The legalization of cannabis has led to an explosion of small-scale “mom and pop” shops, as well as large companies like CannaMed. This new industry will be a big test for New York State’s economic health in the future.
Weed trucks and pop-ups are omnipresent now that possession is allowed. But it might all change if the government intervenes.
For the past few months, anyone visiting Katz’s Deli on Manhattan’s Lower East Side – famous for its role in When Harry Met Sally as well as pastrami – has queued near a green-painted food truck strategically parked on Houston Street to capture Katz’s foot traffic, adorned with multi-colored LED signage advertising the city’s newest hot delicacy: cannabis.
Passers-by may go up to the truck’s sales window and look over a menu scrawled in marker on a white dry-erase board, then ask to view and smell a sample before paying $60 for 3.5 grams, the usual serving size in the cannabis market.
The Green Truck just launched an eighth site, a block away from Grand Central, in addition to the truck here and the others outside a Trader Joe’s in Brooklyn and a major subway transfer on the Upper West Side. Despite the fact that none of this is really allowed – even if the $60 is officially a “contribution,” as the bored-looking truck driver says – no one seems to mind. An NYPD police cruiser was positioned behind the Green Truck on a recent visit to Katz’s, when “donations” or purchases, whatever, proceeded as if cops were not there.
For people 21 and older, marijuana possession and use has been legal in New York State for about a year. However, New York’s approach to legalizing differs significantly from that of California. There are substantial social-justice laws and assurances in place to ensure that minorities and those most disadvantaged by the country’s decades-long drug war have access to cannabis retail possibilities.
The Marijuana Regulation and Taxation Act (MRTA) of New York is one of the most progressive legalization laws in the nation. According to BofA Securities analysis, New York is also the next major prize for the country’s young cannabis business, which is expected to generate $40 billion in legal sales by 2021. New York’s thirst for cannabis is expected to be valued between $3.7 billion and $5.8 billion in five years, according to projections.
It’s also the most lax legalization statute in the nation, since New Yorkers are permitted to smoke cannabis everywhere tobacco is allowed — a benefit not enjoyed by Californians, who risk a penalty for doing so. All of this adds up to an almost unimaginable shift for New York, which under Mayor Rudy Giuliani became the global hub for minor marijuana arrests.
Although the state will not grant the first sales permits until this autumn, a large, unregulated, and legally illegal “gray market” has sprung up to meet demand.
In sum, finding and purchasing pot in New York City has never been simpler — and selling it has never been safer.
“It’s insane.” It’s a dream,” said Milton Washington, who has been selling cannabis for the last 15 years and now resides in Washington Heights in upper Manhattan, where he hopes to convert his present “if you know, you know”-style cannabis speakeasy into a legal, licensed consumption lounge. In addition to sommelier-level selection, the lounge will offer “Rokmil,” a cannabis-centric and “unapologetically Black” fitness and health activity.
But, for now, running his business as is – out of a lovely 19th-century brownstone where, the night before our interview, he hosted a fundraiser for Louisiana US Senate candidate Gary Chambers, Jr – is “nearly risk free,” he added between puffs of a sativa-dominant preroll he described as “perfect for conversation.”
To lure new clients or referrals, delivery businesses place QR-code triggered menus on bus stations, bike-shares, and subway advertisements, offering reduced or even free cannabis. Almost every night of the week, there are cannabis pop-up events or “seshes.” In upscale restaurants, cannabis-infused meals or brunches are advertised. Members-only clubs and lounges use Instagram to market memberships and screen candidates. In the outer boroughs, “smoke shops” openly selling cannabis are springing up to replace previously vacant retail space. And a few outré businesses, like as the Green Truck and Empire Cannabis Clubs, which have two well-publicized locations in Chelsea and the Lower East Side, advertise online and recruit walk-in clients.
During the epidemic, several of these businesspeople created cannabis brands or resorted to selling it. Some are transplants from other states who have been pushed out because to restricted licensing, hefty taxes and permit fees, and the falling wholesale price of cannabis, and are giving it another go in Gotham.
Jackie Conroy works as a dietitian at a charter school throughout the week. She dons a flattering black dress and transforms into her alter persona, the Cannawitch, to operate the dab bar at High Garden, a brunch-and-lounge event that offers cannabis-infused drinks and cuisine, and of which she is a founding partner.
Legalization arrived in New York at the perfect moment.
On a recent Sunday at High Garden’s bright and spacious setting, Conroy said, “People stopped becoming terrified, and by the conclusion of Covid [restrictions], they wanted to be out.” Almost suddenly, in Harlem, where Conroy resides,
“It shifted from constant officer presence to no cop presence,” she said.
Though authoritarian drug-war hard-lining is preferable to this libertarian utopia,
She said, “We don’t want weed trucks on every corner.” She estimates that regulations and the law will rectify this within two or three years. Despite this, Conroy admires the gray marketeers’ hustle.
She said that the cannabis market in New York “has no ceiling at the time.”
The state is fully aware of the situation and is not pleased. There isn’t much that can be done without a harsh police response, which analysts believe would be very unpopular. Sales of three ounces or less are a traffic offense with a $250 fine, with stakes so low that the New York police department isn’t interested in getting involved. When asked for comment or information on the number of infractions issued, a police spokeswoman copied and pasted the legalization statute into an email and did not answer to additional queries.
According to OCM spokeswoman Freeman Klopott, the state office of cannabis management has issued 52 cease-and-desist letters to retailers who are breaking the law. It is recognized that those who get letters endanger their prospects of obtaining a license.
“We advise New Yorkers not to participate in illegal transactions,” Klopott stated, emphasizing that sales are illegal.
“It’s illegal… and we’ll enforce the law with our allies.”
If that wasn’t enough, Klopott added a social-responsibility remark, reminding people that the $200 million in state financing provided to Black and brown “equity” company applicants is funded by legal cannabis licenses. “Illegal activities hinder our capacity to achieve that,” he added in an email.
Klopott will not identify who got the letters or where they were distributed, but it’s evident that they had a limited impact.
Several participants interviewed for this piece requested that their last names not be published, as well as the name and location of their businesses; neither the Green Truck nor the Empire Cannabis Club replied to requests for comment after providing interviews to Forbes.
Many others, though, are stranded, according to my conversations with more than a dozen growers, bakers, dealers, and other underground enterprises. According to Luis Cantillo and Byron Bronson, co-founders of Buddy’s Bodega, you can either risk a future license by building a brand and a following now, or you can sit back and wait for a permit – and risk losing everything to the “Chads and Brads,” or well-capitalized white entrepreneurs with no cannabis background but traditional business acumen and political connections, who have carried out what amounts to a hostile takeover of the cannabis industry in other states
“That’s precisely what occurred in Washington: all these ex-Microsoft execs, who didn’t put any effort in during the medicinal [cannabis] time, swooped in and took out a lot of people’s income as soon as they had the capacity,” Bronson said.
The gray market does not please everyone who is already selling marijuana. Floyd Jarvis was born in Guyana and raised in Canarsie, a predominantly West Indian neighborhood in far south-western Brooklyn that helped elect Mayor Eric Adams, a former police officer. He was arrested for marijuana and served time in state prison before attending the New School to study critical theory, specifically a discipline he calls Black masculinist studies.
Jarvis is now forming a non-profit, Ganja War Veterans for Equity, and plans to apply for a legal marijuana license. Jarvis and other established market makers
“Take a new look at this gray market,” he argues.
People from underprivileged groups like Rastafari in Canarsie used to market cannabis out of economic need, as experts like former John Jay College of Criminal Justice professor Ansley Hamid have demonstrated. The revenues were used to subsidize schools, health-food restaurants, and other community-serving companies.
Outsiders, such as strangers building “smoke shops” that sell dubious pot to everyone, including minors, and export whatever revenues are generated elsewhere, have supplanted the heritage dealers since legalization.
“I want to create a clear difference between heritage market operators and predatory tactics-using Johnny-come-latelies,” Jarvis added.
“It’s folks who have never sold pot in their life who are launching these smoke businesses.” Jarvis would rejoice if they went out of business tomorrow.
He said, “Fuck out of here.”
Canarsie’s contempt and animosity are felt across the city. There’s a sense that this is a brief window of opportunity, and that the other shoe will drop soon long – a post-Prohibition “Roaring Twenties” of cannabis.
“It’s intriguing, and it’s extremely trippy for a lot of New Yorkers who have been here a long time,” says Ryan Lepore, the head of business development at PrestoDoctor, an online platform for medical cannabis referrals. Lepore was arrested for selling marijuana throughout his teens and early twenties.
“You’re seeing folks from other states come into New York to earn as much money as possible,” he added, anticipating that once licenses are issued, the state would tighten down on those who do not have them. Weed trucks and smoke shops selling marijuana couldn’t endure forever.
He said, “The law is not on their side to do that.” “This is only a blip in the timeline.”