New York strengthens the California marijuana market

Are these two wrongs giving consumers a right? Is New York Supporting California’s Marijuana Market?

The marijuana was in a world of hurt. The Golden State continues to do everything in its power to decimate a thriving industry. Commercial cannabis sales fell 8% last year to $5.3 billion, the first drop since legalization in 2018. And state tax revenues fell to 221 from $251.3 million in the third quarter of 2022 $.6 million in the fourth quarter. One reason is that indoor growing is more expensive, overproduced and competes with illegal growing.

The other main reason is the strict tax regime for the cannabis industry with no black market surveillance. Colorado has been a role model for its system of legalizing weed and has seen its black market all but disappear. Executives from once-thriving companies have turned to Governor Newsom for help. But progress has been slow and Newsom wants federal legalization so they can export to save the industry without the state having to change.

Photo by Michael Discenza via Unsplash

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Meanwhile, New York experienced a fiasco in introducing recreational activities and is now embroiled in lawsuits and allegations. The benefit to consumers is that over 1,600 unlicensed pharmacies have opened in New York City, selling a wide variety of products. The state is working diligently to close some of these each week, even managing to keep them closed for up to 72 hours.

In the interest of the neighborhood, NYC’s illegal pharmacies use California black market products as well as legal products that somehow turn up in retail stores. The “Made in California” seal of approval seems to be popular with consumers in the Big Apple.

Photo by Anton Petrus/Getty Images

The downside for East Coast consumers is that they pay a premium for products, with some items selling over 50% more than the West Coast. And items are quickly building a very strong black market customer base in the Empire State.

“California products come to New York in a variety of ways. Some are traditional market products in counterfeit packaging, but there are also genuine branded products shipped to New York. Sometimes it’s through “distiller distributors” who buy legal produce and move it out of the state, and sometimes I’ve seen things go out the back door and end up in bodegas in New York,” says Jesse Redmond, Head of Cannabis at Water tower research.

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Newson’s lack of urgency in fighting the black market (and creating a healthier system with steady tax revenues) makes for a boon in New York, but it also hampers New York’s slow-moving bureaucrats in fixing the colossal abuse of licenses.

With the right cast and script, this could be an even better show than PainKiller about the opioid push and the Sackler family.