Politics
New York Governor Links Illicit Marijuana Shop Crackdown To ‘Dramatically’ Increased Legal Sales, As Equity-Focused Activists Protest Administration
The governor of New York says the state’s escalated enforcement actions against illicit marijuana shops is resulting in a significant increase in legal sales at licensed retailers.
As Gov. Kathy Hochul (D) faces criticism from equity-focused activists who staged a protest on Tuesday over what they see as a “corporate takeover” of the cannabis market, she continues to promote the industry while defending the state’s efforts to eradicate the unregulated market.
The governor also argued at a press briefing on Tuesday that there’s a direct correlation between the stepped-up enforcement and “dramatically” increased legal sales.
“The progress is clear: First week of May to the first week in June, legal sales are up 27 percent,” Hochul said. “Let me break that down for you. For 24 stores in the enforcement areas, that means over a million dollars in additional revenue, or $35,000 per store in just one month. That makes the difference between staying open and closing.”
“That means you continue paying good wages to your workers. It means that your supply coming up from the farmers can have a resource—a place to sell it,” she said. “It means you’re going to be prosperous. You’re going to be able to finally live the dreams that you’ve been delayed for too long.”
The governor noted that the state has seen more than $200 million in legal cannabis sales so far this year—already surpassing the full-year total of about $160 million in 2023.
“We’re on pace to pass $13 million a week. But it’s more than the dollars,” she said. “It’s about small business owners being able to take care of their families, right? That’s all they want. They just want a shot.”
Not everyone is satisfied with the administration’s marijuana regulatory work, however. At a protest organized by the Drug Policy Alliance (DPA) on Tuesday, a coalition of cannabis licensees, state lawmakers and activists called out Hochul, arguing that the governor and corporate lobbyists are undermining the state’s cannabis law by putting large multi-state operators ahead of equity-centered small businesses.
In a press release, they also pointed to recent reporting about the administration dismissing concerns from state officials about a “predatory” private equity loan deal the state approved to provide funding for startup cannabis retailers. DPA said Hochul has “falsely” blamed the legalization law itself for the state’s troubles with the illicit market, without taking responsibility for the administration’s role. To that end, there has been criticism of the governor’s recent ousting of Chris Alexander as executive director of the Office of Cannabis Management (OCM).
At the same time, activists argue that lobbyists for large cannabis corporations are seeking to “dismantle the guardrails” of the law’s social equity provisions “so they can monopolize New York’s lucrative market.”
Sen. Julia Salazar (D) said the implementation of the legalization law is a chance to address the harm that too many New Yorkers have experienced due to many years of criminalization, but “the encroachment of big cannabis corporations in New York’s market poses a threat to the [Marihuana Regulation and Taxation Act’s] success, especially for small, legal cannabis businesses.”
“For the good intent of the MRTA to become reality for more communities of color and justice-impacted New Yorkers, we need Governor Hochul to allow the Cannabis Control Board to function as an independent body, and for the Office of Cannabis Management to be empowered to continue to implement the MRTA equitably,” she said.
But Hochul, as well as New York City Mayor Eric Adams (D), argued on Tuesday that New York’s marijuana market is in good shape and achieving its equity objectives.
“This industry is a testament to a fairer future—one that rights the wrongs of the past,” the governor said. “We’re going to continue our efforts, and we’re going to stop those illegal sellers from operating the way they were. New sheriff’s in town.”
The key to a successful cannabis industry? Shut down the illegal shops and lift up the legal ones.
New York has closed hundreds of illicit storefronts, and we're seeing results: legal sales are up 27%. It's making a real difference for dispensary owners like Leeann. Watch ⤵️ pic.twitter.com/w9V3Xaunvs
— Governor Kathy Hochul (@GovKathyHochul) June 18, 2024
“We’re just getting off the ground. This really means something to me. It means that if we believe in something strongly enough that we have to fight for it, and we need to make changes to get it right,” she said. “We’ll go back and change whatever needs to change in the law. And that’s exactly what our legislature and I did this last session. So change is in the air.”
Adams, for his part, touted the collaboration between the state and city governments to take on unlicensed retailers, arguing that they have invited crime and marketed products specifically to underage consumers.
“We knew we can get this right, and we went back and looked over again to make sure we got it right,” he said. “We’re seeing the benefits on our streets every day. We hear it continuously from the people of the city of New York, and we hearing it from the state.”
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Meanwhile, last week New York marijuana regulators formally approved rules to allow adults 21 and older to grow their own cannabis plants for personal use.
Lawmakers have sent a bill to the governor that would make marijuana farmers markets a permanent feature of the state’s cannabis market, authorizing regulators to issue permits for cannabis grower showcases indefinitely.
As the state has worked to stand up the legal market, it’s also dealt with a proliferation of unlicensed cannabis shops. To that end, lawmakers have also introduced a bill that would allow people in the state to bring legal actions against entities that violate state marijuana laws, potentially empowering ordinary individuals to sue unlicensed cannabis sellers or licensees skirting state law.
A news report earlier this year found that despite state officials levying more than $25 million in fines against unlicensed retailers for selling cannabis products since last year, only a tiny fraction of those fines had been collected by either the New York Tax Department or OCM.
In an attempt to rein in unlicensed sales, Hochul in February called on big tech companies such as Google and Meta to “do the right thing” by taking steps to stop promoting illicit marijuana shops, which have proliferated across the state.
Meanwhile, a top New York lawmaker introduced a bill this month to legalize psilocybin for adults, provided they obtain a permit after undergoing a health screening and educational course.
Photo courtesy of Mike Latimer.
