Evolution of the New York Cannabis Market

Over the past three decades, several states across the country have moved to legalize cannabis for medical or recreational purposes, even though marijuana remains a controlled substance at the federal level. 

To date, 38 states and Washington, D.C., have legalized medical marijuana, while 24 and Washington, D.C., have legalized cannabis for adult recreational use. A handful of states have also passed legislation aimed at decriminalizing the possession and use of cannabis.

In some cases, legislation is tied to ballot measures, while in others, the state legislature creates and passes bills. Where does the state of New York land on cannabis legislation? How have policies evolved over the years?

Cannabis in the State Capital Since 2015

With the passing of the Controlled Substances Act in 1970, cannabis became classified as a Schedule I substance, effectively prohibiting its use. It was 26 years before California approved a proposition legalizing medical marijuana, kicking off the trend of states making their own choices where cannabis law was concerned.

In 2014, New York became the 23^rd state to legalize medical marijuana through a bill in the state legislature. By 2015, dispensaries began distributing products to patients with certification from state-registered healthcare providers.

Although it took several years, the state legislature also passed a bill to legalize adult-use recreational cannabis in July 2021. The holdup in passing this legislation was related to disagreements over how the tax revenue generated from sales should be used.

Some lawmakers argued that a major portion of the money should be earmarked for equity and funneled to communities disproportionately impacted by arrests for cannabis-related crimes. 

Eventually, they won, and 40% of tax revenue from recreational sales is devoted to those communities, and the law contains language aimed at expunging the records of those convicted of marijuana-related offenses that are no longer considered criminal.

The legislation also included a conditional licensing system, the Conditional Adult Use Retail Dispensary (CAURD) program, giving early priority to applicants with past marijuana convictions. It started with an initial offer of 150 licenses but subsequently grew to 300. 

In March 2023, the state's first dispensary licensed to sell recreational cannabis opened.

Keeping Up With a Growing Market

Despite over 400 licenses being issued, only 23 licensed recreational dispensaries had opened by September, failing to meet consumer demand across the state. 

With issues related to finding locations, securing funding and a litany of lawsuits holding up dispensary launches, New York's Cannabis Control Board finally voted to expand the licensing process, opening it up to the general public.

Of course, dispensaries are just one arm of the industry. Cultivation and product manufacturing are also essential. This is where vertically integrated operations that offer end-to-end solutions are key.

Dispensaries already offering medical marijuana in New York are ideally positioned to jump in and start serving the recreational market. 

Licenses to cultivate recreational plants were first issued in April 2022, and Verilife Albany, which opened at the end of December, is the first dual-licensed dispensary to offer both medical and recreational products to customers.

State-of-the-Art Cultivation and Manufacturing

The cannabis industry has come a long way from the days of local dealers illegally growing plants in a closet or bathroom. Today, consumer demand for recently legalized medical and recreational products requires cultivation and manufacturing on a much larger scale.

Some multistate operators like PharmaCann are meeting the needs of a rapidly expanding consumer marketplace by embracing the latest advances in growing and processing technology. 

The company's recently completed Orange County Facility took two years to upgrade and features $130 million in improvements that deliver many benefits.

Benefits of Modern Facilities

Efficiency is front and center when it comes to the cannabis industry, and PharmaCann looks to be an industry leader in this capacity. The updated facility curbs energy waste with high-efficiency LED lighting that also helps with temperature regulation.

With eco-friendly upgrades that include green energy, water reclamation and conservation, fertigation, automated environmental monitoring, recycling, composting and more, this state-of-the-art facility is set to meet new regulations from the Office of Cannabis Management regarding energy efficiency and sustainable cultivation practices.

In addition, the upgrade project relied on 150 union workers, and the new facility requires an expanded workforce. Cultivation at the facility is expected to increase by 200% to 300%, thanks to the highly regulated environment, and this will require an additional 250 employees, meaning new jobs in the area. 

With higher yields, reduced waste and greater efficiency, the facility is predicted to see cost reduction and increased profitability, all while delivering the premium products consumers expect.

Medical, Recreational and Wholesale in the Empire State

The ongoing legalization of medical and recreational cannabis is great news for businesses and consumers alike. It's also beneficial for the state of New York, which stands to see substantial tax revenue. What trends in the cannabis industry will drive sales moving forward?

Discreet Products that Protect Consumer Privacy

Flower is an ever-popular means of consumption that delivers the quick onset of effects associated with inhaled products, and concentrates appeal to seasoned cannabis aficionados looking to get more bang for their buck. However, many modern consumers are interested in more discreet ways to enjoy their cannabis.

Edibles have grown in popularity in both medical and recreational markets because of the discretion and convenience they offer. Preset amounts make for easy entry to cannabis consumption for newcomers, with products and flavors that don't necessarily taste like cannabis. 

Options like gummies and tinctures can be discreetly stored and consumed, so buyer activities are no one's business but their own.

Quality and Variety Consumers Crave

Advanced cultivation and processing facilities allow for outstanding regulation of the growing environment, ensuring more productive plants and higher-quality products. 

With greater capacity, PharmaCann's new facility will offer opportunities to expand production and variety. To meet anticipated market demand for recreational products, 40 new strains are already in the works.

Supplying a Growing Industry

Between the first recreational dispensary opening in March 2023 and the end of August 2023, licensed recreational retailers generated an estimated $70 million in sales. Sales are forecast to jump to over $1 billion by 2025, and to hit well over $4 billion by 2030, coming in line with the California marketplace. 

Looser controls on licensing should help speed the process along, as should a move toward wholesale cannabis brands.

The NY Market Heats Up

The rollout for recreational cannabis has been slow, with several hiccups along the way. But with customers clamoring for products, businesses that are interested in cultivation, production, wholesale and distribution are sure to find their niche. As more licensed dispensaries open across the state, consumers will enjoy increased access to high-quality cannabis products that are safe, consistent and regulated.

Consumer trends indicate that dispensaries offering variety are likely to garner the most interest. Vertically integrated companies that control quality from bud to bowl are well-positioned to meet consumer demand, drive innovation in cultivating new strains and lead the pack in a marketplace that's on the brink of booming.