100th cannabis shop opens in New Paltz

N.Y. marijuana market lags behind what officials hoped

ALBANY — State officials celebrated the opening of New York’s 100th brick-and-mortar marijuana store on Wednesday as cannabis retail shops continue opening at an accelerated pace that’s still far behind what regulators had projected by now.

The store, Big Gas, opened in New Paltz. Gov. Kathy Hochul said the event marked a “historic milestone in establishing a thriving and equitable industry in our state.”

Retail marijuana sales have topped $237 million, with $77 million of that generated in the first two and a half months of this year.

New York legalized marijuana three years ago and has struggled to establish a bustling retail market, in part, because of provisions in the 2021 law that placed restrictions on licensing requirements to achieve what state officials have said are important social equity objectives.

Industry observers have noted that in the first four months of last year — after the state’s first retail shop opened in December 2022 in New York City — the state had collected nearly $17 million in tax revenues from cannabis sales. Under the law that legalized the drug, roughly 40 percent of that revenue was supposed to be redirected to communities most impacted by prior marijuana enforcement.

In Illinois, where recreational marijuana sales became legal in January 2020, that state saw a 50 percent increase in taxes collected from that industry between 2021 and 2022, when it collected $443.3 million in taxes.

Illinois, which does not have the same social equity requirements as New York, mandates that 25 percent of its tax revenue from cannabis sales “must support communities that are economically distressed, experience

high rates of violence, and have been disproportionately impacted by drug criminalization.” That state’s tax disbursements to local governments increased from $82.8 million in 2021 to $146.2 million in 2022.

New York officials have said their regulations, which include a twotiered market structure that mirrors the state’s alcohol industry, creates a firewall between the business owners who grow or process the plant and those who sell it. Those strict business requirements, designed to prevent monopolies and help small business owners with prior marijuana convictions succeed, have also attributed to the difficulties getting the industry rolling.

Still, New York officials on Wednesday touted those social equity objectives, saying they have surpassed the goal outlined in the cannabis law by awarding 60 percent of licenses to social and economic equity applicants. Within that group, 40 percent are minority-owned businesses and 40 percent are women-owned businesses, respectively. A news release issued by Hochul’s office said “37 percent of (New York’s) adult-use dispensaries are majority minority-owned; nationwide only 19 percent are majority minorityowned.”

nd “This milestone embodies our tireless endeavors to reshape the industry landscape and underscores our resolve to push the boundaries of progress,” Office of Cannabis Management Executive Director Chris Alexander said. “Supported by the New York Cannabis Social Equity Investment Fund, we take pride in our progress and pledge to persist in our pursuit of inclusivity and advancement of New York’s cannabis market.”