A woman walks past a smoke shop in New York that displays a marijuana leaf in the window, June 16, 2023.
Spencer Platt | Getty Images News | Getty Images
Coss Marte’s marijuana dispensary in Lower Manhattan has already cost him more than $1 million, and it’s not even open yet.
He obtained a coveted dispensary license last year based on his prior marijuana convictions. It was part of New York’s Conditional Adult Use Retail Dispensary, or CAURD, program, which has until now limited retail licenses to only this group.
But now, as the state tries to boost the slow legal rollout of weed, Marte’s company is one of hundreds of companies in limbo and potentially on the brink of ruin as the state prepares to grant general licenses.
“I might go bankrupt,” Marte said.
In addition to obstacles in finding locations and the financing required to open dispensaries, lawsuits have prevented most CAURD licensees from starting their businesses.
The state’s Cannabis Control Board on Tuesday voted to approve new regulations that would expand New York’s meager legal weed market by allowing a wider range of applicants. The state has struggled to open enough dispensaries and meet demand, amid regulatory hurdles and a thriving illicit market.
“Today marks the most significant expansion of New York’s legal cannabis market since legalization, and we have taken a big step toward our goal of providing New Yorkers with access to safer cannabis and regulated statewide,” Chris Alexander, executive director of the Office of Cannabis Management, or OCM, said in a statement Tuesday.
Entrepreneurs who are already approved feel left behind.
New York has prioritized retail licenses for people who were convicted of marijuana offenses before weed becomes legal in 2021. It’s part of a restorative justice effort aimed at giving those affected by Prohibition a chance to gain a foothold before large corporations entered the industry.
But lawsuits filed by medical marijuana and veterans groups suspended the program and blocked New York regulators from issuing more licenses or opening businesses for existing licenses. The groups argue the program is unconstitutional.
As a result, statewide, only 23 of these licensees have opened their businesses. The vast majority, more than 400, were unable to open. Meanwhile, some 1,500 unlicensed businesses operate in New York City alone.
Tuesday’s announcement made no mention of these licensees or the legal challenges to their legitimacy.
“This could really ruin my life,” Marte said. “I may not be able to recover from this.”
“Monumental” or “nightmare” change?
Beginning in October, license applications will be available to the general public, as well as large multistate manufacturers and medical companies, for retail, cultivation, processing and distribution.
This decision will pave the way for big players, including Care Colombia, Cresco LaboratoriesCuraleaf, Green Thumb and Build well-being assets – to participate in the action.
The new framework is likely to be a boon for the state’s burgeoning legal market, which needs more dispensaries to boost its sales and tax revenue.
By the end of August, the state’s licensed dispensaries had reported cumulative sales of more than $70 million, according to the Cannabis Control Board. When mature, New York’s recreational market is expected to generate more than $1 billion annually by 2025, growing to $4.41 billion by 2030, according to New Frontier Data, a marijuana research company. . That will put it on par with states like California, which has generated $4.51 billion so far this year, the company found.
By expanding eligibility requirements to participate in the legal industry, New York is once again on track to achieve those goals, said Jeff Schultz, a marijuana attorney at Foley Hoag.
“It’s monumental,” Schultz said. “New York needs hundreds of retailers open to meet existing consumer demand and to move any stranded products to the supply side of the current market.”
Marte, who obtained a CAURD license in April 2022 after serving a prison sentence for drug trafficking, said he invested hundreds of thousands of dollars in opening his dispensary on Manhattan’s Lower East Side .
Yet amid the pause and ongoing litigation, Marte has been unable to open and its location remains empty.
Contacted by CNBC, OCM said it could not comment on pending litigation.
“I just want to express, on behalf of the office, a continued commitment to the success of these licensees,” Alexander said Tuesday of the CAURD businesses. “We will continue to work diligently.”
Uncertainty nevertheless haunts Marte.
“It was an opportunity that was a dream,” he said. “And now it’s become a nightmare.”