New York’s legal marijuana industry has closed in on $1 billion in combined sales since early 2023, with three-quarters of those sales generated during a “whirlwind” 2024, a state policy director said during Tuesday’s Cannabis Control Board meeting.
The market has thus far amassed nearly $919 million, with New York estimated to “comfortably” eclipse $1 billion when the final four reporting weeks of 2024 are tallied, said John Kagia, the Office of Cannabis Management’s director of policy.
Nearly $760 million of the sales has occurred in 2024, while 261 dispensaries are now open—a stark contrast from the barely two dozen stores that were open throughout the Empire State’s 62 counties at this time 12 months ago.
Indicating the industry’s slow rollout is a thing of the past, Kagia noted the state had opened nearly 40 stores the last 30 days.
But indications of a burgeoning industry were tempered during the public comment stanza of the meeting when many attendees suggested that existing owners had been harmed by officials’ decision to relax a rule that pot stores can’t open within 1,000 feet of another.
Others suggested that cannabis regulators should now be open to the notion that stores might be opening at too rapid a pace, and that it should delay its December tranche of licenses—an idea that would’ve been considered unthinkable 12 months ago, when there were just 32 stores open.
New York State Assembly Member Grace Lee, D-Manhattan, suggested the state should be selective in granting licenses moving into 2025.
Lee, who represents the city’s financial district, Lower East Side and Chinatown, noted that her district’s first tranche of licensed operators included an Asian-American woman, as well as a formerly incarcerated individual from the Dominican Republic who employs justice-involved individuals, said that these are “incredible entrepreneurs” who are investing and giving back to their community.
The lawmaker then went on to suggest that their efforts might be damaged by the relaxation of the 1,000-foot buffer between stores. She noted that a multi-state, multi-billion dollar company was vying to enter her district, “looking to extract from our communities.”
Lee urged the board to protect the local business owners by giving them the opportunity to “thrive before we start flooding the market.”
Asked about those concerns, Jeffrey Hoffman, a New York City-based cannabis attorney who also spoke at the meeting, said: “The idea is that the metric will be judged on not how many equity licenses we give out, or even how many equity stores we open.”
“We will be judged based on how many of those equity stores are still open a year from now and five and 10 years from now. This is the prize, and we need to make sure that we keep our eye on it,” continued Hoffman, who hosts “Ask Me Anything about Cannabis Legalization in New York” each week on LinkedIn.
Hoffman has a particular interest in social and economic equity cannabis license applicants who currently consume New York’s market.
Another prominent cannabis attorney, Ryan J. McCall, a principal at McCall, Sweeney & Silva, P.C. in the Albany area, also expressed concern about whether New York regulators were setting up small business owners to fail with the recent turn of events.
“There is a lot of cautious optimism in the New York cannabis industry currently,” McCall said. “With that being said, concerns of market saturation are beginning to occur which could potentially cannibalize the industry down the line. This could result in lost jobs and businesses being closed, similar to what has occurred in the craft beer industry.”
Kagia, the state policy official, had noted during the meeting that as the legal market’s aggressive growth continues, and consumers are afforded a greater diversity of product, average revenue among existing stores has already trended downward, from a one-time high of more than $900,000 per month to about $450,000 per month. He called it a natural function of market expansion.
He urged followers to think about a community where consumers were driving three miles to get to a dispensary, and then a new one opens down the road.
Within a new industry, he said, the first stage of growth involves driving out illicit operators. Kaglia noted cannabis regulators’ task force work with law enforcement throughout the state to padlock illegal operators has been a success, particularly downstate, where New York City’s mayor had launched a parallel crackdown.
The declining availability of illicit dispensaries, combined with the opening of more legal stores, has created a tension that is leading to “significantly increased competition as this market grows,” Kagia said.
H/T: www.law.com
