The Midtown Gazette

A Columbia Journalism School newsroom covering Midtown Manhattan in the heart of New York City.


,

Licensed cannabis shops benefit as city shuts down unlicensed shops

Licensed cannabis shops, like Cannadreams, are seeing an increase in business after unlicensed shops have been shut down in their neighborhoods. Photo by Vahini Shori.

The New York City Police Department has now shut down over 1,000 of the city’s unlicensed cannabis shops, and licensed cannabis shop owners across the city are rejoicing as Operation Padlock to Protect enters its fourth month. The initiative was announced in May of this year, and allows law enforcement officials to inspect and shut down unlicensed cannabis shops in all five boroughs.

New York is on pace to sell $700 million dollars worth of cannabis this year, a dramatic increase from the 2023 fiscal year, according to data and research from the Office of Cannabis Management, as reported by Cannabis Business Times, due to more licenses and a more efficient process from the state. 

This has had a profound impact on small businesses throughout the city, with over 1,000 of the city’s estimated 4,000 unlicensed shops shuttered over the course of just four months, which has owners of licensed shops say they’re pleased due to the forced shutdown of their competition. Miguel Lambana, a store manager at Nicklz, said sales have increased almost 40% since local unlicensed shops were shut down. 

“It helps kind of bring the customers to the legal source…now they have no choice,” said Jerry Lin, owner of Cannadreams on 9th Avenue, who applied for his license in late August of 2023. Lin said that the differences in cannabis price from a legal versus an unlicensed shop can be drastic, sometimes even 50%. Lin cites taxes, which sit at 13%, and overhead costs, including a staff of 10-15 people working the store, compared to the 1-3 employee operations Lin has seen at unlicensed shops.

The licensing process itself can be  long and difficult-to-navigate, according to Kat Tarsova, who works as the manager of Indoor Treez, a cannabis shop on 8th Avenue in Midtown that took two and a half years to open.

Consumers are not all pleased with the closures of unlicensed smoke shops. Jasper Swift, a Brooklyn resident who routinely picked up her cannabis from a Midtown smoke shop in Hell’s Kitchen near her job, was frustrated to see a number of local shops raided and shut down. Swift feels that dispensaries are heavily “marketed to people who have money” and that the experience of buying at a dispensary is inconvenient due to long wait times caused by less access to cannabis products and increased prices.

Korie Large, another consumer, agrees. Large was a regular at their unlicensed neighborhood deli-smoke shop and was dismayed to see it be shut down, describing the licensed dispensaries as “heavily taxed”, “new age”, and “too technical.” Large was also frustrated by the prices at legal dispensaries in a city that is already financially “almost unlivable sometimes.”

New York City legalized cannabis in March of 2021, which is why Heidy Montaño was confused about all of the raids and closures happening in the city in recent weeks. She suggested the city offer retroactive or temporary licenses to shops so they wouldn’t have to lose their entire stock in the process of being forcefully shuttered.

Tarsova, the manager at Indoor Treez, said the Office of Cannabis Management had initiated the rollout of retail dispensary licenses in the city with “justice-involved” individuals, which refers to those incarcerated marijuana offenses and their family members. The regulations set by the New York Cannabis Control Board obligated this population to be the first in line for Conditional Adult Use Retail Dispensary, or CAURD, licenses. But according to Tarsova, they have had a more difficult time overcoming barriers to licensure due to less business experience and are less likely to be able to afford advisors to assist them the way better-funded companies could.