New York’s ‘Gray’ Marijuana Market Thrives Despite State’s New Monopoly on Legal Sales

Just two blocks from New York’s first legal cannabis store, at Washington Square Park, more than a dozen dealers conducted business as usual on a recent evening.

AP/Stefan Jeremiah
A person smoking marijuana outside the Housing Works Cannabis Company, New York's first legal cannabis dispensary. AP/Stefan Jeremiah

The Empire State may now have a legal monopoly on the licensed sale of marijuana within its borders, but New York City is learning the hard way that such monopolies do not always succeed in tamping down a black market that has existed for decades.

The first legal recreational cannabis dispensary, Housing Works Cannabis Company, opened to much fanfare at Manhattan last week, with a line of customers that wrapped around the block nearly all the way to the shop’s entrance. For the moment, Housing Works is the only licensed retailer operating in the city.

Unlicensed and black market dealers, however, are another matter, and ever since the state’s elected officials opted to legalize marijuana in March 2021 the number of unlicensed dealers has skyrocketed.

Just two blocks away from the Housing Works store, at Washington Square Park, more than a dozen dealers conducted business as usual on a recent evening, publicly advertising their products with signs set up at folding tables. 

Despite Mayor Adams’s promise to crack down on such illegal sales, police don’t stop the dealers, and the Sun witnessed several cops walk by or turn their heads at the sight of illegal marijuana salesmen as part of what has been described as a “detente” between the dealers and the police.

The Sun talked to several of those dealers, all of whom spoke on the condition of anonymity, and almost all of whom laughed at the notion that legal dispensaries are going to put them out of business.

When one dealer was asked whether she was concerned about the dispensary’s business, she replied, “They tax it.” She said she was confident that the legal dispensaries would not cut into her profits. “Men lie, women lie, but numbers don’t lie,” she told the Sun.

In Washington Square Park, a customer can buy a pre-rolled joint for $10. At Housing Works, the same joints begin around $20 after taxes.

Another dealer said that regular marijuana users would be unlikely to leave their current retailers in favor of the more expensive, regulated market. He compared dispensaries to bars and likened illegal dealers to liquor stores. Higher prices, he said, might be fun for an occasional night on the town, but would not be realistic for a “habit.”

It’s not just street dealers: Smoke shops and bodegas have taken to distributing cannabis, which New Yorkers can legally possess but not sell. In December, Mayor Adams announced the seizure of $4 million of illegal marijuana and tobacco products being sold by these unlicensed vendors.

“We will not let the economic opportunities that legal cannabis offers be taken for a ride by unlicensed establishments,” the mayor said.

A former mayoral candidate and gadfly in city politics, Curtis Sliwa, is one of many New Yorkers skeptical about the future of the city’s legal industry. Mr. Sliwa predicts that the licensed dispensaries will attract even more black market sellers in their vicinity.

“They know the customer’s going to be coming, and then they’ll compete,” Mr. Sliwa told the Sun. “They’ll start to offer them, say — ‘Why you going there? You can sample my product, can’t sample it inside. I’ll offer you credit. We’ll deliver’ — all the things that obviously the state cannot do.”

Mr. Sliwa said he thinks the city will have a difficult time cracking down in any meaningful way. “The time to do it would have been originally when the first weed wagons came out, with the first pop-up stores. They’re never going to be able to control it now. There’s just too much money.”

The New York Sun

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