players like myself … to be able to support each other and be able to have each others’ products. The way the regulations are set up, I don’t think we could do that,” said Vladimir Bautista, CEO of New York City–based cannabis lifestyle brand Happy Munkey, which has applied for a retail license.
In addition, the small number of legal cannabis retailers will need to sell at a significantly higher price than the many illegal dealers, because of the high potency tax and 13% excise taxes and the costs of licensing. The smaller mom-and-pop retailers are left in doubt of whether they will even be able to maintain solvency. The state has yet to announce if there will be legal penalties for those selling without a license, and for that matter, what the rules are for consumption lounges and scores of other guidelines still up in the air. “The illicit market has always had cheaper cannabis. The people who really go to dispensaries are tourists, super-wealthy people and people who just don’t know better,” Joe Lustberg, managing partner at Upwise Capital, said.
