New York State’s top cannabis regulator this week welcomed homespun entrepreneurs setting up shop in what could be one of the largest markets in the U.S., at an industry gathering aimed at ramping up the legal adult use marijuana business in the Empire State.
The idea of including people from African-American and Hispanic neighborhoods where most drug arrests took place remains prominent in the state, which could spawn a legal cannabis trade estimated at $3 billion or more.
The Empire State continues to work to allocate half of its closely watched cannabis business licenses to people most prosecuted by the War on Drugs, said Tremaine Wright, chair of the New York State Cannabis Control Board, the agency that’s overseeing the legal cannabis trade after the state legislature voted to legalize adult use marijuana earlier this year.
“We’ll level the playing field,” Wright told about 400 people on Thursday at the main lecture stage of the CWCBExpo at the Jacob Javits Center in New York City. “If we were to allow huge corporations to dominate, it would be just another way to undermine and repress communities that have been unduly burdened. We’re ready to make cannabis inclusive.”
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Encouraging people involved in the legacy, or pre-legal cannabis business, to move into the legal business also stood out as a recurring theme of the Nov. 4-6 trade show, which drew thousands of entrepreneurs and emerging businesses from vape pen makers to analytical testing equipment to curved rolling papers.
Industry players are trying to avoid the mistakes made in the U.S’s largest legal cannabis market, California, where competition from the legacy market challenges legal cannabis because of the latter’s loftier price tag due to sales taxes, quality requirements and other legal costs.
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Fresh off her appointment by Gov. Kathy Hochul on Sept. 1, Wright used her first formal speech in her current role to reiterate support for social equity licenses for cultivation, retailing and other aspects of the cannabis business.
New York is crafting a full set of cannabis regulations around the licensing regime, with a goal of issuing licenses in about 18 months. The state has not yet determined how many licenses will be awarded.
The state is also exploring a potential investment fund to provide capital to cannabis startups, but details remain unclear. Half of the tax revenue collected for legal cannabis sales will be invested in local communities.
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To avoid social equity licenses being sold to larger companies as in other states, New York will require sales of these license types be made only to other social equity applicants to make sure that the program continues to help impacted neighborhoods, Wright said.
While the state welcomes multistate operator (MSO) cannabis companies, all cannabis companies will be required to share their ESG frameworks to operate, she said.
“When I look into this room I see our future,” said Wright, a former state legislator from Brooklyn’s Bedford-Stuyvesant. “We’re about to create the most equitable cannabis program in the country.”
Social activist and TV and movie actor C.J. Wallace, who is also the son of deceased platinum selling rapper Notorious B.I.G. and Grammy-winning singer Faith Evans, also delivered a keynote address at CWCBExpo focused on his role in the industry.
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Wallace was introduced to cannabis as a young kid at home in his mother’s recording studio when musicians would stop by, but grew more interested in it for CBD treatments for his younger brother’s autism, he said.
Wallace launched a social justice arm for cannabis under the name Think Big, which lobbied for the social inclusion requirements in the New York State law this year. He’s also growing a cannabis-inspired business under the name Frank White, a reference to the lead character played by Christopher Walken in the 1990s movie “King of New York” — a film admired by his father.
Wallace said the business needs to be more inclusive since he knows of few if any other African-American legal cannabis entrepreneurs that are his age in the U.S. right now. Wallace turned 24 this year.
“I want to have the coolest cannabis consumption lounge in New York,” he said. “Before that, we have to empower our people. I want Frank White to be the first company people think of when they think of social justice cannabis.”
Wallace said he’s wary of pricing legal cannabis too high and admitted he still buys from the legacy market when he’s in California because he doesn’t want to pay legal dispensary prices.
“There’s so much that we need to learn and teach the legacy market…it’s a two-way street,” he said. “If you’re smart, you’d want to get involved and it makes the most sense for both sides.”
Cannabis activist Steve DeAngelo, who is also the co-founder of Harborside dispensaries in California, told MarketWatch he’s setting up a new nonprofit organization called the Justus Foundation aimed at helping legacy cannabis market leaders transition to the legal market.
According to industry statistics cited by DeAngelo, 75% of California’s $11.5 billion in cannabis activity is from legacy grower and sellers.
The Justus Foundation will lobby for regulations for legacy operators to enter the legal market, provide support skills training and mentorship and help them launch licensed cannabis businesses, all under the goal of creating a “single unified market” for cannabis in the state, he said.
The Cannabis ETF THCX, -1.25% has fallen 5% in the year to date, while the AdvisorShares Pure US Cannabis ETF MSOS, +3.42% has fallen 27% and the S&P 500 SPX, +0.60% has rallied 25%.
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