Following New York’s legalization of cannabis in 2021, at least 1,200 unlicensed stores have reportedly popped up in New York City. Here’s what officials said they are doing to ensure a healthy licensed market for consumers and operators.
Officials claimed in a New York City Council meeting on Wednesday that at least 1,200 unlicensed weed dispensaries, bodegas, and smoke shops are openly selling unregulated cannabis flower, edibles, vapes, and tobacco products across the city.
So far, New York’s only licensed weed store is Manhattan-based nonprofit Housing Works, with dozens more promised to come on a rolling basis this year. Although two more legal dispensaries are slated to open in the coming weeks (Smacked LLC located at 144 Bleeker Street in Manhattan will open January 24) unregulated cannabis shops continue to dominate the weed space by comparison.
In response to the disproportionately small number of legal weed stores and the thriving gray market, the state said a newly assembled task force will help even the score, after seizing 100,000 products and $4 million at 53 stores over the course of two weeks at the end of last year. In November, Leafly reported the very first raids in Brooklyn and Manhattan. The latest figures are $6 million in seized products, including 600 pounds of cannabis.
NYC Mayor Eric Adams established the inter-agency task force behind the crackdown in November of last year. So far, the collaboration between the New York Sheriff’s office, cannabis office (OCM), NYPD, and other units has seized approximately $10 million worth of illegal cannabis and tobacco products, according to figures the NYC Sheriff’s Office and NYPD shared Wednesday.
How did New York’s gray market blossom?
In March 2021, the Marihuana Regulation and Taxation Act (MRTA) legalized possession and consumption of the plant but offered no legal retailers for non-medical consumers to buy from.
The bill essentially opened an 18-month green rush for sellers of all experience levels, including many corner stores and tobacco shops that had no previous experience sourcing or selling cannabis.
The state has made a clear distinction between these new illicit storefronts and longtime legacy sellers who either stopped operations in hopes of getting a license, or continued to operate discreetly without posing as licensed or regulated. As the gray market window closes, it’s not completely clear how the state will distinguish the illicit operators it wants shut down from the legacy operators whom New York’s cannabis laws and regulators aim to empower.
“New York City has a global opportunity to be a global hub of cannabis industry excellence in education and excellence,” said New York City Sheriff Anthony Miranda at the Wednesday meeting. “This administration will continue to support New Yorkers and justice involved individuals who want to build legitimate and thriving cannabis businesses,” Sheriff Miranda added.
How the gray market crackdown could impact consumers
At a visit to Housing Works Wednesday, a security guard told Leafly that unsuspecting customers at illicit shops could find themselves arrested if they’re present while a shop gets busted. Busts of Weed World trucks in previous years have wrangled innocent bystanders and customers into messy investigations. But lawmakers and regulators have insisted they will not be heavy-handed with cannabis offenders moving forward, and that they intend to use seizures of cannabis products, fines, and summons instead of handcuffs and criminal charges. Tobacco infractions could still lead to arrests and more serious criminal penalties.
Sheriff Miranda also said the task force will investigate the people who are funding these stores, as well as New York’s many delivery services. Miranda and task force representatives did not clarify how it will distinguish legacy delivery operators from illicit ones during Wednesday’s meeting, but reiterated that it only wants to shut down storefronts, not legacy growers or dealers.
Robberies and violence are also a concern at unlicensed shops. The cash-heavy businesses face a constant threat of stick ups, mainly from teenage robbers, according to officials. The NYPD says there were 593 smoke shop robberies last year compared to 343 in 2021, an increase of nearly 73 percent, according to the New York Times cannabis beat.
One smoke shop worker was shot in the leg on Tuesday in Hell’s Kitchen, and a separate unregulated store in Midtown was robbed on Wednesday at gunpoint, according to officials. No shots were fired in the robbery.
