New York’s Legal Marijuana Market Set To Pass $1 Billion In Sales By End Of 2024

New York’s legal marijuana market is expected to hit a major milestone in the next month as retailers pass $1 billion in products sold since stores opened two years ago.

As of last week, the total sales figure stood at $863.9 million—up from $500 million in August, according to data from the Office of Cannabis Management (OCM). The state is set to surpass the billion-dollar sales mark by the end of December, officials predict.

“These numbers clearly indicate that New York is open for business,” John Kagia, OCM’s policy director, told the New York Post, which first reported the impending $1 billion milestone. “There’s strong momentum behind the market right now.”

After a slow rollout in its first year marked by lawsuits and other delays, legal marijuana sales in New York have picked up significantly in the past several months. Regulators say that’s the result of more licensed businesses opening as well as what they describe as a successful crackdown on unlicensed shops.

This spring, for example, officials in New York City launched Operation Padlock, an enforcement initiative meant to shutter illegal storefronts. Since then, licensed shops that were open before the operation began have since seen sales climb 105 percent, according to an OCM survey.

A spokesperson for Gov. Kathy Hochul (D) told the Post that enforcement actions statewide shut down more than 1,000 illegal dispensaries.

“Her policies have helped transform the industry, increase revenues for local businesses and spur reinvestments in the communities most harmed by historical wrongs—all while building the most equitable cannabis market in the nation,” the spokesperson said.

Hochul argued in June that there’s a direct correlation between the stepped-up enforcement and “dramatically” increased legal sales.

In terms of state revenue from the legal cannabis industry, state Comptroller Tom DiNapoli’s office told the Post that the state is on pace to bring in twice what it saw in 2023. So far in 2024, the state has received $16.6 million in cannabis revenue through June, the office said.

Despite the pickup in legal cannabis activity, the Post notes that New York is still “a cellar-dweller” compared to many other legal-cannabis states. For example, while New York has 245 licensed cannabis stores, Oklahoma has 1,900. And where New York shoppers spend less than $50 per state resident on cannabis, Alaska and Michigan boast sales of more than $300 per resident.

A report by state officials earlier this year found both “growing pains” and “successful efforts” in New York’s marijuana market launch.

While the state ran into a number of obstacles during the first years of legalization—including a slow market rollout, leadership controversies and so-called “predatory deals” around the state’s marijuana social equity fund—the report is optimistic.

In it, regulators highlighted that more than half (54.7 percent) of adult-use licenses have been awarded to social and economic equity applicants, part of the legalization law’s goal of ensuring that people most harmed by prohibition have a chance to take ownership of the new industry.

Most cannabis consumers are also now shopping at legal stores, the earlier report said, noting that two thirds (67 percent) of New Yorkers who consumed cannabis during the past year “reported purchasing from legal retail stores.”

Legalization has also led to more than 200,000 cannabis-related criminal convictions having been sealed, with another 107,000 “suppressed while awaiting sealing,” the report found, adding thatmore than 400,000 criminal convictions are also eligible for expungement under the legalization law, known as the Marihuana Regulation and Taxation Act.

Moreover, the report says, “No person in New York state remains incarcerated for solely a marihuana-related offense.”

“Candidly, OCM knows there is much work to be done, and we remain undaunted by the task ahead,” the agency’s Acting Director Felicia A.B. Reid said in a statement at the time. “OCM continues to refine its data collection methods, improve customer service and consumer education, prioritize public heath efforts, engage with stakeholders, and work diligently to shut down the illicit cannabis market.”

The report came on the heels of Gov. Hochul lauding what she called the state’s “smokin’ hot” marijuana market, as the retailers in state passed the half-billion-dollar mark in legal sales since the market’s launch.

“Thanks to our efforts to shut down illicit storefronts and support our legal dispensaries,” she said. “New York’s legal cannabis industry is reaching an all-time high—surpassing $500 million in sales!”

While not a small amount of money, the amount paled in comparison to other, smaller states with legal marijuana. Illinois, for example, sold roughly $2 billion in legal cannabis products during 2023 alone.

Hochul also said in June that the state’s escalated enforcement actions against illicit marijuana shops is resulting in a significant increase in legal sales at licensed retailers.

The governor made the comments amid criticism from equity-focused activists over what they see as a “corporate takeover” of the cannabis market, citing reporting about the administration dismissing concerns from state officials about a “predatory” private equity loan deal the state approved to provide funding for startup cannabis retailers.

Certain advocates say Hochul has “falsely” blamed the legalization law itself for the state’s troubles with the illicit market, without taking responsibility for the administration’s role. To that end, there has been criticism of the governor’s ousting of Chris Alexander as executive director of OCM earlier this year.

In an attempt to rein in unlicensed sales, the governor in February called on big tech companies such as Google and Meta to “do the right thing” by taking steps to stop promoting illicit marijuana shops, which have proliferated across the state.

Meanwhile, New York officials this summer rolled out a broad plan to encourage environmental sustainability and set energy use standards within the state’s legal marijuana industry. It’s part of regulators’ broader goal of promoting economic, environmental and social sustainability in the emerging sector.

In June, state regulators also formally approved rules to allow adults 21 and older to grow their own cannabis plants for personal use.

A top New York lawmaker also introduced a bill in June to legalize psilocybin for adults, provided they obtain a permit after undergoing a health screening and educational course.

In September, meanwhile, the state announced it’s preparing to deploy up to $5 million in grants funded by marijuana tax revenue as part of an effort to reinvest in areas disproportionately impacted by the the war on drugs. OCM said the awards aim “to redress a wide range of community needs—from housing to childcare to job skills training and many areas in between.”

Under state law, 40 percent of all cannabis tax revenue is earmarked for community reinvestment, targeting “areas of the state that have been historically under-resourced, underserved, and over-policed,” OCM noted.

New York Is Succeeding In Establishing An Equitable And Competitive Marijuana Market, Despite Challenges (Op-Ed)