Start Spreading the News: The New York Cannabis Market Will Shape the Future of the Industry
The Empire State has the power to normalize legal cannabis and push the government towards federal legalization.
As goes New York goes, so goes the world.
A few months ago, Governor Andrew Cuomo signed New York's Senate Bill S854A, the Marijuana Regulation and Taxation Act (MRTA), legalizing adult-use cannabis in New York. Despite having just passed, the MRTA has already positioned New York at the center of the legal cannabis movement.
While California's legalization in 1996 initially pushed states towards legalization, New York, and more specifically New York City, has the power to normalize legal cannabis, move the government towards federal legalization, and catalyze the global cannabis legalization movement. As the country's most populous city and the U.S.'s cultural, financial, and media capital, New York City shapes the future of all sorts of industries. And its role in cannabis will be no different.
Through the MRTA, New York's market has the potential to shape the country's cannabis industry, with the following factors leading the way.
The New York legislature passed the MRTA, which is the most progressive state-wide cannabis legislation passed to date. A prominent element of the bill is provisions that support social equity, which aims to create a more diverse and inclusive cannabis industry. The MRTA mandates that 50% of license holders, and a certain percentage of employees, represent people from communities of color that were negatively impacted by the War on Drugs, along with other underrepresented groups like women and veterans. While regulations still have to be written and approved, the bill itself lays the groundwork for repairing communities damaged by the war on drugs by empowering a diverse group of people to participate in this growing legal industry.
One of the exciting surprises of this bill was that it embraced the concept of "social consumption" lounges, which is essentially a public place for adults 21 and older to consume cannabis and perhaps enjoy some food or entertainment while they do it.
This is how it should be, as those spaces already exist en masse serving other regulated products like alcohol on site, and we call them bars, restaurants, hotels, and venues. All of these spaces should have an opportunity to involve cannabis in their approach to hospitality. With the rise of cannabis-infused beverages, a social consumption lounge doesn't have to look or feel anything like a smoke-filled Amsterdam coffee shop— although those are great as well!
NYC will lead the globe in social consumption, with cannabis-infused experiences and entertainment and participation from a multi-disciplinary group of professionals. Imagine a night out in the East Village enjoying artisan cannabis cocktails from Death + Co and then taking in a lightly infused dinner followed by an outdoor jazz concert to enjoy low dose THC pre-rolls optimized for musical enjoyment. The possibilities are endless.
Tens of billions of dollars of food and other CPG goods are delivered by courier, usually on a bicycle, in New York City every year. In addition, the city of New York consumes more cannabis - almost all of it from the underground market - than any other city in the world. You couldn't have a robust social equity bill without delivery right out of the gates - as the physical density of the city and low startup costs make it an attractive opportunity for achieving the promise of economic advancement to impacted communities. Based on current regulations, a business would be limited to 25 delivery drivers, protecting small businesses from large tech incumbents like Uber and Amazon. The overall scale, challenge, and ultimate opportunity in New York City cannabis delivery will catalyze the creation of ancillary companies that support the infrastructure of what will be a multi-billion dollar industry.
Launching, operating, and successfully scaling a regulated cannabis business is one of the most challenging tasks ever conceived - and the startup costs are immense, so access to capital is one of the most urgent and vital issues to confront. For the most part, Wall Street has mainly remained sidelined from investing in US-based plant-touching cannabis companies—primarily due to federal banking laws and SEC guidelines around cannabis.
Like it or not, Wall Street has some real power at the Federal level, and I can't envision a world where a multi-billion dollar industry is created on the streets of New York without Wall Street and the broader global financial community getting in on the action. Many federal bills are working their way through the system, including the broad-based MORE act to the more banking-specific SAFE act. It's not a matter of if Wall Street gets involved; it's when. At that point, hundreds of billions of dollars of capital will be up for grabs as the industry goes global.
This is just the beginning of the new market that's poised to take over the cannabis industry. There's no industry with as much growth potential as legalized cannabis - New York State is projected to create over 50,000 jobs over the next five years in this newly legal industry, across the state and all disciplines from cultivation to logistics to retail and beyond.
While there are still many unanswered questions about the New York cannabis market, one thing is for sure - demand and anticipation are building rapidly. With 9 million people in NYC and over 60 million people in the Northeast, New York is sure to be the state to watch as the cannabis industry continues to expand.