Why Is New York Stopping Cannabis Dispensaries From Opening?
If you have been following the news, you might have heard about New York halting new cannabis dispensaries from opening. It’s not that cannabis has suddenly turned illegal in the state.
The substance has been legal for medical use since 2016 and recreational use since 2022. If that’s the case, what is happening?
Well, the halt is in connection with allegations of bias and discrimination in dispensary licensing. The main players include a group of disabled veterans vs. individuals who were charged with cannabis-related offenses in the past. Let’s dig in and try to understand what is happening in New York.
The Allegations of Discriminatory License Approval by the Office of Cannabis Management (OCM)
Soon after New York legalized recreational cannabis last year, the state decided to allow certain entrepreneurs to open cannabis dispensaries. The initiative was started with five social and economic equity groups, of which disabled veterans are a part.
Some believe it is concerning that cannabis dispensary licenses are being given out on a social equity basis. The reasoning behind this was to help those groups who have been prosecuted and suffered when cannabis was still illegal.
The intention sounds good, but four disabled veterans recently filed a lawsuit that alleges the OCM unfairly prioritized certain groups. Instead of giving a fair chance to all target equity groups, the OCM opened licensing applications to ex-cannabis offenders first.
This includes not just those who were arrested for cannabis-related offenses in the past but also their family members. In turn, the NY State Supreme Court has issued a temporary injunction against the OCM from granting cannabis dispensary licenses. This injunction will likely be extended indefinitely until the situation is resolved.
What Does This Mean for The New York Cannabis Scene?
For starters, it means that those who have applied early will likely lose the ‘first-movers’ advantage. However, for those who aren’t a fan of biased equity policies, this should come as welcome news.
These developments will also give existing dispensaries, both online and offline, an edge. They already have a lot of experience in the game and possess an established customer base.
Moreover, their customers are loyal because many of these dispensaries aren’t in it for the money. Instead, they are passionate about the cannabis scene in an almost activist type of way. The cannabis community is surprisingly tight-knit, and there’s a lot of useful advice and tips that get passed around.
For example, you can often find cannabis dispensaries recommending clients to register for medical cards for the benefits they provide. These were extremely useful in situations where recreational use was illegal but medical use was permitted.
According to nuEra, a med card state allows you to purchase more quantities of cannabis. In states like Illinois, this can be as much as 250 grams instead of 40 grams for adult use. This is a significant amount compared to other states. For perspective, dispensaries in New York only allow you to purchase 85 grams.
Street Weed vs. Cannabis Dispensary Weed: Customers Still Favor the Former
Another important challenge that the New York cannabis scene faces is price disparity. Buying off the street is far more affordable, and there aren’t any good incentives to favor licensed dispensaries yet. The controversy about the licensing of legal dispensaries is not helping anyone in this situation.
Sure, some dispensaries try to offer discounts, but cannabis is still way more expensive than buying from a local dealer.
The main reason for this is the taxes that the government is more than happy to impose on cultivators. In New York, if you are going to be selling adult-use cannabis, you are looking at a tax of 13%. Even the registration for an Adult-Use Cannabis Certificate will cost you $600.
This isn’t a New York problem alone, though. California experienced the same situation with the cannabis cultivation tax strangling the legal industry. Eventually, Governor Newsom ended the cultivation tax and set 15% as the excise tax at points of sale.
Considering that until then, only 26% of legal entrepreneurs in the field were making a profit, this was welcome news. Hopefully, the state of New York will craft a more conducive environment for entrepreneurs who wish to sell legally.
With nearly half the states in the country having legalized cannabis in some form, it’s sad to see these setbacks. Then again, it’s surprising that things have come this far. No one would believe you if you went back fifteen years and said cannabis would be legal in 23 states.
A biased OCM aside, New York cannabis lovers have enjoyed considerable freedom, especially in comparison to states like Idaho. Sure, cannabis isn’t for everyone, but with its medical acceptance, it has an interesting role to play in people’s lives. For now, we can only wait and watch until licensing for dispensaries is provided in more transparent and fair ways.