As of March 31st, 2021, New York is the 17th state (including a district) to have legalized recreational marijuana. After several false starts on the path towards full legalization, America\’s third-largest economy is now poised to become one of the largest legal cannabis economies in the world.
Although New Jersey, Montana, South Dakota, and Arizona are also recent additions to the growing number of state recreational cannabis programs, no state offers the sheer economic potential that New York does. Expectations are big, but hesitancy remains.
By The Numbers: Market Expectations
The cannabis sector has been waiting with bated breath for nearly a decade for New York State to come online. The state makes up close to eight percent of the country\’s GDP and is expected to quickly become one of America\’s largest cannabis markets.
New York offers unparalleled potential compared with the other new markets coming online this year. With possibly 20 million consumers ready to spend their money on legal cannabis, all eyes are on the state and its rollout.
Recreational cannabis sales could reach $1.2 billion by 2023 and up to $4.2 billion in 2027, as per CNN Business Times — literally making New York\’s marijuana market a billion dollar industry within two years of legalization.
According to a New York Times piece, launching recreational cannabis could return $350 million in yearly tax revenue. Provisions within the new laws ensure 40 percent of that revenue will funnel into social programs and Black and Latino communities which have been disproportionately impacted by harsh drug laws over the decades.
On top of the retail sales of recreational cannabis comes the investment and employment opportunities. Forbes estimates this industry will spawn at least 23,000 jobs, although likely more by 2023.
Another win is the opening up of the medical cannabis sector. Technically, the state has allowed for medical marijuana since 2014, but the program was notoriously restrictive, with only 10 companies licensed to supply the state\’s patients.
Now, there is exponential potential for retailers, processors, and cultivators across both the medical and recreational sides of the sector. Once again, just like the tax revenues designated for marginalized communities, there are also provisions to ensure that at least 50 percent of licenses are issued to groups formerly targeted by anti-drug laws. In particular, these legislative stipulations aim to provide opportunities for BIPOC, women, and veterans.
A Bumpy Road to Legalization Still Lies Ahead
Not everyone is excited by legalization in New York, however. As only one example of a voice against expanding the restricted medical program into a legal recreational one, Seth Baron wrote \”Get ready for an NYC reeking of weed and crawling with unstable potheads\” for the New York Post. Baron is one of many who are fearful of creating a cannabis free-for-all within the state.
In rural New York State, communities are also struggling with adopting the legislation within their small municipalities. In Saugerties, a town just north of New York City with a population of 20,000, Police Chief Joseph Sinagra plans to enact his adaptation of the law to keep cannabis out of the hands of youth.
The Daily Freeman spoke with Sinagra, who explained he plans to charge anyone under the age of 21 with possession \”in order to protect the physical and mental well-being of our youth.\” As it stands now, the new legislation declares it is illegal for anyone under the age of 21 to possess cannabis, but there are no details on how to enforce this regulation.
Another unknown is how the equity protections built within the new legislation will roll out in reality. Unlike in other recreational states, there are limitations on how multi-state companies can expand and operate in New York. According to Intelligencer, this means that the most prominent players in US cannabis can expand into New York. Under these rules, operators like CuraLeaf, who runs 37 retail dispensaries in Florida, can only operate eight in New York.
Also, there are concerns about how the provisions for equitable distribution of licensees to those communities disproportionately affected by the War on Drugs will work. There are still genuine challenges facing small to medium-sized cannabis companies across the country because of a lack of banking options.
These industry newcomers are often headed by women and people of color, who don\’t have access to the same investment opportunities. States like Illinois and Massachusetts with similar empowerment initiatives have spectacularly failed to award any licenses to marginalized groups. So many are curious how New York will ensure their supposedly equitable legislation will succeed.
New York Offers Massive Potential Despite the Unknowns
With one of the largest economies in the country and a potential customer base of 20 million, the New York market will eventually become one of America\’s most influential. However, based on the current legislative limitations, it likely won\’t be a free-for-all like some had originally expected.
Many details need to be ironed out to ensure that equity provisions succeed and that massive multi-state companies don\’t gobble up all the licenses through legal loopholes. Still, many companies are placing all their bets on New York\’s future $4.2 billion cannabis sector despite the unknowns.