The legalization of adult-use marijuana in New York has been a highly anticipated and debated topic for years. After finally passing legislation in 2021, the state began selling recreational cannabis in December 2022. Since then, sales numbers have steadily increased but are still significantly lower than other states with similar markets.
In fact, as of September 29th, 2023, New York’s adult-use marijuana sales have reached $83 million for the year. This may seem like a considerable figure, but when compared to other states such as Michigan, with total sales of nearly $440 million in its first full year of adult-use sales, or Massachusetts, with over $394 million in their first year, it becomes clear that New York has fallen behind.
This raises the question: why is New York’s adult-use marijuana market not performing as well as expected?
Slow Rollout of Licensing in New York
One of the main reasons for New York’s low adult-use marijuana sales numbers is the slow rollout of licensing for businesses. The process for obtaining a license to sell recreational cannabis in New York has been plagued with delays and challenges.
Since the legalization of adult-use marijuana, multiple lawsuits have impacted the licensing process. These legal battles have caused further delays and uncertainty for potential business owners. As of right now, there are only 27 licensed retailers in the state, which is a small number compared to other states with similar markets.
This limited number of licensed retailers directly impacts the overall sales numbers for adult-use marijuana in New York. With fewer businesses able to legally sell cannabis, it becomes more difficult for consumers to access and purchase products.
The Cannabis Growers Showcase (CGS), which allows growers to sell directly to consumers, has been a slight relief for some of these businesses sitting on excess products due to the slow rollout of licensing. However, with only an estimated $1.5 million in sales from this showcase, it is clear that more is needed to compensate for the lack of licensed retailers.
Cultural Shift and Existing “Illegal” Shops
New York has had a long-standing cannabis culture, with many individuals partaking in the recreational use of marijuana for years. However, even with adult use legalization, there is still a significant presence of unlicensed shops throughout the state.
These “illegal” shops sell cannabis products without proper licensing and regulation, which some argue undermines the legal market but also poses potential safety risks for consumers.
The continued existence of illegal shops in New York has a direct impact on the legal sales numbers. Not only do these shops take away potential customers from licensed retailers, but they also contribute to the overall perception that the state’s adult-use marijuana market is not fully established or regulated.
A report in August from the New York City Independent Budget Office estimates that there are 1,500 unlicensed retailers in New York City, which may hold up to $484 million worth of cannabis products. Which they estimate would contribute $19.4m in revenue for the city.
The New York Office of Cannabis Management has taken a stricter approach to go after these “illegal” shops more recently. In a press release from October, they tout “the seizure of more than 8,500 pounds of illicit product with an estimated street value of more than $42 million.”
“We know there’s room for improvement as New York works to launch a brand-new cannabis industry and crack down on illicit operators, and I’m committed to working with all stakeholders to get the job done right,” Governor Hochul said. “My Administration is laser-focused on shutting down illegal storefronts, protecting the health and safety of children, and helping small businesses thrive. We will continue working to build the most equitable adult-use cannabis industry in the nation that invests in communities and rights the wrongs of the past.”
Comparing Sales Numbers: New York vs. Other States
While New York’s adult-use marijuana sales have reached $83 million for the year, it pales in comparison to other states’ first-year numbers.
In Michigan, with a population of around 10 million people, total adult-use sales reached nearly $440 million in its first full year of legalization.
Similarly, Massachusetts, with a population of approximately 7 million, sold over $394 million in adult-use sales during its first year.
Even Missouri, with a population of just under 6 million people, reported nearly $256 million in the first three months of adult-use sales.
Comparatively, New York’s sales numbers are significantly lower despite having a larger population of over 19 million people. This stark difference can be attributed to the slow rollout of licenses in New York.
As other states have shown, with proper licensing and regulation, the adult-use marijuana market has the potential for significant sales and revenue. However, New York’s market has struggled to reach its full potential without an efficient and timely process for obtaining licenses.
It is essential for the state to address and resolve these licensing issues in order to fully establish and regulate the adult-use marijuana market.
What Should New York Do?
At Beard Bros, we firmly believe that the New York Office of Cannabis Management (OCM) could do a lot better for the industry by focusing on approving more licenses rather than focusing on “illicit” enforcement. By addressing the slow licensing process and giving growers more outlets to sell their products, we believe that the state’s adult-use marijuana market can thrive.
The current focus on going after illegal shops and seizures of illicit products is not a long-term solution. It only serves to hinder the growth and development of the legal market while neglecting the needs of licensed businesses.
By streamlining the licensing process and approving more licenses, licensed retailers can have a wider variety of products to offer consumers, ultimately driving up sales numbers. This will also help to eliminate the presence of illegal shops by providing more legal options for consumers.
Additionally, a faster and more efficient licensing process can also benefit small businesses and marginalized communities. By prioritizing licenses for these groups, the industry can become more diverse and equitable.
Overall, the rollout of New York’s adult-use marijuana program has been a long and bumpy road. Despite having an established cannabis culture and a large population, the state’s sales numbers have severely underperformed compared to other states during their first year of legalization.
The slow licensing process and focus on “illicit” enforcement have greatly hindered the growth of the legal market, leaving licensed businesses struggling to compete with the illegal market.
However, there is still hope for the future of New York’s adult-use marijuana industry. By addressing these issues and prioritizing licensing approvals, the state can see a significant increase in sales and revenue and promote diversity and equity within the industry.
We at Beard Bros are hopeful that New York will take the necessary steps to improve their adult-use marijuana market and become a leader in the industry.
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