After the rockiest of starts, the regulated marijuana market is finally coming to life in New York state.
Cannabis retailers reported $429.9 million in revenue from January through the end of August, a month in which weekly sales surpassed $20 million for the first time.
At this pace – and with an estimated 200 licensed retailers ready to open for business by the end of September – finishing 2024 with more than $1 billion in regulated marijuana sales is “within the realm of plausibility,” a top cannabis regulator said.
“Obviously, we lost some momentum last year,” John Kagia, the state Office of Cannabis Management’s deputy director of policy, told MJBizDaily in an interview.
“I don’t want to dismiss how challenging it has been for our stakeholders in this market … but we always knew that, with enough time and with enough effort, we would get this market operational.”
“I think $1 billion is a reachable goal for this year,” Kagia concluded.
Marijuana sales projections
While passing the $1 billion threshold would mark a tenfold increase over regulated marijuana sales in 2023, the figure is still well below initial sales projections for the Empire State.
New York legalized cannabis in March 2021 with bold promises to build the nation’s most equitable marijuana market, but the first sale wasn’t recorded until late December 2022.
As of Monday, there were 189 licensed retailers throughout New York state – fewer licensed marijuana stores than in Missouri, which legalized adult-use cannabis more than a year and a half after New York and has only one-third of the population.
And since it could be more than a year before thousands of pending license applications are processed, regulators and critics both acknowledge much more needs to be done.
“Things are definitely better now than they were in May, but it hasn’t even been six months,” said Osbert Orduña, CEO of The Cannabis Place, a social equity retailer that opened this March in the New York City borough of Queens.
For small businesses, those long delays create massive debts.
“All that bleeding,” he added, “all of that needs to be repaid.”
Eliminating the competition
New legislation passed earlier this year granted New York law enforcement broad powers to literally padlock the doors of anyone selling marijuana without a permit.
Almost 1,350 alleged illicit marijuana sellers have been closed since a statewide crackdown launched in May, Gov. Kathy Hochul said last month.
According to Hochul, the illicit market shutdown has had the intended effect: Regulated marijuana sales are up by double or triple digits at licensed retailers, she said.
“There’s sunlight; there’s dawn on the horizon,” said Joseph Rossi, a managing director at consultancy Park Strategies, where he directs the cannabis practice.
“It’s good news for those pioneers that struggled early on and were harmed by the rollout,” he added.
Thousands of permits still pending
At the OCM, Kagia said the combination of increased permitting and shutting down unlicensed retailers has helped accelerate regulated sales.
“That’s the critical duet needed to make this market sing,” he said.
However, despite having issued 405 retail permits – including 202 Conditional Adult Use Retail Dispensary (CAURD) permits reserved for nonprofits and those impacted by the war on drugs – there are still fewer than 200 retailers open across the state.
It can take six to nine months after initial permitting for a business to open its doors, Kagia said.
Exactly how many cannabis retailers New York state can support remains to be seen, but Kagia says he believes it’s in the “thousands.”
‘Fragile’ cannabis market
OCM has almost 4,000 permit applications left to process, OCM spokesperson Taylor Randi Lee confirmed to MJBizDaily.
The backlog could take until early 2025 to clear, acting OCM Executive Director Felicia Reid told Spectrum News last month.
“Had (license applicants) known they wouldn’t have been reviewed for so long, they might have made different decisions,” said Lauren Rudick, a New York City-based attorney and founder of Rudick Law Group who has clients on every level of the supply chain.
Orduna, the retail operator in Queens, said the state’s $1 billion sales figure is misleading in itself.
“It’s not the gross revenue, it’s the net revenue that tells the story,” he said.
“And the story the net revenue tells is that New York is still a fragile, delicate market.”
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
