Thursday, February 22, 2024

Is New York Promising False Hope To The Marijuana Industry

New York City is the number one city for marijuana sales, but the state’s systems have made it only profitable for the black market.

When New York State voted for full recreational weed in 2021, the industry salivated with the prospects of the market. They thoughtfully crafted a plan to help move existing medical dispensaries to recreational, providing they jump through hoops and spend hundreds of thousands.  With existing population and a huge tourism population, people were willing to invest.  At the last minute, NY changed everything and today there are 23 legal operators and over 1,500 unlicensed dispensaries in NY racking in hundreds of millions a month. And not paying state or city taxes.

Now, is New York promising false hope t the marijuana industry again with the state Supreme Court stepping in?o

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New York City has proven unable to close the unlicensed dispensaries. Giving fines or imposing temporary closures at a rate of 1-2 a week, they recently turned to a unique solution. Rather than focus on expanding legal retailers, they established a policy to punish landlords with hefty fines for allowing unlicensed dispensaries in their building. Whether the landlord knows of the true nature of the business beforehand, is irrelevant. And now it has gotten even messier.

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A New York judge approved settling a lawsuit filed by a group of service-disabled veterans. The Court granted the group a provisional license and paved the way for more than 400 provisional licensees to open marijuana dispensaries. The new business owners would have to compete against the existing retailers.  The veterans businesses will be able to finally open after a painful and expensive wait. Most likely they will miss the cash rich holiday season.

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By allowing this group new licenses, the state now has to focus on clearing backlogged provisional licensees as mandated by the court. New applicants will have to wait even longer for licensure. It appears April is the current target for the net way of licensures and it is drawing criticism.

A representative of the New York Cannabis Retail Association told one media outlet 30 members of his association are on the verge of bankruptcy and can’t wait until April. The 1,500 dispensaries are stocked with an estimated $500 million in products.  It seems part of those are from the illicit market, which only increases income for black market.

It has been quickly proven the market has a big demand, but New York will have a long way to go to solve the mess they started and retrain consumer into new purchase patterns.

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