One week after the state landed its first cannabis sale, the next steps of New York’s legal weed rollout remain up in the air.
Last week, regulators and customers fawned over the birth of New York’s long awaited adult-use market. Thousands waited in line to join the historic leap forward, just in time for the New Year. But the Hempire State’s new billion-dollar baby now faces big growing pains going into 2023.
Lawmakers have delivered on most promises, including baking social equity into the DNA of the state’s adult-use program. But there is still much work to be done if New York wants to truly redefine how states handle legalization from a legislative and regulatory standpoint.
From getting deliveries up and running to settling a federal lawsuit from a disgruntled dispensary applicant, here are the many steps that still lie ahead for New York’s new legal weed market in 2023.
High prices, but plenty of alternatives
Shoppers were lined around the block to shop at Housing Works on day one, plus at peak traffic times throughout the week. But some customers are already complaining about high prices.
Carts were going for astronomical prices on day one at Housing Works (over $50 for .5 gram carts and about $100 for 1 gram). Sure, the flower is fairly-priced ($40-$60 per 3.5 grams), but options are limited. And nobody feels good paying $30-$35 for edibles or $18-$50 for pre-rolls.
With those prices, Housing Works should be on track to hit its $1 million year-one sales goal. Thankfully, medical, gray market, and homegrown options exist while the adult-use marketplace develops and prices normalize.
Ultimately, pricing will be shaped by regulatory restrictions that forbid undue influence from highly-leveraged multi-national operators. Regulations that limit interference from established operators aim to give consumers the power to choose which brands thrive.
Last week, Sen. Liz Kruger told Leafly lawmakers have studied how California and other markets lost ground to the illicit market. Sen. Kruger and members of the state’s cannabis board said on day one of sales that they intend to apply lessons learned from the mistakes of other states. Accessible pricing will be a key part of New York’s fight to lure buyers away from unlicensed operations, some of which have contaminated boof, while others offer high-grade West Coast-quality without local taxes.
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First, the state has to bring delivery services online, through exclusive third-party partner Dutchie. So far, none of the 63 licensees have been permitted to begin delivery sales.
Next, New York must stand-up dozens of brick and mortar stores to join Housing Works, currently the only licensed adult-use dispensary open for business in the state. The Dormitory Authority (DASNY) is in charge of the process, but the office has still not met the December 30, 2022 deadline to publish a report on its efforts to raise a $200 million fund for the state’s new dispensaries.
Social equity and public comments
There are also regulatory hurdles and deadlines that the state faces in the coming weeks. New York is currently digging through “hundreds of pages of notes” to deliver a social and economic equity plan, which was due on January 1, 2023, according to the The Marihuana Regulation and Taxation Act (MRTA). The MRTA legalized cannabis in New York in March 2021, and laid a clear groundwork for how and when regulators must get things rolling. Proposed final regulations were released in late 2022, and are open to public comment before being finalized.
New York’s Office of Cannabis Management (OCM) told Syracuse.com it is analyzing data to identify locations “of more than 1.2 million arrests to analyze communities disproportionately impacted” by the drug war, Klopott said, and the agency will be submitting the overdue report about its social equity-related activities by the end of this week. An OCM spokesman said full social equity plan will be released in the first quarter of 2023.
Lawsuit blocking New York dispensary licenses
An active federal lawsuit continues to block the issuance of 63 dispensary licenses in Brooklyn and four other regions of the state. OCM officials have expressed confidence that the temporary injunction currently stopping the state from awarding conditional adult-use dispensary licenses will be resolved in the coming months. The plaintiff told Leafly that “enjoining” the licensing process for other operators was not their intention. Until the suit is resolved, cannabis buyers and prospective dispensary owners in the impacted regions (Brooklyn, Finger Lakes, Central NY, Western NY, and Mid-Hudson) must wait for dispensaries to open.
Leafly spoke to Alex Norman, an affected applicant who said he isn’t moping about the delay. He’s simply positioning his business, Budega NYC, for other cannabis opportunities including branded products and a consumption lounge.
Crackdown continues with more raids
In November, Leafly reported on the first law enforcement raids of unlicensed cannabis stores. Over the course of two weeks in December, a joint task force assembled by Mayor Eric Adams seized 100,000 products and $4 million in cash from unlicensed stores. New York cannabis pioneers like Norman, Juancarlos Huntt, and Shiest Bubz have distanced the legacy market, which is first in line to receive licenses, from the unlicensed illicit stores that are abusing enforcement gaps in the MRTA to pose as licensed dispensaries.
Neighborly rivalry brewing
New Jersey beat New York to day one of adult-use sales by about 8 months. And from June to September 2022, the state’s weed sales grew 46% over the previous quarter. In the third quarter alone, the Garden State has reportedly sold $116,572,533 worth of legal weed with just 20 open dispensaries. But New Jersey’s Cannabis Control Board recently failed an attempt to dunk on New York’s limited day-one rollout in a now-deleted tweet that said, “Aww…on our first day we did 12, but congrats on this one, it’s cute! Congratulations, NYC!”
Competition can breed excellence. So hopefully this friendly rivalry leads to high times and low prices for cannabis lovers in New York and New Jersey alike. Not to mention, Connecticut will join the tri-state race next week when adult-use sales officially begin January 10. On your mark, get set, smoke!
