New York City nonprofit preps for Day 1 of adult-use marijuana sales as state’s only operating retailer

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Exterior image of the building where Housing Works Cannabis Co. is located.

Housing Works Cannabis Co. is located in a Manhattan building that once was home to a Gap store.

Housing Works’ nonprofit status, decades of legacy service in the community and retail experience uniquely positioned the organization to become New York’s first licensed adult-use marijuana store to open for business.

And likely the only one to launch sales before the calendar flips, falling short of market projections from the state’s top politico only a few months ago.

Its newly established brand, Housing Works Cannabis Co., will have a soft opening Thursday – aptly at 4:20 p.m. ET – at its 4,000-square-foot location in Manhattan’s NoHo neighborhood, ushering in a new era for New Yorkers and the millions of tourists who visit annually.

“We are excited, we’re nervous. But most of all, we’re really proud to be a part of this historic moment,” store manager Sasha Nutgent told MJBizDaily.

“And to be the first.”

Housing Works’ unlikely route to the inside lane of the cannabis industry’s most closely watched market launch in years began only a few months ago.

That truncated timeline is as remarkable as the nonprofit’s evolution from providing services for the homeless and those with HIV/AIDS to selling recreational marijuana in a potentially billion-dollar market.

New York adult-use retailers are projected to generate $1 billion-$1.2 billion in sales in 2023 and $2.2 billion-$2.7 billion by 2026, according to the 2022 MJBiz Factbook.

Preparing for launch

Construction crews and Housing Works staffers have been working round the clock to convert a long-vacated Gap location into a completely different type of retail space.

The nonprofit’s legacy of operating 10 thrift stores and two bookstores in Brooklyn and Manhattan helped the cause.

As did Nutgent’s experience running several of Housing Works’ retail stores over the years.

Operators received the keys only last week for the storefront, located within 1 Astor Place, a terra cotta building completed in 1883 that features mixed-use retail and more than 170 residential units.

Consultants and architects were instrumental in designing the space under tight deadlines.

Other short-order work included:

  • Finalizing point-of-sales systems.
  • Meeting with growers, brands and manufacturers.
  • Selecting products.
  • Hiring and training 14 staffers – a mix of former medical marijuana dispensary workers, industry newbies, retailers and some with tech backgrounds.

One staffer is a client of Housing Works, which also provides job training and custom services for New Yorkers recently released from incarceration.

The store will offer consumers an array of cannabis products as New York isn’t expected to see inventory shortfalls other emerging adult-use markets have experienced.

Housing Works plans to offer 700-1,200 SKUs (stock-keeping units), including a variety of edibles, tinctures, pet treats, vapes, flower, pre-rolls and accessories, for Day 1 sales, according to Nutgent.

On the fast track

It appears Housing Works and the state’s other seven nonprofits with conditional adult-use retail dispensary (CAURD) licenses might have a faster track to open brick-and-mortar stores than the other 28 CAURD awardees who plan to establish for-profit enterprises.

That’s largely because nonprofits under New York’s developing cannabis program can’t access state-vetted properties and funds earmarked to help social equity retailers.

These restrictions might increase capital concerns for operators, but they also lessen compliance requirements, minimizing processing approvals and delays that typically come with cannabis regulation and government support.

Above all else though, Housing Works had a retail-ready property and experience entering and serving diverse retail markets throughout the city.

“They already have infrastructure, a very apparent location and ability to come into the market,” said Trivette Knowles, spokesperson for New York’s Office of Cannabis Management (OCM).

“Once we gave the provisional licenses to these licensees, we gave them the autonomy and the freedom to conduct their business in an entrepreneurial manner and how they saw fit.”

The goal of New York’s equity-driven approach was not only to help those wronged by the government’s war on drugs to secure marijuana business licenses but also to develop a system to boost their chance for prolonged success.

Housing Works filed its application in late September, and two months later, it was among the state’s first 36 retail license winners approved to sell recreational cannabis in one of the nation’s most regulated states.

It’s not uncommon for that approval process to drag on for well over a year in other adult-use markets.

“The turnaround was insane,” Nutgent said.

A different approach

New York regulators plan to issue as many as 175 retail licenses, including 25 earmarked for nonprofits, which have to meet the following criteria:

  • A history of serving current or formerly incarcerated individuals, including creating vocational opportunities.
  • Have at least one social justice-involved board member.
  • Employ at least five full-time workers.
  • Operate a social enterprise with net assets or a profit for at least two years.

In guidance issued in late November, regulators allowed qualifying businesses to launch delivery services before opening their retail stores, another significant change from other recreational markets.

“OCM is doing something different,” Knowles said. “OCM is trying something different.”

In yet another departure from the norm, all Housing Works Cannabis Co. proceeds will be redirected to fund community services provided by its parent company, Housing Works.

The organization was established in 1990 to address the HIV/AIDS pandemic as well as the homeless crises, which has exacerbated since the COVID-19 outbreak.

In October, more than 65,000 people, including nearly 21,000 children, were sleeping in New York City’s primary shelter system alone.

Such rates not seen since the Great Depression, according to statistics compiled by the Coalition for the Homeless.

The parent Housing Works also offers other community services such as COVID-19 testing, addiction counseling, health care, housing, legal help and other assistance programs.

“All the proceeds go toward those programs within Housing Works that help us get our mission done,” Nutgent said.

New year, new resolutions

Housing Works Cannabis Co.’s mad dash to the finish line isn’t what many envisioned for the initial rollout of adult-use sales in the influential New York market, which is expected to rival some of the nation’s largest when fully operational.

Though the store opening gives regulators and Gov. Kathy Hochul a victory after insisting for months recreational sales would start by year’s end, Housing Works is expected to be the lone operator up and running this year, falling well short of market expectations.

Hochul said in October that the state was “on track” to open 20 adult-use stores in 2022, with another 20 retail outlets per month coming online.

January now promises to be a ramp-up month, though several concerns regarding social equity funding, securing property on favorable lease terms, state-supported retail locations and other operational requirements persist, prompting some license holders and applicants to adjust business plans on the fly in the run-up to adult-use sales.

“Within the next couple of weeks, specifically following the New Year, we’re going to see a lot of developments,” the OCM’s Knowles said.

An ongoing lawsuit challenging residency requirements has also stymied progress, halting the issuance of dozens of licenses in Brooklyn, Central New York, the Finger Lakes, the mid-Hudson area and Western New York.

Through it all, Housing Works overcame some rather overwhelming odds to be the first adult-use store in the state to open its doors this year – and in Manhattan, no less.

“We really fought hard to build a team and find architects and designers to get the store open in time, because we wanted to commit to the city’s promise to open before 2023,” said Nutgent, who’s prepped her staff for an expected busy day on the sales floor and checkout counters.

“We are expecting hundreds of people.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.