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New York’s cannabis market, which was designed to boost the economy and promote social equity, is facing some serious challenges as licensing moves into high gear. More than 5,250 licenses have already been issued, and 54.1% of those are for social equity businesses, reflecting the state’s strong commitment to inclusion. But with things moving so quickly, the market could become unstable.
Dispensaries in particular are up against some tough obstacles. Federal tax code 280E prevents them from deducting normal business expenses, which leaves smaller operators in a tough spot as they try to stay afloat with high costs. In cities like New York, sky-high rents only add to the pressure, making it hard for many dispensaries to turn a profit. And though there are now 270 adult-use retail stores open, market saturation is becoming a real worry.
Looking at the experience of states like Oregon and California serves as a cautionary tale. They saw price crashes and closures as oversupply took hold, and New York could be headed in the same direction — especially with $757.8 million in adult-use retail sales by late 2024. On top of that, New York seized 16,900 pounds of unlicensed cannabis, valued at an estimated $68.5 million, showing that illicit competition is still a major problem that hurts legitimate businesses.
There is significant frustration among cannabis entrepreneurs and dispensary owners regarding the changing regulations, with some feeling like changes are being made without any warning or reason. They’re facing uphill battles as they deal with shifting rules and an ongoing fight against the black market. The challenges are mounting, from the pace of licensing to federal tax requirements, and regulations that aren’t always clear to upstarts. If these and other issues aren’t addressed, the state could risk undermining the very goals of economic growth and social equity that legalization was meant to achieve.
— Provided by Ascend Agency
The news and editorial staffs of the New York Daily News had no role in this post’s preparation.
