The ratio of licensed shops to unregulated ones is so lopsided that the former are practically a rounding error. Photo: Avery Meeker on Unsplash

Here’s a question: have you purchased cannabis for recreational use here in NYC? And did you purchase it from one of the legal retailers licensed by the state’s codification of a legal market two-and-a-half years ago?

Odds are that even if you think you have, you actually haven’t. The ratio of licensed shops to unregulated ones is so lopsided that the former are practically a rounding error. If you froze things as they are now, you could go to a different unlicensed shop twice a day for the next couple years and never step foot inside an officially sanctioned cannabis retailer, and never really know it given how official everything might look. The days of retail sales dominated by delis peddling some bud under the counter or “tobacco-focused” smoke shops being anything but are gone now, with explicitly weed-focused storefronts popping up at an astonishing clip all around the city.

An official with the state’s Office of Cannabis Management (OCM) once described to me a rough categorization of types of these shops: the “Rick and Morty” storefronts that often feature stylized images of those or other cartoon characters, often in amusing tableaus and featuring bright colors, neon signs, fake grass and other tacky accoutrements (which officials complain are geared to appeal to underage buyers); the Apple-store-like shops that present themselves as well-stocked and seamless, with high-tech vaporizers and a vibe that might appeal to the millennial tech crowd; and the more standard smoke shop-style stores that simply dropped the pretense of selling only tobacco products.

Despite their open advertising, almost none of these are actually allowed to sell marijuana. That’s partly as a result of the sheer scarcity of licensed shops: well over two years into this project, there are exactly nine regulated recreational cannabis shops operating in New York City. Nine. That probably wouldn’t be nearly enough to satisfy the demand somewhere like Rochester, let alone the country’s largest city by far.

Past is not prologue, though, and we’re at something of an inflection point here that could, in theory, lead to a turnaround for the market. For one thing, a significant obstacle was lifted in the form of the state’s proposed settlements in two lawsuits brought against its cannabis regulatory scheme, which had thrown the entirety of the future market into doubt. One of them was around the Cannabis Control Board and OCM’s decision to prioritize justice-involved people and organizations for the first batch of temporary licenses, over other groups like disabled veterans, and had resulted in an injunction that stopped all new applications from being granted and new shops from opening.. The court still has to sign off on the settlement, though it likely will, at which point shops could begin reopening.

When the gears start turning again, there are a few things the state might want to reexamine about its role in the process. For one thing, THE CITY recently reported that the terms for state-issued loans for cannabis entrepreneurs are incredibly restrictive and grant the issuing authority, a private-public partnership fund, substantial control over minute aspects of the businesses themselves, and can impose additional costs on borrowers. This comes in tandem with the state’s slowness in multiple steps of its much-touted assistance program, from helping businesses find actual retail space to providing small business consulting.

NYC Sheriff Anthony Miranda announced this week that he sent letters to the landlords of 50 buildings around the city, informing them that they might be held liable for tenants who were operating unlicensed shops. Photo: Budding on Unsplash

At the same time, NYC Sheriff Anthony Miranda — yes, we have a sheriff, and no, he’s not part of the NYPD, mainly handling civil affairs — announced this week that he sent letters to the landlords of 50 buildings around the city, informing them that they might be held liable for tenants who were operating unlicensed shops. City Council Majority Leader Keith Powers also recently introduced a bill that would classify unregulated shops under the city’s existing public nuisance law, essentially allowing local authorities to summarily shut them down if they were deemed to be out of compliance. As the New York Daily News’ editorial board pointed out, there are reasons to be cautious about expanding an authority that was previously best known for tossing low-income people out on the street with little recourse, but at the same time, it’s not clear that the legal market can survive at all without much more proactive enforcement against the unlawful market.

Of course, enforcement isn’t just about what’s on the books, but  who it’s practically applied against and how, and how credible the specter of enforcement is in the first place. A few months ago, state lawmakers passed a law allowing unlawful stores to be hit with significant fines after administrative trials that followed enforcement operations. Last month, THE CITY also reported that the state had only held 26 trials and levied $220,000 in fines, and then paused all trials due to budget issues. So, even though the shops are aware that the possibility of hefty fines technically exists, they also know that such a possibility is not going to meaningfully materialize any time soon, and so what’s the point of compliance?

This is all complicated by the fact that, as we delved into before, the state is toeing a delicate line here-trying to signal that unregulated sales aren’t okay and won’t be tolerated, without throwing the book at violators in a way that critics contend would simply replicate the failed criminalization of marijuana in prior decades. Rather than even try to strike this balance, it seems like a lot of policymakers preferred to ignore it altogether, declining to build in any overarching enforcement mechanisms when the law was first passed in 2021; that’s why it was initially unclear whether unlicensed shops were even technically illegal, and why there has had to be all this remedial regulation around enforcement.

One thing is pretty clear: the lawful shops won’t really be able to compete head-to-head with thousands of unlicensed ones that don’t have to bother with things like taxes and safety codes. Even as obstacles like injunctions are removed and the path to actually launching more legal dispensaries begins to clear, they’ll be suffocated by the sheer weight of their black market competitors. Either lawmakers find a way to fix that, or the promise of a real, robust, regulated, and homegrown legal cannabis sector — which was supposed to create jobs, keep profits in communities around the city, and generate tax revenue — will fade to nothing.

Felipe De La Hoz is an immigration-focused journalist who has written investigative and analytic articles, explainers, essays, and columns for the New Republic, The Washington Post, New York Mag, Slate,...

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