Business 163(Wed, Thur) – New York Lawmakers Take On The Cannabis Gray Market To Protect The State’s $4.2 Billion Industry

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1. It’s never been difficult to buy weed in New York. Since the Empire State legalized cannabis last year—but has yet to issue dispensary licenses—a vibrant gray market has stepped out of the shadows and now dozens of unlicensed storefronts and mobile trucks have opened across the state, from Manhattan to Albany.

2. Technically speaking, New York’s cannabis regulators consider any person or business selling, gifting or exchanging cannabis as unlicensed and illegal. The state is now actively trying to snuff out the gray market operators because they view it as a threat to the legal industry that should be up and running by the beginning of 2023.

3. There is also a lot at stake: New York is projected to become the nation’s second-largest legal cannabis market after California with an estimated $4.2 billion market within five years. In early February, the New York State Office of Cannabis Management sent cease-and-desist letters to dozens of gray market operators across the state, threatening that if they don’t shut down, they won’t be eligible for a license—and might be on the hook for criminal charges. “These violators must stop their activity immediately, or face the consequences,” Cannabis Control Board Chair Tremaine Wright said in a statement.

Why do you think New York, along with several other US states have chosen to decriminalize the use of Marijuana?

4. But most pot entrepreneurs haven’t heeded the warning and even more unlicensed shops have opened up. The cops aren’t conducting raids and the state’s prosecutors aren’t willing to go after these operators because there is enough of a gray area in the law to give the gray market legal cover. And now State Senator Diane Savino (D-Staten Island and Brooklyn) is setting out to take down the gray market with a new bill introduced last month that, if passed would explicitly make it illegal to sell, gift, transfer, or trade cannabis without a license.

5. “They can dress themselves up and rent a storefront; it doesn’t make them any different than the guy who delivers weed to your house,” Savino says. “They should shut down and hope that they survive and are able to apply for a dispensary license.”Most of the unlicensed dispensaries in New York have not heeded warnings from regulators.

6. “It is pretty important that we get our arms around it and stop this from happening because it opens the door to more of an illegal market continuing,” says Kruger. “We will not accept an illegal market.”But Kruger says she does not want to set up new criminal penalties to tackle the problem. “I’m not big on arresting people for using marijuana and I’m not big on arresting people, even for selling marijuana,” she says.

Do you think a change to the law such as this would ever be introduced in Japan? Why? Why not?

7. In Albany, District Attorney P. David Soares has supported decriminalization and regulation for years. Soares says legalization in New York is long overdue but he thinks the state “missed the mark” by allowing New Yorkers to grow six plants at home, which will continue to fuel the illicit market.

8. Soares says three forces are propping up the gray market: confusion among citizens who believe weed is now legal to use, buy and sell; a lack of clarity in the ranks of law enforcement on what’s legal and what’s not; and a lack of resources and incentives for law enforcement and prosecutors to go after people and companies that either continued their illicit marijuana operations or opened unlicensed dispensaries.

9. “I cannot imagine us engaging in an operation and shutting down [an illegal dispensary], having him in front of a judge and asking that judge to sentence this person while we’re also being invited to cut a ribbon for the new dispensary that’s just a beautiful place,” Soares says. 

What do you think laws relating to drug use will be 20 years from now? Do you expect further changes? Discuss.

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