Photo: Aurelie Muntzel. Cannabis dealers have sprung up across the city and state as a result of current legal gray areas.

The business of pot brings economic promise to the South Bronx 

Bronxites harmed by the nation’s War on Drugs are being urged to get in on the ground floor of an unusual and lucrative emerging market — marijuana.

The law that legalized marijuana possession in New York State last year also pledged to address past injustices by placing those with convictions for marijuana-related infractions at the head of the line for licenses to legally sell the drug.

“The word of the day is ‘opportunity,’ state Sen. Jamaal Bailey told a packed audience at an information session focused on the Bronx on Tuesday.  “It’s important to get in on the ground floor of an emerging market … and we gotta help you do it.”

In addition to immediately legalizing possession of up to 3 ounces of “weed”, the Marijuana Regulation and Taxation Act created an Office of Cannabis Management to oversee licensing and regulating sales of marijuana through retail marijuana dispensaries over the coming year.

Central to the law is a Social and Economic Equity Program to ensure that members of communities disproportionately harmed by marijuana laws in the past get priority in licensing to sell and grow pot.

Almost 200 “conditional” licenses to grow weed already have been issued, and the first batch of conditional licenses to operate marijuana dispensaries are expected to be approved by fall, Tremaine Wright, chair of external affairs for the new Office of Cannabis Management, told the crowd.  That office will begin accepting applications for those early licenses by late summer, she said, in hopes new sales dispensaries can be operating by the end of this year.

While eligibility rules for the conditional licenses have not been finalized, proposed rules specify that applicants must have themselves been formerly incarcerated on marijuana-related charges, or be closely related to someone who was, and must show evidence of having been involved in a successful legitimate business for at least two years.

As word spreads, many formerly incarcerated people or family members are scrambling to figure out how to quickly create a bricks and mortar business that could require a high initial investment and would have to meet strict reporting requirements, much like operating a state-regulated liquor store.

Many audience members at Tuesday’s forum identified themselves as “legacy” marijuana marketers and peppered the panel of city and state officials, plus local nonprofit leaders, with detailed questions. 

“There is no limit to the number of licenses we’re issuing in New York State,” Wright assured them.  “This is not a moment of scarcity.”

After the initial conditional retail licenses are issued, a broader group will be eligible for Adult Use Cannabis Licenses in the next round.  Current proposals would include those who have lived in communities impacted by the war on drugs, minority and women-owned businesses, distressed farmers and service-disabled veteran-owned businesses.  The promise is that 50% of all licenses granted will go to those in this group.

New York’s approach reflects the national conversations about reinvestment and reparations towards Black and Latino communities, which have been impacted by a disproportionate number of drug arrests and convictions over the years. Blacks and Latinos were twice as likely to receive a minimum sentence than their white counterparts, federal data shows, and according to an ACLU report, Black people were 3.7 times more likely to be arrested for marijuana.

These documented discrepancies were behind legalization in  38 states as of June 2022.  Similar equity programs have been rolled out in other states, but there have been many issues in implementation.  In California, some applicants have complained about long bureaucratic delays, shifting requirements, and lack of financial and other assistance.

“New York passed a good bill, but this is an uphill battle. Social equity has not worked in any other state,” cautioned Eli Northrup of the Bronx Defenders. “We need to organize around ensuring legal resources and sources of funding” to applicants.

The Bronx Defenders and the Bronx Community Foundation plan to launch a Bronx Cannabis Hub by the end of July with the mission to connect interested Bronx residents to legal and other resources.   

The South Bronx-based Mothers on the Move nonprofit is another local group trying to fill the discrepancy between the large number of applicants who have been previously convicted, but lack the knowledge and financial resources to set up one of these enterprises.

“There is so much you can do with hemp. It’s not just the dispensaries,” says Wanda Salaman, the executive director of Mothers on the Move.

Mothers on the Move has been hosting weekly meetings to add comments on regulations to implement the social equity program.  It has also been working with the Pratt Institute to help develop an incubator to provide Bronxites with access to legal, financial, and business advice, as well as financial backing.

Gov. Kathy Hochul included $200 million in the 2022-23 state budget to create a Social Equity Cannabis Investment Program, which would direct licensing fees and private equity to support the new dispensaries.  While details are still being developed, that program envisions providing financial assistance to successful applicants, as well as physical locations for the businesses, with assistance from the state Economic Development Authority.

The stakes are high.  Analysts and state promoters of legalization say it opens New York State to a potential $1.8 billion dollar industry, ranging from CBD and THC infused products, to hemp-based sustainable construction materials such as hempcrete.

In addition to licenses to growers and dispensary sellers, the state will also issue licenses for such activities as packaging, processing, testing, delivering, and operating on-site consumption facilities. 

Lawyers like Frederic Abramson have been besieged with requests for information and help.

“Most people have been calling but they don’t have business plans together,” said Abramson, a civil law attorney with clients city-wide. “My phone has been ringing off the hook.”

But Wright told the group that many well-established groups will be offering free consulting and legal services, including retired executives in the SCORE program, which often operates through city libraries.  The application fee for the conditional licenses is $2,000.

Kevin Kim, commissioner of the NYC Small Business Services agency, said that $5 million was placed in his agency’s budget to support those seeking to enter the new industry, and it would be working with local nonprofit partners to provide services and information.

“If there are frustrations for retail space, come to us.  We are a non-regulatory agency on your side,” he told the crowd, to enthusiastic applause.

With marijuana possession and consumption legal but commercial sales not yet so, the legal gray area has led to a flourishing of unlicensed marijuana sales.  Marijuana vendors have taken up across the city in the form of foldable desks, to trucks, to brick and mortar smoke shops that “gift” pre-rolled joints in exchange for membership or other merchandise.

“Business is going!” reported a smiling Tarek, who has set up a digital cannabis delivery business since possession has been decriminalized.  Tarek said he had no interest in obtaining a sales license so long as he is not required to.

But while Wright conceded arrests are unlikely in this interim period, she pointed out that until the first cannabis dispensaries are authorized, sales, gifting, bartering and donations in exchange for marijuana remain illegal in New York.

“Please don’t participate in that trade if you’re considering coming before this board for a license in New York State.  It’s not worth it,” she cautioned. “You’re too close to the goal line.”

The story was updated on July 14. 

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