1 00:00:03,040 --> 00:00:06,240 Speaker 1: We're at Washington Square Park on a warm February day. 2 00:00:06,880 --> 00:00:10,280 Speaker 1: Pigeons are cooing, dogs are barking, there's a guy playing piano, 3 00:00:10,480 --> 00:00:12,760 Speaker 1: Lots of people just walking around and. 4 00:00:12,680 --> 00:00:15,440 Speaker 2: Talking, and then there's the weed. Everywhere you look. 5 00:00:15,480 --> 00:00:17,480 Speaker 3: There are small fold up tables that have been set 6 00:00:17,520 --> 00:00:19,520 Speaker 3: up which people are using to sell cannabis. 7 00:00:19,640 --> 00:00:23,320 Speaker 1: There are packets of edibles, flour, pre roll, all being 8 00:00:23,360 --> 00:00:25,920 Speaker 1: sold out in the open, and people are smoking out 9 00:00:25,960 --> 00:00:28,160 Speaker 1: in the open too. There's a couple of n y 10 00:00:28,240 --> 00:00:30,200 Speaker 1: U students that just bought and are smoking on a 11 00:00:30,240 --> 00:00:30,960 Speaker 1: bench right now. 12 00:00:33,240 --> 00:00:34,680 Speaker 4: Yeah, we're seniors. 13 00:00:34,760 --> 00:00:37,199 Speaker 5: So we have John signed up in finance. 14 00:00:37,240 --> 00:00:38,559 Speaker 2: Actually after that. 15 00:00:38,720 --> 00:00:42,040 Speaker 1: Really, so when you first started at YU, was pot 16 00:00:42,120 --> 00:00:47,479 Speaker 1: decriminalized yet, but people weren't, like they weren't selling at 17 00:00:47,479 --> 00:00:48,440 Speaker 1: tables like they are. 18 00:00:48,640 --> 00:00:50,600 Speaker 6: No, it wasn't open, but like I mean here like 19 00:00:50,640 --> 00:00:51,880 Speaker 6: you can always kind. 20 00:00:51,760 --> 00:00:58,680 Speaker 2: Of welcome to pot. 21 00:00:58,680 --> 00:01:01,080 Speaker 3: Lots our deep dive to what's going on with the 22 00:01:01,160 --> 00:01:04,959 Speaker 3: legalized marijuana market in New York. We'll spend three episodes 23 00:01:05,000 --> 00:01:07,440 Speaker 3: exploring what the birth of this market looks like, how 24 00:01:07,440 --> 00:01:09,480 Speaker 3: the business is setting up, and finally, how New York 25 00:01:09,560 --> 00:01:12,360 Speaker 3: is trying to address the social inequities. 26 00:01:11,680 --> 00:01:14,960 Speaker 2: Of the past. It's been a little over three years. 27 00:01:14,800 --> 00:01:19,399 Speaker 3: Since recreational cannabis was decriminalized in the state. Lawmakers legalized 28 00:01:19,440 --> 00:01:21,920 Speaker 3: the drug for adults twenty one and older and expunge 29 00:01:21,959 --> 00:01:25,040 Speaker 3: the records of thousands of people with pot related convictions, 30 00:01:25,319 --> 00:01:27,640 Speaker 3: but there's still some tension between the illicit market for 31 00:01:27,720 --> 00:01:30,480 Speaker 3: weed and the new legal one. New York passed the 32 00:01:30,560 --> 00:01:32,760 Speaker 3: first of its kind law in March twenty twenty one 33 00:01:32,840 --> 00:01:36,200 Speaker 3: to allow people with previous convictions for cannabis related offenses 34 00:01:36,240 --> 00:01:38,640 Speaker 3: to get a foothold in a new legal industry. 35 00:01:39,040 --> 00:01:41,200 Speaker 2: One word, there will be license shops selling. 36 00:01:40,959 --> 00:01:43,200 Speaker 1: Weed, and what New York is trying to do is 37 00:01:43,319 --> 00:01:46,440 Speaker 1: different to places like California and many other states that 38 00:01:46,480 --> 00:01:50,280 Speaker 1: have already legalized recreational pot. The idea is not just 39 00:01:50,320 --> 00:01:53,760 Speaker 1: to go some way towards addressing past social inequities, but 40 00:01:53,920 --> 00:01:56,720 Speaker 1: also to make sure that New York's legal weed landscape 41 00:01:56,760 --> 00:02:00,560 Speaker 1: develops more organically, with lots of small scale growers and 42 00:02:00,600 --> 00:02:03,600 Speaker 1: retailers rather than a few big dominant companies. 43 00:02:03,960 --> 00:02:05,840 Speaker 3: It's a big change for a city that was heavily 44 00:02:05,880 --> 00:02:08,280 Speaker 3: impacted by things like the War on Drugs and stop 45 00:02:08,320 --> 00:02:11,160 Speaker 3: and frisk, But there's still a big question mark about how. 46 00:02:11,040 --> 00:02:12,960 Speaker 2: This new market for legal weed will work. 47 00:02:13,000 --> 00:02:20,040 Speaker 3: Exactly here in Washington Square Park, you could see the 48 00:02:20,080 --> 00:02:22,919 Speaker 3: issue pretty clearly. Weed is supposed to be sold by 49 00:02:22,960 --> 00:02:25,560 Speaker 3: license shops. You have to go to the state to 50 00:02:25,600 --> 00:02:28,040 Speaker 3: apply to open one. But so far there's not much 51 00:02:28,080 --> 00:02:31,680 Speaker 3: appetite to crack down on licensed sellers. No one wants 52 00:02:31,720 --> 00:02:34,560 Speaker 3: to be arresting people for selling weed illegally after the 53 00:02:34,600 --> 00:02:35,840 Speaker 3: state just decriminalized it. 54 00:02:36,120 --> 00:02:37,840 Speaker 7: They can't if you ain't got no ID. 55 00:02:39,160 --> 00:02:41,000 Speaker 5: If you ain't got an ID, you ain't gonna rest you. 56 00:02:41,080 --> 00:02:43,640 Speaker 5: Make sure you know who you are, and then after that. 57 00:02:43,520 --> 00:02:44,359 Speaker 2: They leave you alone. 58 00:02:44,400 --> 00:02:46,400 Speaker 7: But if you got ID, they just run your joint 59 00:02:46,919 --> 00:02:48,880 Speaker 7: and whatever you tell you a pack of believe you know, 60 00:02:48,880 --> 00:02:51,639 Speaker 7: I mean this ain't this ain't killing nobody, baby, Come 61 00:02:51,639 --> 00:02:52,680 Speaker 7: on to that liquor stoes. 62 00:02:52,760 --> 00:02:55,440 Speaker 5: Man, Come on, got you white folks, get bred man, 63 00:02:55,480 --> 00:02:56,360 Speaker 5: let us get some money. 64 00:02:56,400 --> 00:02:56,560 Speaker 6: Man. 65 00:02:56,800 --> 00:02:59,320 Speaker 3: That's one of the cannabis sellers in Washington Square Park. 66 00:03:00,000 --> 00:03:02,120 Speaker 3: Not going to use his real name for obvious reasons, 67 00:03:02,120 --> 00:03:04,720 Speaker 3: so we'll just call him Charlie. Charlie has a small 68 00:03:04,720 --> 00:03:07,160 Speaker 3: fold of table and the selling packets of flour and 69 00:03:07,240 --> 00:03:09,480 Speaker 3: pre roll joints, and we asked him if he ever 70 00:03:09,520 --> 00:03:11,880 Speaker 3: gets in trouble with the police for all that he's doing, 71 00:03:11,919 --> 00:03:14,919 Speaker 3: because selling pot without a license is still legal. 72 00:03:15,200 --> 00:03:18,160 Speaker 7: A by me weed to smoke, man ay by need 73 00:03:18,160 --> 00:03:20,359 Speaker 7: a little weed to smoke to calm down. 74 00:03:20,240 --> 00:03:21,919 Speaker 4: You know, and it ain't a bad thing. 75 00:03:22,520 --> 00:03:24,359 Speaker 1: All of this has left New York in a weird 76 00:03:24,440 --> 00:03:27,600 Speaker 1: gray area. People are excited about a business that they 77 00:03:27,600 --> 00:03:30,040 Speaker 1: think might be worth billions, but there's still a lot 78 00:03:30,080 --> 00:03:33,280 Speaker 1: of uncertainty over how exactly this will all work and 79 00:03:33,320 --> 00:03:35,840 Speaker 1: how much this new market will actually be worth. 80 00:03:36,280 --> 00:03:38,360 Speaker 3: In this special odd Lot series, we're going to be 81 00:03:38,400 --> 00:03:41,560 Speaker 3: taking a closer look at the birth of a new industry. 82 00:03:42,000 --> 00:03:43,880 Speaker 3: And if you walk around this city, you're going to 83 00:03:43,920 --> 00:03:47,360 Speaker 3: see and smell and possibly even participate in the results 84 00:03:47,360 --> 00:03:48,400 Speaker 3: of this new legalization. 85 00:03:49,040 --> 00:03:51,800 Speaker 1: Yeah, that's kind of what happened to Charlie. He says 86 00:03:51,840 --> 00:03:54,000 Speaker 1: he came back to New York after being in Atlanta 87 00:03:54,040 --> 00:03:56,040 Speaker 1: for a few years. He saw what was going on 88 00:03:56,080 --> 00:03:59,160 Speaker 1: in places like Washington Square Park and he jumped right in. 89 00:04:00,120 --> 00:04:02,360 Speaker 7: Over the blunt and I'm walking through here, and i 90 00:04:02,360 --> 00:04:04,600 Speaker 7: haven't been here in a while, and I'm seeing. 91 00:04:04,320 --> 00:04:08,480 Speaker 2: Everybody in this park everybody in the smelling. I'm smelling weed. 92 00:04:08,920 --> 00:04:11,960 Speaker 7: I see police walking around, I see motherfuckers at the 93 00:04:12,000 --> 00:04:13,280 Speaker 7: table hundred facts weed. 94 00:04:13,320 --> 00:04:18,960 Speaker 4: I'm like, hold up, I'm like yo. Nigga's like yeah, 95 00:04:18,960 --> 00:04:21,840 Speaker 4: I'm like, this is real weed. Hell yeah, it's real 96 00:04:21,880 --> 00:04:24,240 Speaker 4: weed on tea. I said, Man, don't play at me. Man, 97 00:04:24,279 --> 00:04:26,720 Speaker 4: I'm sitting my back against the wall. He said, oh, 98 00:04:26,880 --> 00:04:28,720 Speaker 4: I said what, I got to get a license. He said, Man, 99 00:04:28,760 --> 00:04:30,640 Speaker 4: go get a table. Man, get you some weed and 100 00:04:30,720 --> 00:04:31,360 Speaker 4: put it out here. 101 00:04:31,440 --> 00:04:31,640 Speaker 8: Man. 102 00:04:32,040 --> 00:04:35,200 Speaker 7: Took my ass to the Bronx, went to the uh Mo, 103 00:04:35,400 --> 00:04:38,960 Speaker 7: Nigga's dog got me some cash. I went to see 104 00:04:38,960 --> 00:04:41,400 Speaker 7: the birst weed. Motherfucker that I ran. I was going 105 00:04:41,480 --> 00:04:43,440 Speaker 7: to the Bronx. I just happened to run into a 106 00:04:43,480 --> 00:04:45,120 Speaker 7: standard dude that had weed on it. 107 00:04:45,440 --> 00:04:46,000 Speaker 5: I swear to. 108 00:04:46,000 --> 00:04:49,000 Speaker 8: God, I'm like, hey, yo, I wanna buy something. Something 109 00:04:49,080 --> 00:04:49,479 Speaker 8: I want like. 110 00:04:49,440 --> 00:04:52,880 Speaker 7: Two hundred and fifty dollars worth of weed. Brought me some baggage, 111 00:04:53,120 --> 00:04:55,200 Speaker 7: came in and put it in the park and I 112 00:04:55,240 --> 00:04:58,159 Speaker 7: ain't looked back shit. Thanks to me, I'm winning and 113 00:04:58,240 --> 00:05:00,919 Speaker 7: I don't know how long this is gonna lie. So 114 00:05:01,000 --> 00:05:02,760 Speaker 7: that's why I have to take advantage. 115 00:05:02,960 --> 00:05:04,400 Speaker 5: So That's why it's all about. 116 00:05:04,279 --> 00:05:06,200 Speaker 7: Just getting what I gotta get right now. It just 117 00:05:06,240 --> 00:05:07,320 Speaker 7: stat to have my whole. 118 00:05:07,160 --> 00:05:10,320 Speaker 1: Far For Charlie, this is a big win. Charlie's black. 119 00:05:10,520 --> 00:05:14,039 Speaker 1: He's part of a community disproportionately affected by policies like 120 00:05:14,080 --> 00:05:16,640 Speaker 1: stopp and frisk. He spent time in jail and had 121 00:05:16,680 --> 00:05:19,880 Speaker 1: a hard time finding a job afterwards. He lived in shelters. 122 00:05:20,160 --> 00:05:22,599 Speaker 1: But now he says he can make between four hundred 123 00:05:22,640 --> 00:05:25,480 Speaker 1: and fifty and seven hundred dollars a day just by 124 00:05:25,480 --> 00:05:28,360 Speaker 1: selling weed on the street. We asked Charlie if he'd 125 00:05:28,400 --> 00:05:30,440 Speaker 1: ever consider setting up a licensed shop. 126 00:05:30,920 --> 00:05:33,720 Speaker 2: He got down. For all that shit man, all that 127 00:05:33,839 --> 00:05:35,719 Speaker 2: red they work, and all. 128 00:05:35,680 --> 00:05:40,760 Speaker 7: That man, I put these up here, got my little stand, yeah, 129 00:05:40,760 --> 00:05:41,200 Speaker 7: I mean. 130 00:05:41,240 --> 00:05:44,520 Speaker 5: By my little you know, joints wholesale. Put it out 131 00:05:44,560 --> 00:05:47,440 Speaker 5: head and get my pre roll. But ye see my joint. 132 00:05:47,520 --> 00:05:51,520 Speaker 5: I put a stand here, I make my money, and 133 00:05:51,640 --> 00:05:52,520 Speaker 5: I'm good. 134 00:05:53,880 --> 00:05:56,320 Speaker 3: It's great news for him, but maybe not so much 135 00:05:56,360 --> 00:05:59,040 Speaker 3: for anyone who's trying to sell cannabis legally, or for 136 00:05:59,200 --> 00:06:01,920 Speaker 3: municipal government who are hoping to raise money by taxing 137 00:06:02,000 --> 00:06:02,839 Speaker 3: legal weed sales. 138 00:06:03,080 --> 00:06:05,400 Speaker 1: By the way, we ask the New York Police Department 139 00:06:05,480 --> 00:06:08,919 Speaker 1: why they aren't arresting the weed sellers in Washington Square Park, 140 00:06:09,279 --> 00:06:11,719 Speaker 1: And they say that the penal law as it's currently 141 00:06:11,720 --> 00:06:16,000 Speaker 1: written does not provide a penalty for an unlicensed establishment 142 00:06:16,080 --> 00:06:19,080 Speaker 1: that displays cannabis for sale, So the police are kind 143 00:06:19,080 --> 00:06:22,720 Speaker 1: of hamstrung. They can bring what's known as nuisance abatement 144 00:06:22,800 --> 00:06:26,520 Speaker 1: proceedings against some sellers, but it's not really an effective tool, 145 00:06:26,720 --> 00:06:29,400 Speaker 1: given that those types of proceedings can take weeks or 146 00:06:29,480 --> 00:06:30,360 Speaker 1: months to play out. 147 00:06:30,480 --> 00:06:32,719 Speaker 3: So for guys like Charlie, who no longer have to 148 00:06:32,720 --> 00:06:35,800 Speaker 3: worry about getting arrested for selling pot, they're just filling 149 00:06:35,800 --> 00:06:39,120 Speaker 3: a hole in a market. Because despite starting its licensing 150 00:06:39,160 --> 00:06:41,880 Speaker 3: program several months ago, New York has approved just one 151 00:06:41,960 --> 00:06:46,040 Speaker 3: hundred and sixty five retail dispensaries, and those are provisional approvals. 152 00:06:46,120 --> 00:06:48,760 Speaker 3: The vast majority of those shops aren't up been running yet. 153 00:06:49,080 --> 00:06:52,159 Speaker 1: One of New York's first legal pot shops, Housing Works 154 00:06:52,200 --> 00:06:54,919 Speaker 1: Cannabis Company, is just a few blocks from here. Actually 155 00:06:55,200 --> 00:06:57,320 Speaker 1: we're going to talk to them in a later episode, 156 00:06:57,360 --> 00:07:00,240 Speaker 1: but it's worth noting that the first three re tail 157 00:07:00,320 --> 00:07:03,520 Speaker 1: dispensaries to start operating in the city, we're all set 158 00:07:03,600 --> 00:07:06,320 Speaker 1: up within about ten blocks of each other. They're all 159 00:07:06,360 --> 00:07:10,760 Speaker 1: clustered around Washington Square Park and NYU in Manhattan, so 160 00:07:10,880 --> 00:07:13,520 Speaker 1: people in the area have a few options. They can 161 00:07:13,560 --> 00:07:16,480 Speaker 1: go to a license store and get regulated weed, or 162 00:07:16,520 --> 00:07:18,720 Speaker 1: they can shop on the street in places like the 163 00:07:18,760 --> 00:07:21,720 Speaker 1: Park and buy from sellers like Charlie. But that's not 164 00:07:21,880 --> 00:07:25,440 Speaker 1: the case everywhere. A case in point, Almost eighty five 165 00:07:25,480 --> 00:07:28,760 Speaker 1: percent of municipalities in Long Island have opted out of 166 00:07:28,800 --> 00:07:30,280 Speaker 1: allowing dispensaries at all. 167 00:07:30,560 --> 00:07:33,360 Speaker 7: You can't even hit eight wee stores at nine boroughs. 168 00:07:33,840 --> 00:07:35,520 Speaker 5: They say they hit eight wee stores. 169 00:07:35,400 --> 00:07:38,320 Speaker 7: Nine bowls, So I'm like nine bubos, Like, all right, 170 00:07:38,360 --> 00:07:42,320 Speaker 7: if you cat Long Island, you know New cell Yakis 171 00:07:42,440 --> 00:07:45,800 Speaker 7: and Mount Vernon and then a five bowls, I guess 172 00:07:45,800 --> 00:07:48,680 Speaker 7: you got nine. But come on, that's. 173 00:07:48,000 --> 00:07:50,280 Speaker 2: It's it's bullshit. You're breaking that. 174 00:07:50,480 --> 00:07:52,760 Speaker 7: I mean, you running up and taking them people we 175 00:07:54,920 --> 00:07:56,800 Speaker 7: I mean they ain't gonna get no time for it. 176 00:07:57,120 --> 00:08:02,120 Speaker 3: Then what is the vine a point at Goodbye Jeffrey Schultz, 177 00:08:02,240 --> 00:08:04,920 Speaker 3: who just might be the polar opposite of our cannabis 178 00:08:04,920 --> 00:08:07,960 Speaker 3: seller in Washington Square Park. He's a corporate lawyer at 179 00:08:08,000 --> 00:08:11,040 Speaker 3: a firm called Feuerstein Kulik and he's been helping advise 180 00:08:11,080 --> 00:08:14,440 Speaker 3: people that want to open weed dispensaries legally, plus people 181 00:08:14,480 --> 00:08:16,840 Speaker 3: who want to invest in the industry or start bigger 182 00:08:16,880 --> 00:08:20,720 Speaker 3: cannabis companies called multi state operators or MSOs. He points 183 00:08:20,720 --> 00:08:23,840 Speaker 3: out that even after the medical marijuana program, which started 184 00:08:23,840 --> 00:08:27,160 Speaker 3: back in twenty fourteen, doesn't have that many licensed operators 185 00:08:27,240 --> 00:08:29,800 Speaker 3: yet either, despite it being almost ten years old. 186 00:08:31,720 --> 00:08:32,600 Speaker 2: How do you get a license. 187 00:08:32,720 --> 00:08:34,560 Speaker 9: You need to be issued a license from the state, 188 00:08:34,559 --> 00:08:37,040 Speaker 9: whether it's a dull use or medical. Those licenses don't 189 00:08:37,040 --> 00:08:40,640 Speaker 9: come free, and you know, there are exceptions to every rule. 190 00:08:40,880 --> 00:08:44,520 Speaker 9: Every state has a different program. Florida, for example, Let's 191 00:08:44,520 --> 00:08:47,520 Speaker 9: take New York's medical market. New York's medical market, there 192 00:08:47,559 --> 00:08:50,280 Speaker 9: are ten licensed operators in the state of New York 193 00:08:50,280 --> 00:08:52,400 Speaker 9: onto the medical program. Ten that's it for a state 194 00:08:52,440 --> 00:08:55,200 Speaker 9: of nineteen million residents. It's very challenging to get your 195 00:08:55,240 --> 00:08:57,360 Speaker 9: hand on one of those licenses. They've all changed hands 196 00:08:57,360 --> 00:08:59,560 Speaker 9: at some point or are in the process of changing 197 00:08:59,600 --> 00:09:02,520 Speaker 9: hands the moment. Versus a state like Oklahoma, where you 198 00:09:02,559 --> 00:09:04,160 Speaker 9: can show up and if you have a heartbeat and 199 00:09:04,200 --> 00:09:06,520 Speaker 9: I think probably five hundred dollars, you can probably get 200 00:09:06,520 --> 00:09:10,120 Speaker 9: yourself a license. But you walk into two very different 201 00:09:10,160 --> 00:09:13,199 Speaker 9: economic situations and opportunities. In New York, if you're one 202 00:09:13,200 --> 00:09:16,880 Speaker 9: of ten, you're an oligopoly. In Oklahoma, the challenge there 203 00:09:16,920 --> 00:09:18,600 Speaker 9: is and whether you can get the license, is whether 204 00:09:18,679 --> 00:09:22,280 Speaker 9: you can be competitive enough to make money. And that's 205 00:09:22,360 --> 00:09:25,280 Speaker 9: really where it begins. I think what we're seeing as 206 00:09:25,280 --> 00:09:30,200 Speaker 9: the industry matures challenges, particularly for brands and single state 207 00:09:30,240 --> 00:09:33,720 Speaker 9: operators or generally not the large MSOs. 208 00:09:34,280 --> 00:09:36,760 Speaker 1: That's one reason why it's hard to find brands that 209 00:09:36,800 --> 00:09:40,200 Speaker 1: are popular in places like California here in New York 210 00:09:40,600 --> 00:09:41,600 Speaker 1: legally at least. 211 00:09:41,920 --> 00:09:45,240 Speaker 3: Also, New York specifically has written conditions that dictate the 212 00:09:45,320 --> 00:09:48,199 Speaker 3: kind of packaging and branding allowed, and as the rules 213 00:09:48,320 --> 00:09:51,319 Speaker 3: very by state, it's hard to standardize the move into 214 00:09:51,400 --> 00:09:52,040 Speaker 3: other states. 215 00:09:52,200 --> 00:09:54,600 Speaker 9: It's very difficult to build your brand, to build brand 216 00:09:54,640 --> 00:09:56,760 Speaker 9: equity if you're a California brand. When I'm seeing it 217 00:09:56,760 --> 00:10:00,079 Speaker 9: now every day, these California brands want to enter New York. 218 00:10:00,480 --> 00:10:03,120 Speaker 9: They don't have a license yet, they may never get one. 219 00:10:03,320 --> 00:10:07,640 Speaker 9: It's expensive the license itself, the capex required to build 220 00:10:07,679 --> 00:10:10,920 Speaker 9: the manufacturing or cultivation or both the facilities in the 221 00:10:10,960 --> 00:10:13,839 Speaker 9: state of New York or any state. It's capex heavy 222 00:10:14,080 --> 00:10:15,840 Speaker 9: and it could be several years before you see a 223 00:10:15,840 --> 00:10:16,880 Speaker 9: return on that investment. 224 00:10:17,240 --> 00:10:19,800 Speaker 1: But for Jeff, there's no gray market in weed in 225 00:10:19,800 --> 00:10:23,480 Speaker 1: New York. What sellers like Charlie are doing is very illegal. 226 00:10:25,080 --> 00:10:25,920 Speaker 2: Let me be very clear. 227 00:10:26,000 --> 00:10:29,240 Speaker 9: None of those stores that are outside of the medical 228 00:10:29,280 --> 00:10:32,480 Speaker 9: market that you're seeing the bodegas and without naming names, well, 229 00:10:32,480 --> 00:10:33,040 Speaker 9: they're everywhere. 230 00:10:33,080 --> 00:10:37,760 Speaker 2: Quite honestly, there's no loophole. There's no loophole. It is illegal. 231 00:10:37,920 --> 00:10:39,880 Speaker 2: It is illegal at the state level. It is illegal 232 00:10:39,880 --> 00:10:40,640 Speaker 2: at the federal level. 233 00:10:40,679 --> 00:10:43,559 Speaker 9: They're committing federal crimes, they're committing state crimes. 234 00:10:44,160 --> 00:10:45,240 Speaker 2: The loophole is that there is. 235 00:10:45,240 --> 00:10:49,079 Speaker 9: No enforcement today and it is quite honestly scaring away 236 00:10:49,800 --> 00:10:52,280 Speaker 9: a lot of operators, particularly on the retail side. They 237 00:10:52,320 --> 00:10:55,240 Speaker 9: know they don't want to compete with that. Why compete 238 00:10:55,240 --> 00:10:57,480 Speaker 9: with that? And this is a story we've read before. 239 00:10:57,520 --> 00:11:01,760 Speaker 9: This happened in California when we transitioned from Prop to 240 00:11:01,920 --> 00:11:02,520 Speaker 9: fifteen to Prop. 241 00:11:02,559 --> 00:11:03,640 Speaker 2: Sixty four, when we went. 242 00:11:03,480 --> 00:11:06,079 Speaker 9: From medical to adult use. It was a very very 243 00:11:06,080 --> 00:11:09,040 Speaker 9: bumpy ride. And to this day there are thousands of 244 00:11:09,160 --> 00:11:11,520 Speaker 9: unlicensed retaillers in California. 245 00:11:11,600 --> 00:11:12,840 Speaker 2: This is the result. 246 00:11:12,679 --> 00:11:18,320 Speaker 9: Of decriminalizing something without simultaneously regulating it. This delay in 247 00:11:18,400 --> 00:11:21,080 Speaker 9: the program and the rollout of the program is exacerbating 248 00:11:21,200 --> 00:11:23,079 Speaker 9: this problem. 249 00:11:22,880 --> 00:11:25,400 Speaker 1: With a lack of enforcement. It's clear that there's not 250 00:11:25,480 --> 00:11:28,920 Speaker 1: much appetite in today's political environment to lock people up 251 00:11:29,000 --> 00:11:30,319 Speaker 1: for selling weed illegally. 252 00:11:30,720 --> 00:11:32,520 Speaker 9: Not only to not do it, but the optics of 253 00:11:32,559 --> 00:11:34,960 Speaker 9: it are horrific. It appears that no one's really going 254 00:11:34,960 --> 00:11:38,679 Speaker 9: to suffer criminal consequences of operating these stories. It's possible 255 00:11:38,720 --> 00:11:41,439 Speaker 9: that they'll be disqualified eventually from applying for a license, 256 00:11:41,800 --> 00:11:44,360 Speaker 9: but again, I'm not sure that's going to deturn anybody. 257 00:11:44,800 --> 00:11:48,480 Speaker 9: The state made what I would say relatively weak effort 258 00:11:48,559 --> 00:11:51,319 Speaker 9: at attempting to scare people away from doing this. They 259 00:11:51,360 --> 00:11:55,040 Speaker 9: sent out a seasoned desist letter, but that letter had 260 00:11:55,080 --> 00:11:58,080 Speaker 9: no teeth and it was sent to a very small 261 00:11:58,120 --> 00:12:01,760 Speaker 9: fraction of the retailer that are out there that are operating. 262 00:12:01,800 --> 00:12:05,760 Speaker 9: But look, when there are no consequences, really, what's the point. 263 00:12:06,000 --> 00:12:08,160 Speaker 3: As of the date we're recording this episode, the state 264 00:12:08,200 --> 00:12:11,800 Speaker 3: reports having sent out two hundred seasoned desist letters statewide 265 00:12:11,840 --> 00:12:14,480 Speaker 3: and in New York City, the total estimated street value 266 00:12:14,480 --> 00:12:18,199 Speaker 3: of illicit products seesed is ten million dollars. That includes 267 00:12:18,240 --> 00:12:21,679 Speaker 3: over seventy five unlicensed shops and about twenty mobile trucks. 268 00:12:21,880 --> 00:12:23,679 Speaker 2: Why would they stop? Why would anyone do that? 269 00:12:23,840 --> 00:12:27,400 Speaker 9: And I think it's very short sighted to remain or 270 00:12:27,520 --> 00:12:30,760 Speaker 9: move into the non licensed market right now. I suppose 271 00:12:30,760 --> 00:12:33,480 Speaker 9: there's a cash grab opportunity, there's no question about that. 272 00:12:33,480 --> 00:12:37,000 Speaker 9: We all see it. But the cannabis industry will evolve 273 00:12:37,080 --> 00:12:39,760 Speaker 9: much like alcohol did when prohibition ended in the thirties, 274 00:12:40,240 --> 00:12:43,559 Speaker 9: and it took time. It took time for liquor stores 275 00:12:43,600 --> 00:12:45,800 Speaker 9: to pop open. It's going to take time, and it's 276 00:12:45,840 --> 00:12:47,920 Speaker 9: going to take time to shut down the illegal stores. 277 00:12:48,360 --> 00:12:52,280 Speaker 9: I don't foresee that happening until there's a sizeable regulated 278 00:12:52,320 --> 00:12:55,760 Speaker 9: industry that finally has had an off and says it's enough. 279 00:12:55,800 --> 00:12:59,560 Speaker 9: We can't compete, particularly right now when the state is 280 00:12:59,559 --> 00:13:03,160 Speaker 9: about to finance the first one hundred one hundred fifty 281 00:13:03,200 --> 00:13:05,720 Speaker 9: stores their primary competition. 282 00:13:05,840 --> 00:13:07,400 Speaker 2: So the state is going to fund. 283 00:13:07,640 --> 00:13:11,120 Speaker 9: People who they have determined deserve a shot at having 284 00:13:11,160 --> 00:13:13,880 Speaker 9: ownership in this industry, and their biggest competition is the 285 00:13:13,920 --> 00:13:17,280 Speaker 9: illicit stores. So QUERI whether the state is really going 286 00:13:17,360 --> 00:13:19,360 Speaker 9: to let this continue for any period of time. 287 00:13:19,880 --> 00:13:20,920 Speaker 2: I think that's the reason. 288 00:13:21,000 --> 00:13:23,280 Speaker 9: If it's going to end at some point. It's because 289 00:13:23,320 --> 00:13:25,640 Speaker 9: the state is raising money and they're using tax revenue 290 00:13:25,920 --> 00:13:29,720 Speaker 9: to support legal, regulated stores, and they can't have someone 291 00:13:29,720 --> 00:13:43,640 Speaker 9: next door to them selling untaxed legal cannabis from California. 292 00:13:44,080 --> 00:13:47,120 Speaker 3: And when prohibition ended in nineteen thirty three, there wasn't 293 00:13:47,160 --> 00:13:50,120 Speaker 3: any real effort to unwind the criminal charges of the 294 00:13:50,120 --> 00:13:53,120 Speaker 3: past decade. If you've gotten into trouble for bootlegging booze, 295 00:13:53,160 --> 00:13:53,800 Speaker 3: and tough luck. 296 00:13:54,120 --> 00:13:56,880 Speaker 1: This analogy to the end of Prohibition, an era in 297 00:13:56,920 --> 00:13:59,880 Speaker 1: which the United States banned the import, movement and sale 298 00:14:00,040 --> 00:14:02,720 Speaker 1: of alcohol, is one that comes up time and time 299 00:14:02,760 --> 00:14:06,280 Speaker 1: again in our conversations about the legal pot industry, and 300 00:14:06,320 --> 00:14:08,880 Speaker 1: you can kind of see why selling booze in the 301 00:14:08,960 --> 00:14:11,439 Speaker 1: US was illegal for more than a decade and then, 302 00:14:11,920 --> 00:14:14,600 Speaker 1: just like pot, it was suddenly okay again. But there 303 00:14:14,640 --> 00:14:18,560 Speaker 1: are some big differences. First start, prohibition was ended at 304 00:14:18,559 --> 00:14:22,200 Speaker 1: a federal level, although lots of counties and municipalities still 305 00:14:22,200 --> 00:14:23,360 Speaker 1: decided to stay dry. 306 00:14:23,880 --> 00:14:27,240 Speaker 3: What's unusual about New York's legalization of cannabis is the 307 00:14:27,320 --> 00:14:30,240 Speaker 3: social justice component that comes with it. New York is 308 00:14:30,280 --> 00:14:33,640 Speaker 3: reserving licenses to open retail dispensaries for people who've been 309 00:14:33,680 --> 00:14:37,160 Speaker 3: convicted of cannabis related offenses or have been impacted by 310 00:14:37,160 --> 00:14:41,200 Speaker 3: aggressive cannabis related policies like stopping frisk over the years, 311 00:14:41,280 --> 00:14:41,600 Speaker 3: and for. 312 00:14:41,600 --> 00:14:44,520 Speaker 1: People like Jeff Schultz, the existence of the gray market 313 00:14:44,600 --> 00:14:48,400 Speaker 1: in weed, all those sellers in Washington Square Park is 314 00:14:48,440 --> 00:14:52,000 Speaker 1: a pretty big roadblock to creating a thriving legal industry 315 00:14:52,080 --> 00:14:54,560 Speaker 1: that would fulfill those social equity goals. 316 00:14:56,000 --> 00:14:57,680 Speaker 9: I think we need to heal a little bit. It's 317 00:14:57,720 --> 00:15:00,000 Speaker 9: a little bit different than the alcohol industry in the thirties. 318 00:15:00,360 --> 00:15:05,160 Speaker 9: We didn't have this restorative justice layer to an industry 319 00:15:05,240 --> 00:15:07,800 Speaker 9: that was being brought into the light. But we have 320 00:15:07,840 --> 00:15:10,320 Speaker 9: to deal with that as a nation. We have to 321 00:15:10,360 --> 00:15:12,960 Speaker 9: deal with that as operators in this industry, as competitors 322 00:15:13,000 --> 00:15:16,200 Speaker 9: with one another. Until we heal from the War on 323 00:15:16,280 --> 00:15:18,520 Speaker 9: drugs and some of the issues that are very much 324 00:15:18,760 --> 00:15:21,080 Speaker 9: front and center in New York City, I'm not sure 325 00:15:21,080 --> 00:15:23,120 Speaker 9: we're going to see a whole lot of action there, 326 00:15:23,160 --> 00:15:25,240 Speaker 9: but I think once the state realizes that they are 327 00:15:25,760 --> 00:15:28,120 Speaker 9: enabling their largest competitors, it may end. 328 00:15:29,720 --> 00:15:32,240 Speaker 1: There are some other tensions with the gray market as well. 329 00:15:32,640 --> 00:15:34,760 Speaker 1: The weed that you're getting from a licensed shop in 330 00:15:34,760 --> 00:15:38,320 Speaker 1: New York is regulated, but that doesn't necessarily mean that 331 00:15:38,360 --> 00:15:39,400 Speaker 1: it's better quality. 332 00:15:39,680 --> 00:15:41,600 Speaker 3: So even if you can get the capital you need 333 00:15:41,640 --> 00:15:44,240 Speaker 3: to start a retail dispensary, and even if you manage 334 00:15:44,240 --> 00:15:46,080 Speaker 3: to get a license from the State of New York, 335 00:15:46,400 --> 00:15:48,680 Speaker 3: you're still going to be restricted in what you can sell. 336 00:15:49,080 --> 00:15:51,360 Speaker 6: I mean the same way a ton of produce is 337 00:15:51,440 --> 00:15:55,000 Speaker 6: grown in California and not necessarily in New York. It's similar. 338 00:15:55,120 --> 00:15:58,520 Speaker 6: The climate there is in certain parts is more conducive. 339 00:15:58,840 --> 00:16:02,800 Speaker 1: That's Jason Wild, executive chairman at terris End, a multi 340 00:16:02,800 --> 00:16:06,800 Speaker 1: state operator or MSO that cultivates and processes weed in 341 00:16:06,840 --> 00:16:11,480 Speaker 1: places like Pennsylvania, New Jersey, Michigan, and California. He tells 342 00:16:11,560 --> 00:16:14,200 Speaker 1: us that growing cannabis might not be as easy in 343 00:16:14,240 --> 00:16:17,160 Speaker 1: New York as it is say on the West Coast. 344 00:16:17,360 --> 00:16:20,400 Speaker 1: What's more, the illegal sellers, the guys on the street, 345 00:16:20,840 --> 00:16:24,000 Speaker 1: they have a long history of securing product and a 346 00:16:24,040 --> 00:16:25,720 Speaker 1: lot of experience with growing it. 347 00:16:26,120 --> 00:16:30,240 Speaker 6: Like in California, you can get multiple cycles of outdoor product. 348 00:16:30,480 --> 00:16:32,920 Speaker 6: In New York, depending on how far upstate you are, 349 00:16:33,160 --> 00:16:34,880 Speaker 6: you're only going to be able to get one cycle. 350 00:16:35,160 --> 00:16:37,760 Speaker 6: And just on top of that, there's just back to 351 00:16:38,120 --> 00:16:41,320 Speaker 6: talking about experience. There's just so much less experience in 352 00:16:41,320 --> 00:16:44,680 Speaker 6: New York. You can't dial in the quality of your 353 00:16:44,720 --> 00:16:47,520 Speaker 6: cannabis right away in those first two harvests. It takes 354 00:16:47,600 --> 00:16:50,320 Speaker 6: It actually takes years and years. New York has been 355 00:16:50,680 --> 00:16:54,520 Speaker 6: a huge market, a cultural center in terms of delivery, 356 00:16:54,560 --> 00:16:57,160 Speaker 6: guys coming and bringing you stuff in your apartment or whatever. 357 00:16:57,200 --> 00:16:59,200 Speaker 6: Over the years, you know more around New York City, 358 00:16:59,560 --> 00:17:02,160 Speaker 6: but there's been practically no industry in New York of 359 00:17:02,280 --> 00:17:06,479 Speaker 6: cultivators and manufacturers. On the other hand, California, that's been 360 00:17:06,520 --> 00:17:09,400 Speaker 6: a big part of their economy, even when it was illegal, 361 00:17:09,520 --> 00:17:12,120 Speaker 6: and when they passed laws legalizing medical and then wreck 362 00:17:12,160 --> 00:17:14,719 Speaker 6: in California, they were just trying to bring all of 363 00:17:14,760 --> 00:17:18,080 Speaker 6: the illegal growers into the legal framework. But they came 364 00:17:18,119 --> 00:17:20,680 Speaker 6: in knowing how to do this stuff. In New York, 365 00:17:20,760 --> 00:17:23,439 Speaker 6: there's just like no experience on top of all the 366 00:17:23,440 --> 00:17:25,360 Speaker 6: different climate issues and things like that. 367 00:17:25,600 --> 00:17:28,120 Speaker 3: And you're also going to be competing with street sellers 368 00:17:28,160 --> 00:17:31,679 Speaker 3: who've access to everything flower from organic weed farms in 369 00:17:31,720 --> 00:17:35,520 Speaker 3: Florida or the most recognizable brands from California with very 370 00:17:35,520 --> 00:17:36,240 Speaker 3: little overhead. 371 00:17:36,840 --> 00:17:39,000 Speaker 8: That's what the list of market's really good at. I 372 00:17:39,000 --> 00:17:43,040 Speaker 8: guess that branded product and I hear there's counterfeit brands 373 00:17:43,040 --> 00:17:46,639 Speaker 8: in New York City coming in from the West coast. 374 00:17:47,320 --> 00:17:50,159 Speaker 8: Water will find its way through those cracks and the like. 375 00:17:50,240 --> 00:17:53,840 Speaker 8: So if you're buying illicitly in New York and it's 376 00:17:53,840 --> 00:17:57,600 Speaker 8: a branded product, it is definitely not coming from those 377 00:17:57,920 --> 00:18:02,200 Speaker 8: ten medical ros right now registered operators. So how is 378 00:18:02,200 --> 00:18:05,120 Speaker 8: it getting across same as it always has Quite frankly, 379 00:18:05,359 --> 00:18:08,800 Speaker 8: it's being grown maybe out west, being packaged, and it 380 00:18:08,840 --> 00:18:12,520 Speaker 8: could be being packaged in a legal state and then 381 00:18:12,600 --> 00:18:16,640 Speaker 8: being sold off their books out of state. That has happened. 382 00:18:16,960 --> 00:18:19,360 Speaker 8: But at the end of the day, that product you're 383 00:18:19,359 --> 00:18:22,320 Speaker 8: buying might be one hundred percent elicit from where it's grown. 384 00:18:22,359 --> 00:18:24,119 Speaker 8: It might not have had a license to be grown, 385 00:18:24,200 --> 00:18:27,080 Speaker 8: might not having a license to be processed. It certainly 386 00:18:27,080 --> 00:18:29,200 Speaker 8: didn't have a license to get shipped from California to 387 00:18:29,280 --> 00:18:31,200 Speaker 8: New York City. And at the end of the day, 388 00:18:31,440 --> 00:18:35,280 Speaker 8: finds you like when you used to go and find 389 00:18:35,280 --> 00:18:37,240 Speaker 8: your plug and he'd give you a little sandwich bag 390 00:18:37,320 --> 00:18:41,200 Speaker 8: of an eighth Now they just got really fancy sandwich bags. 391 00:18:41,480 --> 00:18:44,080 Speaker 1: That's Craig Wiggins. He used to lead a trio of 392 00:18:44,119 --> 00:18:47,359 Speaker 1: analysts known as the Cannalysts Joe and I actually spoke 393 00:18:47,359 --> 00:18:49,879 Speaker 1: to him on the podcast back in twenty nineteen, but 394 00:18:50,080 --> 00:18:53,679 Speaker 1: now four years later, he's wound the cannalysts down, but 395 00:18:53,760 --> 00:18:56,000 Speaker 1: he still keeps a finger on the pulse of the 396 00:18:56,040 --> 00:18:59,720 Speaker 1: cannabis industry. He describes the New York market as basically 397 00:18:59,760 --> 00:19:00,719 Speaker 1: the Wild West. 398 00:19:01,119 --> 00:19:03,680 Speaker 8: They're allowing pretty much everything to go on. There's people 399 00:19:03,680 --> 00:19:07,080 Speaker 8: who've already built their infrastructure who are very effective at 400 00:19:07,119 --> 00:19:11,960 Speaker 8: getting good quality cannabis from California East kind of thing. 401 00:19:12,400 --> 00:19:15,000 Speaker 8: So I think that's always going to be there, But 402 00:19:15,320 --> 00:19:17,840 Speaker 8: I think New York is a real interesting example. Some 403 00:19:18,080 --> 00:19:21,080 Speaker 8: New York legalized or it was voted to legalize and 404 00:19:21,119 --> 00:19:23,160 Speaker 8: it was signed off by the governor end of March 405 00:19:23,200 --> 00:19:26,440 Speaker 8: twenty twenty one. Presently in New York you have ten 406 00:19:26,560 --> 00:19:29,320 Speaker 8: what are called registered operators or ro Those are the 407 00:19:29,359 --> 00:19:33,080 Speaker 8: medical guys that got their licenses early on. Each one 408 00:19:33,119 --> 00:19:37,680 Speaker 8: of those companies was allowed to open up four medical dispensaries. Now, 409 00:19:37,720 --> 00:19:41,000 Speaker 8: with adult use coming in, they're going to eventually be 410 00:19:41,080 --> 00:19:45,960 Speaker 8: allowed to open up four more medical dispensaries in underserved communities. 411 00:19:46,119 --> 00:19:48,480 Speaker 8: And when they get those eight open, so the four 412 00:19:48,520 --> 00:19:52,159 Speaker 8: existing plus the four more and the underserved communities have 413 00:19:52,240 --> 00:19:55,560 Speaker 8: not been defined yet. Then they're allowed to take out 414 00:19:55,560 --> 00:19:58,760 Speaker 8: of those eight stores, three are allowed to go dual. 415 00:19:58,960 --> 00:20:02,480 Speaker 8: So adult use of those ten companies that can have 416 00:20:02,720 --> 00:20:05,159 Speaker 8: forty stores amongst them, which is an awful lot for 417 00:20:05,280 --> 00:20:09,760 Speaker 8: New York. Can they deliver their product outside their store 418 00:20:09,800 --> 00:20:12,760 Speaker 8: network or are they going to be required to sell 419 00:20:12,800 --> 00:20:16,000 Speaker 8: through an independent third party. That's to be determined. So 420 00:20:16,440 --> 00:20:18,560 Speaker 8: what has happened so far in New York and retail 421 00:20:18,640 --> 00:20:21,320 Speaker 8: is going. First off, those one hundred and fifty stores 422 00:20:21,359 --> 00:20:24,359 Speaker 8: will be social equity stores. So you've had to have 423 00:20:24,960 --> 00:20:27,960 Speaker 8: an arrest in your family in the past, you've had 424 00:20:28,000 --> 00:20:31,720 Speaker 8: to demonstrate that you've been running a profitable enterprise business 425 00:20:31,800 --> 00:20:34,040 Speaker 8: for at least a year. So those one hundred and 426 00:20:34,080 --> 00:20:37,800 Speaker 8: fifty applications for retailer out they've licensed two hundred and 427 00:20:37,840 --> 00:20:41,159 Speaker 8: fifty hemp and outdoor licenses. So at the end of 428 00:20:41,200 --> 00:20:44,919 Speaker 8: this year's p October, which usually comes in October, that's Croptober, 429 00:20:45,680 --> 00:20:50,680 Speaker 8: we will see a supply of adult use cannabis finally 430 00:20:50,800 --> 00:20:55,199 Speaker 8: entering the processing system in New York. That's where we 431 00:20:55,280 --> 00:20:59,160 Speaker 8: are with New York. So because of how the state's 432 00:20:59,200 --> 00:21:03,520 Speaker 8: rolling out adult use, the illicit markets operating pretty welch 433 00:21:03,600 --> 00:21:05,639 Speaker 8: with impunity right now. 434 00:21:10,280 --> 00:21:12,440 Speaker 3: That leaves the future of the New York weed market 435 00:21:12,440 --> 00:21:15,200 Speaker 3: in doubt. Yes, historically New York has been a big 436 00:21:15,240 --> 00:21:18,639 Speaker 3: weed consuming city, but that doesn't necessarily mean we'll suddenly 437 00:21:18,720 --> 00:21:20,879 Speaker 3: become a profitable legal mass market. 438 00:21:21,000 --> 00:21:23,359 Speaker 1: On the next episode of Potlots, we are going to 439 00:21:23,440 --> 00:21:27,080 Speaker 1: explore the business of big cannabis. Who are the investors 440 00:21:27,119 --> 00:21:29,920 Speaker 1: getting in on the space and the cannabis companies setting up, 441 00:21:30,320 --> 00:21:33,680 Speaker 1: What are the challenges they face, and can this industry 442 00:21:33,960 --> 00:21:34,880 Speaker 1: live up to the hype? 443 00:21:35,200 --> 00:21:38,040 Speaker 3: The highs and lows for big cannabis neck Join us 444 00:21:38,040 --> 00:21:40,879 Speaker 3: then for more Potlots. I'm Joe Wisenthal. You can follow 445 00:21:40,880 --> 00:21:42,200 Speaker 3: me on Twitter at The Stalwart. 446 00:21:42,280 --> 00:21:44,679 Speaker 1: And I'm Tracy Alloway. You can follow me on Twitter 447 00:21:44,800 --> 00:21:48,400 Speaker 1: at Tracy Alloway. Our producer is Carmen Rodriguez. Follow her 448 00:21:48,520 --> 00:21:51,679 Speaker 1: on Twitter at Carmen Arman. Dash El Bennett is our 449 00:21:51,680 --> 00:21:55,520 Speaker 1: associate producer. He is at Dashbot. Our sound engineer is 450 00:21:55,560 --> 00:21:59,520 Speaker 1: Blake Maples. Stage Bauman is our head of Podcasts. Special 451 00:21:59,520 --> 00:22:01,080 Speaker 1: Thanks Moses Adnam. 452 00:22:01,440 --> 00:22:04,119 Speaker 3: For more Bloomberg coverage of the legal marijuana industry, you 453 00:22:04,160 --> 00:22:07,720 Speaker 3: should check out The Dose. Tiffany carries weekly newsletter about 454 00:22:07,720 --> 00:22:09,919 Speaker 3: the business of cannabis and psychedelics. 455 00:22:10,240 --> 00:22:13,000 Speaker 2: Subscribe at Bloomberg dot com. Thanks for listening.