New York is one of the signature cities in the world. The marijuana industry sees it as one of the top global markets. The state government had a strong plan to roll out recreational  and changed in within a few weeks of launch. Chaos ensued and the issuing of licenses basically became a trickle.  But is New York finally getting its marijuana act together?

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The chaos allowed around 2,000 illicit dispensaries to open in the state, with around 2,500 in greater New York City. There were even unlicensed retailers within 3 blocks of NYC’s iconic City Hall. After trying to force landlords to shutter the stores and then begging social media companies to unplatform them, the government had to act. The state legislature passed new laws to crack down on the unsanctioned shops. Previously, the city’s power to step in had been limited and the legal market was bogged down in red tape.

The state is proud they have closed roughly 1,000 illicit stores in the state with over 750 NYC alone. Over 41,000 violations have been issued, totally $65,671,487 in penalties. The city estimates it has already seized a total value of $41,443,792 in products, whose fate remains unclear.

In an added complication, it seems part of the products sold came from the California black market. The closures could benefit the Golden State’s efforts to wrangle their mess. The Empire State has less than 200 retailers so this can be a huge boom for them. The illicit market was very profitable in NYC, with some estimates of $1.5 billion in sales in 2023.

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Andrew Cooper, Chair of hte Cannabis & Psychedelics Practice Group at NY headquartered Falcon Rappaport & Berkman LLP had a comment on it. “There is no doubt that the current initiatives which have been implemented to shut down illicit cannabis operations as part of the newly enacted budget have been an overwhelming success with over 230 illegal cannabis stores padlocked and over 6,000 pounds of illicit product valued at $22 million seized since May 21, 2024. In the 10 weeks since enforcement actions began, regulated cannabis sales are up 72 percent in New York City with retailers collectively reporting $2.6 million in weekly revenue growth over the same period. This puts New York on pace to sell $520M of Cannabis in 2024, with some people suggesting that it could break $700M.”

 “Because the sheriff’s office can now enter and inspect businesses without a court order, it’s able to quickly raid retail stores and seize products. Unfortunately, legal CBD and Hemp stores who, arguably, are not selling illegal weed have been getting caught up in these raids as well.  In many instances, Sheriff’s deputies and NYPD officers, many of whom are wholly unfamiliar with the relevant regulations including the fact that CBD and Hemp can be sold with the appropriate license, still confiscate legal products and arrest shop owners” continued Cooper.

Governor Kathy Hochul and Mayor Eric Adams celebrated the success of the crackdown on Wednesday.

“In the three months since launching ‘Operation Padlock to Protect,’ our administration has delivered major results on a major quality of life and public safety issue,” Adams said. “For too long, illegal shops have contributed to a feeling that anything goes on our streets.”

Is New York finally getting its marijuana act together, the industry is certainly hoping it is.

Canada and 24 US states have legal recreational marijuana. Forty states have medical marijuana available, yet for some, it is not enough. The cannabis black market is thriving while hurting the newly legal market and confusing consumers. As a customer, you need to know if black market weed safe.

A study commissioned by the New York Medical Cannabis Industry Association found that after reviewing cannabis products from 20 illicit stores in New York City, about 40% contained harmful contaminants such as E. coli, lead and salmonella. This is prior to the boom of more than 1,500 unlicensed dispensaries. Consumers are paying premium prices for something which may not agree with their body.

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While it’s an issue in states like Colorado, Michigan, and Washington, it’s a much bigger problem in New York and California. It is a major drag on the young legal industry and a potential danger to consumers.

Canada was forward thinking about started a campaign early in legalizaiton to convince consumer to purchase from authorized dispensaries.  Here is the information Manitoba shares with the public:

If you buy cannabis, make sure to get it from a licensed retail store that offers a wide selection of legal products.

Street, or black market cannabis offers you no quality control in terms of strength or purity. It may contain traces of pesticides and even other drugs that could put your life at risk.

When you support the black market, you have no idea whether or not your money will go to fund other illegal activities. Buying cannabis from a black market supplier puts you at risk of arrest and fines.

WIth the black market, it is important to understand the supply chain.  Step one is the growers. Currently, there is a significant number of indoors grows which increase the cost of the plant.  California’s growers are losing money to illicit grows both indoor and outdoor because it is just cheaper.  The state is doing anything to crack down and there is zero oversight to insure quality or grow techniques.

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The other two segments are “the guy”. Some people find it easier to use their “guy” who hooks them up. They acquire product – both legal and illicit and then sell directly to the customer.  No taxes, no oversight, no verification for what is in the product.

Two big issues for consumers are inconsistent potency levels which means you don’t get high enough or you get too high. The other is unsanitary processing and packaging, which can directly effect your body and body functions.

While California has some of hte highest taxes of the industry, their enforcement is dismal. Colaroda and Maine have some of the best with dwindle black markets. With over 50% of the US having to legal weed, state governments to reaccess taxing and enforcement is order to

Legal marijuana is becoming more and more accessible. Still, in countries like the U.S. and Canada, where there are legal markets in place, black market marijuana sales remain consistent. According to a new survey, the #1 reason people are still buying black market weed is price. It is crushing California and other states should see it is a big warning.

The survey, conducted between 2019-2020 and published in the Journal of Studies on Alcohol and Drugs, polled 12,000 cannabis users in Canada and the U.S. and found that price outranked convenience, which is the second main reason people continue to opt for illegal weed.

A 2016 referendum legalized recreational use in California. A goal to eliminate illegal sellers, regulate the substance for safety, and raise tax for the state. The first dispensaries opened in 2018. But the licensed stores have not dented the size of the black market, which has remained steady at around $8 billion a year, according to Tom Adams of Global Go Analytics. The legal business is struggling. In 2022, sanctioned cannabis sales fell 8.2 percent to $5.3 billion.

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According to the study:

In both years, the most commonly reported barriers to legal purchasing were price (Canada: 35%–36%; United States: 27%) and inconvenience (Canada: 17%–20%; U.S.: 16%–18%). In 2020 versus 2019, several factors were less commonly reported as barriers in Canada, including inconvenience and location of legal sources. Certain barriers increased in the United States, including slow delivery and requiring a credit card.

In the United States, black market cannabis sales are one of the principal wild cards in establishing a functioning legal cannabis market. States like California, which were the first to establish legal markets, have allowed the two markets to coexist, something that cannabis workers have called extremely unfair.

Alex Brough is the co-founder of Keneh Ventures, a private equity fund that invests in businesses ancillary to the legal marijuana trade. In an interview with Times Union, he compared a legal dispensary owner who ‘does everything above-book’ to a bootlegger selling cheap, untested weed.

“You don’t know any better, you’re not an industry expert, and you go to California, and you go to get an [eighth-ounce] of chronic at this place for $60, and at this place across the street, they’re selling it for $30,” he explained. “If you’re at all budget-minded, you’re going for the $30.”

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States in the U.S. that are establishing new cannabis markets can use previous states as guideposts, allowing for more controlled transitions and accurate predictions of how their legal market would work. Still, cannabis black market sales have existed for decades, with businesses having built relationships with shoppers. Creating a new legal market will take time to build and to earn the trust of new shoppers.