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Friday State Spotlight: New York, The Empire State
I know that Matt Levine likes to take off on Fridays, but here at Money Puff, we stay hustling. (It may also be that we have nowhere near the writing chops of Matt, but hey.)
Since one of the interesting things about the cannabis market in the United States is that every state has its own set of rules and regulations, I thought it made sense to set aside Fridays for a State Spotlight.
First up, my home state of New York. I grew up in the Empire State, but — given my conservative Irish Catholic parents who proudly, to this day, proclaim they have ‘never even tried an illegal drug’ — did not really start smoking weed until I went to college at NYU.
Then — and now, for that matter — you could buy weed at Washington Square Park. Unlike now, though, back then it was a drug deal. As in, walk to the west corner of the park, yes that one. When proffered (‘weed, coke, molly, weed’) nod your head. ‘Weed please.’
‘$50. Go sit on the fountain.’
Comply; be cool — but not too cool. When he sits down next to you, cover the dusty baggie he lays on the ledge with your hand. He does not look at you; do the same. You barely have to extend the $60 (‘No change’) and he’s off into the night.
Nowadays — and thank you for allowing me that divulgence — you can buy weed in Washington Square Park from a friendly gentleman at a folding table, even getting to sniff the product. That’s due to the 2019 decriminalization of weed, and long delay getting the adult-use market stood up.
There are now an estimated 1,400 “illegal” weed shops across the city, and the city is starting to crack down:
Mayor Adams and Manhattan DA Alvin Bragg put illegal cannabis shops on notice Tuesday that they will face eviction if they continue to break the law.
Adams, Bragg and several other top officials announced that prosecutors will now rely on a decades-old public nuisance law to evict businesses selling marijuana without a license.
Under the policy, building landlords and owners will be required to evict commercial tenants engaging in illegal drug sales. If they fail to do so, the Manhattan DA and the city sheriff’s office will assume responsibility for those evictions. Bragg’s office has notified approximately 400 smoke shops they are at risk of being thrown out.
“They will be evicted,” Mayor Adams said during a press conference on the Upper West Side. “New Yorkers have had enough.”
Have they? I mean, certainly narcs like Joseph Lusardi have had enough. But, does the proliferation of weed shops not mean that, in fact, New Yorkers can’t get enough? These shops are illegal because they are not licensed; why not give them a license? DC, for example, recently passed a bill seeking to eliminate license caps and providing a pathway for “gifting” operations (like the NYC shops) to enter the legal market. It does feel like a bait and switch to allow these shops to grow unchecked, with no guidance, and then announce they’re once again illegal.
It also feels wrong to claim that these shops are specifically targeting and selling to minors. A lot of the argument seems to center around the fact that strains have names like ‘Cookies’ and ‘Skittles’ and have brands that feature cartoon characters. Has anyone looked around those same shops at the vapes, energy drinks, and craft beer selections? They’re just selling a product.
New York, one of the largest markets, is projected to be worth billions in the coming years; the stakes are high. But while there are plenty of reasons why a dispensary will fail — onerous regulations, unfair tax treatment, limited access to capital — you should be wary of anyone who tries to claim it’s due to other shops selling similar stuff. Cannabis companies are used to limited competition; they forget what it feels like.
A social equity fund run by ex-NBA player Chris Webber has failed to raise a promised $150 million for social equity license holders. That news comes after months of dogged reporting by Brad Racino, and a lot of evasion by the state. The admirable social equity program is key to New York’s cannabis plan, so failing to provide necessary capital for new entrants will be a huge embarrassment and major stumbling block for legal sales out the gate.
And no adult-use cannabis shops can open up in my home borough of Brooklyn — at least while a lawsuit from a Michigan company makes it way through the courts. The case, brought by Variscite NY One, centers around the residency requirement for New York’s social equity license holders, the first ones who get a crack at the adult-use market. Variscite’s argument relies on the commerce clause of the US Constitution, which we’ve talked about before; a federal judge stuck down a similar requirement in Maine last August.
Bummer for all the awesome shops and deserving entrepreneurs waiting to open. But fine with me — I’ve got a guy.