New York City’s marijuana regulators promised a crackdown on Thursday in an attempt to shutter the 1,500 illicit cannabis vendors as the state’s regulated market slowly swings into gear.
State and city cannabis officials made the pledge as they rolled out a new law that gave them greater authority to enforce rules and clean up the sprawling clandestine industry of underground weed shops.
Only 12 dispensaries have opened statewide two years after Albany legalized recreational weed, but unregulated flower, edibles and vapes are available on almost every street corner in many city neighborhoods.
The influx of shady vendors was “anticipated,” the city’s cannabis czar Dasheeda Dawson told The Post at the launch of the three-day Cannabis World Congress & Business Exposition at the Javits Center in Manhattan — which attracted business leaders, local license holders and cannabis culture luminaires like the rapper Redman.
“New York [City’s unregulated vendors] doesn’t surprise me, because I’m a New Yorker. This is the place where people come for opportunity, and so we have some of the most opportunism,” said Dawson, who was appointed as the Founding Director of Cannabis NYC by Mayor Adams last fall.
“I think… we should have anticipated that we’d have more here in New York City just based on our overall unlicensed activity that happens throughout the city.”
David Nicponski was awarded a provisional social equity license to open up a dispensary in the Bronx at the end of April. He fears that those who haven’t played by the rules will hurt his budding business when it launches.
“Investors are more hesitant to invest in businesses when they see outnumbering 20-1 illicit shops that don’t have to pay taxes, don’t have to pay union wages, can get product cheaper from other states,” Nicponski said.
“Most of the folks I’ve spoken to are not directly concerned about the ability to compete with the illicits currently operating shops, but also most of them are having trouble opening in the first place because of the lack of capital and the prevalence of the illicit shops and the lack of enforcement so far.”
Help was on the way in the form of a measure Gov Hochul signed last month that increased the penalties on stores that sell marijuana without a license and gave the state’s Office of Cannabis Management and the Department of Taxation and Finance authority to enforce it.
OCM is now hiring agents to crack down on the nuisance vendors — many of which are funded by groups of people, not individually operated, according to Dawson — in tandem with local cops, state agencies, community groups and health officials.
“I don’t want to pretend that we are going to wipe away the illicit market overnight,” said Tremaine Wright, Chairwoman of the New York State Cannabis Control Board.
“It’s obviously going to be years,” she continued, noting that people like Nicponski “entered into this marketplace knowing exactly what the landscape was and they knew that this was going to be the hurdle of bringing people from an illicit market into our regulated market.”
Wright said the NYPD was “actively engaged” in shutting down unregulated smoke shops, bodega owners and their landlords.
“Recently enacted laws allow for the arrest of anyone who operates a business that sells cannabis without a license, and possessing cannabis in excess of three ounces in public is unlawful,” an NYPD rep said in a statement.
“The NYPD will continue to work closely with the Office of Cannabis Management, prosecutors, and other criminal justice partners to address any unlawful activity relating to the sale and use of cannabis.”
Besides posing a business concern, the questionable products posed a health risk, Wright added.
“Do not go and purchase from anybody that is selling illicit product, because it’s not safe. That is our message,” Wright warned New Yorkers.
“We need our consumers to be aware that they have an opportunity to buy from licensed sellers who are actually selling product that his been grown in New York, tested… and has some guarantees with the product, that they can rely upon.”
Competition with unlicensed vendors was less of a concern outside New York City, according to one Cooperstown-based cultivator whose bud is legally for sale in Albany, Schenectady and Queens.
“There are a few illicit operators [in the Albany area] … but it doesn’t really disrupt our business or sales as it does in the New York City market,” said Sugarhouse Farms Managing Partner Nick Polsinelli.
“The illicit operators are rampant in the New York City market and it directly undermines New York State’s regulated marketplace.”
Nicponski said he worries that by the time he gets his business up and running that non-social equity candidates will reap the benefits instead of him.
“My biggest fear is by that time I do all the hard work necessary to get capital, find a location, build it out, staff it, open it, and have made all that effort, then at that time enforcement kind of ramps up just in time to let a new wave of well capitalized out-of-state licensed applicant suddenly open up,” he said.
Sephida Artis-Mills and her brother Redman, born Reggie Noble, founded the United Empowerment Party last year, a political party that looks to impact cannabis policy around the globe and help raise capital for New York social equity license holders that had been arrested for marijuana before it was legalized.
“We are building this coalition to be able to provide resources, solutions and everything they need to get them open for business, because as long as they’re not open, they lose money and then that impacts the market overall,” said Artis-Mills as she sat next to Redman, who was flanked by fans.
Artis-Mills said any money raised by her coalition of New York advocates and operators would be supplemental to the state’s cannabis social equity fund, which had struggled to raise $150 million from private investors for new licensees.
Still, there was plenty of green to go around, Tim Seymour, host of CNBC’s “Money Talks” told expo attendees.
“You can make an argument that right now, in the United States, the addressable market is near $100 billion,” Seymour said, even as he acknowledged the market was struggling.
“If you’ve invested almost any dollar, you’re probably down at 30 cents. It’s the nature of what’s going on. Some of it is a function of the infancy of these markets, the lack of liquidity, the lack of access to capital.
“Some of it’s a function, of frankly, some of the best stories are the ones that no one’s ever heard of or invested in, and some of those are probably right out there,” Seymour said, gesturing to the massive exhibit space.
Seymour predicted that despite its setbacks and slow rollout, the city’s industry would soon be a pacesetter.
“New York City is not only the capital city of the world, as far as I’m concerned, but when you think about where brands are created, and style and tastes are created, it all happens in New York City.”
His optimism was ultimately shared by Nicponski.
“I hope the other CAURD [Conditional Adult-Use Retail Dispensary] licenses can collectively bootstrap the industry, an industry that grows and grows for everybody, he said.
“We can basically form the new industry in a way that is sustainable and economically profitable not only for the business owners but also in a way that benefits the communities that we are operating in.”
