Speaker 1: Hey, young America, we need to talk about something called grass.
Speaker 2: Not that grass.
Speaker 1: I'm talking about marijuana.
Speaker 2: It's stimulating, mind expanding, safer to use that alcohol. It's
Speaker 2: the ind thing, the hula hoop of the jet generation,
Speaker 2: and as much a part of growing up as smoking
Speaker 2: cornsilk behind the back fence. Such are the myths concerning marijuana,
Speaker 2: myths that low thousands of young people into experimenting with
Speaker 2: a noxious weed. The facts are otherwise. Marijuana is an intoxicating,
Speaker 2: mind muddling drug. Every case history tells the same story,
Speaker 2: a story that's a tragic pattern of men and women's
Speaker 2: lives cause marijuana. This harmless looking cigarette is cloaked in
Speaker 2: many innocent disguises, but like the man sho inhale the
Speaker 2: smoke and it becomes an invitation to your own murder.
Speaker 2: This killer and the man who sells it has no
Speaker 2: respect for anybody.
Speaker 1: That's how the US has largely campaigned against marijuana, from
Speaker 1: the regular television ads to PSAs straight from the American
Speaker 1: Medical Association, and even movies. That last clip you heard
Speaker 1: is from the nineteen forty nine movie She Should Have
Speaker 1: Said No. Also known as wild weed. It's one of
Speaker 1: those movies that's filled with messages about how bad drugs
Speaker 1: and especially marijuana really are, watching morality tales like she
Speaker 1: should have said. No, they're not very subtle in their messaging.
Speaker 3: No they're not a lot of the messaging around weed
Speaker 3: has been about how bad it is for your health,
Speaker 3: your youth, your overall life direction, and that has perpetuated
Speaker 3: the notion that those who deal in the industry are
Speaker 3: basically criminals and terrible people. And it's kind of crazy
Speaker 3: to contrast those movies with what's happening now. So what's
Speaker 3: it like running a weed truck.
Speaker 4: Well, you know, it's pretty fun. You got some free
Speaker 4: samples from it, that's for sure. We've had a couple
Speaker 4: of customers come up and they're like, can I smoke this?
Speaker 4: Like is this okay to do? And it's like they're
Speaker 4: not used to it, and they think it's still, you know,
Speaker 4: this forbidden thing. But then we have customers who are like, oh, yeah,
Speaker 4: this is great to see that it's finally stortying to
Speaker 4: open up.
Speaker 3: That's a bud tender. Get it at a local weed
Speaker 3: truck in New York and those have become as ubiquitous
Speaker 3: on Manhattan streets as hot dog carts or ice cream vendors,
Speaker 3: and she says attitudes towards pot have changed a lot.
Speaker 3: You still have people who can't believe that this is legal,
Speaker 3: but she says she sees all types of people coming
Speaker 3: to buy weed nowadays, even parents with their adult children.
Speaker 1: Welcome back to pot lots. We've talked about the illicit
Speaker 1: market in New York and the business of legal weed,
Speaker 1: and in this episode, we're going to be speaking about
Speaker 1: one of the things that makes New York unique because
Speaker 1: not all is the state trying to use legalized lead
Speaker 1: to raise tax revenue and create a new industry with
Speaker 1: lots of jobs. It's also trying to use the program
Speaker 1: to rectify some of the wrongs of the past.
Speaker 5: Two historical policies were particularly damaging to black and brown
Speaker 5: communities across the state. The first is the Rockefeller drug laws,
Speaker 5: and Governor Rockefeller at the time, you know, there was
Speaker 5: a big panic across the country about drugs and drug use,
Speaker 5: and you know, those drug laws really created these insanely
Speaker 5: harmful mandatory minimum sentences for minor possession in the sale
Speaker 5: of elicit drugs. And the second thing was stop and
Speaker 5: frisk that Stamian Fagan.
Speaker 3: He probably has one of the most interesting government jobs
Speaker 3: in the world right now. He's Chief Equity Officer at
Speaker 3: New York's Office of Cannabis Management, so he thinks about
Speaker 3: this idea of social justice a lot, as well as
Speaker 3: the legacy of previous drug policies. Former New York Governor
Speaker 3: Nelson Rockefeller toughened up punishment for drug offenses in the
Speaker 3: nineteen seventies in response to a crime wave in the city,
Speaker 3: and stop in frisk, which allowed New York police officers
Speaker 3: to temporarily detain people and check them for contraband, was
Speaker 3: practiced for many years, including under Mike Bloomberg's tenure as mayor.
Speaker 3: Bloomberg is of course the founder and majority owner of
Speaker 3: Bloomberg LP.
Speaker 5: And so the combination of the Rockfeller drug laws and
Speaker 5: stop in frisk led to people spending years in prison
Speaker 5: for minor cannabis possession and predominantly, you know, with the
Speaker 5: implementation of stop and frisk, you know, we have all
Speaker 5: the numbers now, one point two million individual arrests over
Speaker 5: forty years. Almost close to sixty percent of those arrested
Speaker 5: were black in a state that is fifteen percent black.
Speaker 1: This is the kind of injustice that New York's legalized
Speaker 1: weed program is trying to address. So when it comes
Speaker 1: to handing out weed licenses, priority is given to people
Speaker 1: with prior pot related convictions or their relatives, as well
Speaker 1: as nonprofits. Some of the taxes from legal weed sales
Speaker 1: are also being used for reinvestment fund that's supposed to
Speaker 1: be used to support communities that have been most affected
Speaker 1: by the War on drugs.
Speaker 5: The biggest social equity goal laid out in the cannabis
Speaker 5: laws fifty percent licenses going to social equity applicants. The
Speaker 5: second biggest component of it is this community Reinvestment fund,
Speaker 5: and so this is probably for me, the most impactful
Speaker 5: part of the cannabis law. Forty percent of all the
Speaker 5: tax revenue generated in perpetuity in the state of New
Speaker 5: York from cannabis sales will get reinvested into communities disproportionally
Speaker 5: impacted by the enforcement disapportion enforcement of cannabis. And so
Speaker 5: that looks like three hundred million dollars a year for
Speaker 5: you know, decades, every year being given out in grants
Speaker 5: for re entry services, nonprofits, park projects, schools in those
Speaker 5: communities in places like East Brooklyn, South Bronx East Buffalo,
Speaker 5: and that is where the impact is really going to
Speaker 5: be felt long term, that's going to create generational opportunity
Speaker 5: for a lot of these communities. And so those are
Speaker 5: the two pillars, the fifty percent licenses in the reinvestment.
Speaker 5: And so these were tools that were really weaponized against
Speaker 5: already marginalized communities for decades. And you know when things
Speaker 5: like that happen in America and we look back and
Speaker 5: we're like, wow, I can't believe we did that. Oh well,
Speaker 5: let's move forward, like we couldn't do that this time.
Speaker 5: Those people who are arrested, those people who you know,
Speaker 5: had to see their kids through a glass because they
Speaker 5: were smoking a plant outside of Nightja housing, you know,
Speaker 5: they're still here. They're still their kids are here, their
Speaker 5: families are here. They're mad. And so it's often very
Speaker 5: easy and convenient for Americans to sort of just like, oh,
Speaker 5: it's really bad that we did that, but can't do
Speaker 5: anything better now. But we absolutely can. This cannabis law
Speaker 5: isn't actually going to fix a lot of the structural
Speaker 5: issues and all the consequences of those policies, but it
Speaker 5: can definitely make life better for a lot of these communities,
Speaker 5: and it definitely can create a more exciting industry with
Speaker 5: a lot more participation from everyday New Yorkers.
Speaker 3: For New York, it means walking a fine line between
Speaker 3: nurturing this new legal industry and making sure it can succeed,
Speaker 3: and also avoiding going back to the injustices of the
Speaker 3: past by cracking down too harshly on the illicit sellers.
Speaker 1: Now Damien betting that some of this will happen naturally.
Speaker 1: It is the legal weed business matures. Consumers will migrate
Speaker 1: towards the regulated shops and product.
Speaker 3: If you build the legal weed bodega, they will come.
Speaker 5: We're never going back to a place where people go
Speaker 5: behind bars for selling a plant. We're just we're not
Speaker 5: doing that as a state. It's already re traumatizing people
Speaker 5: the minimal of enforcement tactics we're doing right now. But
Speaker 5: what we are going to do is we're going to
Speaker 5: look at the scale of the challenge of the illicit
Speaker 5: market very differently. So what we've seen in other states
Speaker 5: is that as you increase the legal footprint of your
Speaker 5: legal market and you give consumers safe, tested, affordable legal
Speaker 5: product on their corners, the illicit market fades into the background.
Speaker 5: At a certain point, these guys are going to look
Speaker 5: like they're selling bath to bourbon outside of a liquor store,
Speaker 5: and consumers are just not going to go for it.
Speaker 5: They're not going to go for a place or a
Speaker 5: store that you know can't tell them where they got
Speaker 5: the product from and it's in a grocery bag, when
Speaker 5: there's a place right next door that's selling safe, tested
Speaker 5: product from a family farm that you know upstate. And
Speaker 5: so that's on us in a lot of ways to
Speaker 5: step up the rollout of these legal options because New
Speaker 5: Yorkers are going to smoke weed, and if they don't
Speaker 5: have a legal place to buy it, these stores will proliferate.
Speaker 5: So we have to meet that demand where it's at
Speaker 5: a lot of people think that this is enforcement challenge,
Speaker 5: but it's actually just a timing challenge. Eventually, these stores
Speaker 5: will just supply and demand will remove them for us.
Speaker 5: And then the second thing is consumer education. I don't
Speaker 5: think people understand how expensive it is for the City
Speaker 5: of New York or Schenectady to send five police officers
Speaker 5: to a shop to bag and tag all the product
Speaker 5: in there, to write it up, to issue a summons.
Speaker 1: Sett in competition from the illicit market. Aside, there are
Speaker 1: other impediments for people who want to open a legal
Speaker 1: weed business, and by extension, impediments for New York social
Speaker 1: justice ambition when it comes to weed.
Speaker 3: We touched on this a bit in our first episode,
Speaker 3: but getting a license and setting up a brick and
Speaker 3: mortar business isn't cheap, and it might be especially difficult
Speaker 3: for the people that New York is trying to give
Speaker 3: priority to.
Speaker 5: The cost of entering this space is central to the
Speaker 5: lack of demographic diversity in ownership in the industry. And
Speaker 5: so when I look at the demographics of ownership across
Speaker 5: the state, across the country, I'm seeing the racial wealth gap.
Speaker 5: I'm not seeing a competitive market where the best got
Speaker 5: to the top. It's really who had access to private
Speaker 5: capital at the time of legalization in their state respective state.
Speaker 5: And so when we the designers of the cannabis law
Speaker 5: in New York, were looking at other markets, one market
Speaker 5: jumped out to them as more accessible, more stable, and
Speaker 5: more consumer friendly than any other state, and that's Washington State.
Speaker 5: Washington State has a two tier market, so they separated
Speaker 5: retailers from producers, essentially banning vertical integration in the cannabis space.
Speaker 5: Much of the reasons for doing stuff like this is
Speaker 5: the same reasons you wouldn't want Jack Daniels opening up
Speaker 5: a liquor store right after prohibition. You're never going to
Speaker 5: get better whiskeys. You're just going to get Jack Daniels
Speaker 5: because they control everything in the supply chain and eventually
Speaker 5: would consolidate the market. And so by creating that two
Speaker 5: tier structure, you're creating access points for small business. So
Speaker 5: now instead of having to do the grow, processing, manufacturing, distribution,
Speaker 5: and retail in a twenty million dollar business, you can
Speaker 5: just do the distribution facility for half a million dollars.
Speaker 5: You can get a retail store in Schenectady for half
Speaker 5: a million dollars. You could start a farm for one
Speaker 5: hundred thousand dollars. There's access points for small business operators
Speaker 5: in a two tier market that they wouldn't normally have
Speaker 5: access to in a vertically integrated industry.
Speaker 1: But for Damien, if New York can get it right,
Speaker 1: if it can use the legal weed industry to try
Speaker 1: to begin to address some of the social inequities of
Speaker 1: the past, then that makes sense, not just from a
Speaker 1: social justice perspective, but also from a business one.
Speaker 3: He says New York wants to create a vibrant and
Speaker 3: stable marijuana industry, one where there are lots of small scale,
Speaker 3: independent operators rather than a few dominant players. Think of
Speaker 3: a vibrant craft beer scene rather than a few big
Speaker 3: corporate beer brands. And he's looking to Washington State as
Speaker 3: a blueprint of how New York can achieve.
Speaker 5: This what we want the New York market to look like.
Speaker 5: I think that when people were drafting the MRTA and
Speaker 5: drafting our canabis regulations and looking at Washington State, we
Speaker 5: were also looking at the economic data from what is
Speaker 5: now a legal market that's eight years old in Washington.
Speaker 5: So when Washington first legalized, they had thirteen hundred farmers
Speaker 5: growing cannabis across the state. They had growed about five
Speaker 5: hundred retail stores. Eight years after legalization, they have eleven
Speaker 5: hundred and fifty farmers. So that's a stable marketplace. After
Speaker 5: almost a decade, they've barely consolidated their production footprint. Those
Speaker 5: farmers are still making good money. Another big data point
Speaker 5: that we looked at in Washington State is skews. You
Speaker 5: know how many products are on the shelves on average
Speaker 5: in each dispensary, and in Washington State there's on average
Speaker 5: seventeen hundred different products in each dispensary. We compared that
Speaker 5: to say Florida, where you know, they have a medical
Speaker 5: cannabis market that very much for all intensive purposes acts
Speaker 5: like a recreational market. They have on average seventy products
Speaker 5: per store. And that is a consequence of vertical integration
Speaker 5: versus a two tier market. And so that's what we're
Speaker 5: really looking for to judge our success is diversity of
Speaker 5: consumer experiences, diversity of products, diversity of participation on the
Speaker 5: brand side and on the production side. In terms of
Speaker 5: business ownership, ultimately, you know, we want large operators, medium
Speaker 5: sized operators, and thousands of small businesses to be competing
Speaker 5: interdependently on one another in a very dynamic supply chain.
Speaker 5: We see this as a huge opportunity for New York
Speaker 5: to put its cultural stamp on cannabis.
Speaker 3: But this is all still very new, and Damien stresses
Speaker 3: that the work is ongoing. If President Biden were to
Speaker 3: decide to reschedule marijuana as a Class one drug, New
Speaker 3: York State's entire calculus for how this is meant to
Speaker 3: work could change, and so could its business plans.
Speaker 5: What you've seen so far, what you will see in
Speaker 5: the coming years from our office and from all Benny
Speaker 5: generally about cannabis is it's the most flexible you'll ever
Speaker 5: see government. And that is because, you know, one, because
Speaker 5: it's a brand new industry, and we have to be
Speaker 5: able to respond to the dramatically changing landscape of legal cannabis.
Speaker 5: You know, President Biden could reschedule next week and it
Speaker 5: would completely change the calculus of a lot of our programming.
Speaker 5: You know, we could see interstate commerce before federal legalization,
Speaker 5: and that would also completely change the dynamics of how
Speaker 5: businesses in New York operate. And so we have to
Speaker 5: be prepared to respond to all these changing dynamics. There's
Speaker 5: also no blueprint for how to do this right. And
Speaker 5: I really want to stress that is that you know,
Speaker 5: majority of other states who have launched illegal cannabis industries,
Speaker 5: they're not great industries.
Speaker 1: But even if New York is successful in all these
Speaker 1: ambitious goals, we're talking about decades of harm that were
Speaker 1: done to minorities and marginalized communities.
Speaker 5: So I met people up there who'd been resting five
Speaker 5: six seven times over the course of ten years. You know,
Speaker 5: almost every time they stepped out of their house, there
Speaker 5: was a cop there waiting for them to pat them
Speaker 5: down because they smelled cannabis and arrest them. And so
Speaker 5: people looking me dead in the eye and saying, like,
Speaker 5: you know, if you gave me a license and a
Speaker 5: million dollars, it would not make up for like the
Speaker 5: years I missed with my kid. What you're doing isn't enough.
Speaker 5: And so I've had a lot of those interactions with
Speaker 5: not you know, and these aren't young people. These are
Speaker 5: fifty sixty year old men who are who have been
Speaker 5: struggling to get back on track ever since some of
Speaker 5: those arrests. I think about them a lot of my
Speaker 5: work because it just makes me want to go harder.
Speaker 3: This is cost Marte. When Damien talks about people who
Speaker 3: have been repeatedly arrested for pot with police, for instance,
Speaker 3: waiting outside their houses to catch them, this is kind
Speaker 3: of who he's talking about. Costs was arrested multiple times
Speaker 3: for drug dealing and even went to prison for many years.
Speaker 6: I grew up in a neighborhood that I was being
Speaker 6: stopped multiple times per day sometimes, you know, it was
Speaker 6: a normalcy where I could just be walking to school
Speaker 6: and have a bag of weed on me, and I'm
Speaker 6: being placed on the wall, now being searched, now that
Speaker 6: being incarcerated, now going through the system. I've been arrested
Speaker 6: a nine times total, and it became something that I
Speaker 6: felt normalized but also traumatized in a sense because I
Speaker 6: had to find better ways to hide my weed. If
Speaker 6: I would have grown up probably in Scars Day in Westchester,
Speaker 6: I would not worry where I would carry my weed at.
Speaker 7: You know.
Speaker 6: Sometimes I had to hide it in my underwear or
Speaker 6: you know, stash it in different spots because I felt like,
Speaker 6: all right, there's a cop there, I gotta be careful,
Speaker 6: you know, or I got to walk a certain way.
Speaker 6: I can't even smoke in the streets. Even today, when
Speaker 6: I walk down and I see an NYPD officer, I
Speaker 6: feel like I'm doing something wrong because I was targeted
Speaker 6: so many times. I mean I got stopped by cops
Speaker 6: over total hundred times. I served a total of six
Speaker 6: years in prison for dealing drugs, for dealing in marijuana.
Speaker 6: It was troubling because I feel traumatized. This has not
Speaker 6: only affected myself, but also if the family members that
Speaker 6: I had to experience this by visiting me in Ryker's
Speaker 6: Island multiple times. My son who grew up talking to
Speaker 6: me through a payphone while I was incarcerated. It's just
Speaker 6: a crazy system.
Speaker 3: When COST got out of prison, the former drug kingpin
Speaker 3: transformed his entrepreneurial experience and his newfound appreciation for working
Speaker 3: out into a gym business called con Body. Then he
Speaker 3: watched as New York made an announcement after announcement about
Speaker 3: its legal weed plans.
Speaker 6: I went into prison for running a multimillion dollar drug business.
Speaker 6: We had a delivery service generating about five million dollars
Speaker 6: of revenue. I was profiting about two million dollars myself
Speaker 6: between my partner and I back then, and I was
Speaker 6: sentenced to seven years in prison. And what we did.
Speaker 6: We had a delivery service. We had dispatchers, we had runners,
Speaker 6: we had even texters in the visuals that we had
Speaker 6: to hire so we could do personal text messages. Because
Speaker 6: we didn't have these touch screen phones like today where
Speaker 6: we could send a text message right away. We had
Speaker 6: to literally hold on the number two to spend to
Speaker 6: spell the letter A, and that took three seconds at
Speaker 6: a time. But that's why I went to prison. I
Speaker 6: believe we're in a great state right now. There's no
Speaker 6: other state that has given an opportunity and first DIBs
Speaker 6: for formerly incarcery individuals to be the first one to market.
Speaker 6: We've seen this time and time again where we see
Speaker 6: other states make the decision very complicated for people that
Speaker 6: been justice impacted to get involved with selling cannabis, and
Speaker 6: New York State is doing the reverse. They're allowing individuals
Speaker 6: that have been convicted also have previously ran a business
Speaker 6: be first in line and be first in line for
Speaker 6: a while. They're now ditting anybody else get in the
Speaker 6: industry for a year after we get in it. So
Speaker 6: I mean, I think it's a great opportunity for us
Speaker 6: to jump on board. I was very excited to get
Speaker 6: on board early. I've been talking about criminal justice reform,
Speaker 6: marijuana reform for a very long time. I had a
Speaker 6: particular friend that was asking me to work and run
Speaker 6: one of his dispensaries in the state of Massachusetts, but
Speaker 6: they were not allowing me to work there because of
Speaker 6: my criminal record and conviction for cannabis, and so it
Speaker 6: was like a catch twenty two. I'm an expert in
Speaker 6: the field. You from my past experience, why can I
Speaker 6: do this? And they changed that in Massachusetts today now
Speaker 6: they have a social equity program over there, But back then,
Speaker 6: I'm talking about five years ago, when they started first
Speaker 6: rolling this out, it was just deterring, and I started
Speaker 6: speaking on panels behind it, and I saw like I
Speaker 6: wanted to get into this industry and advocate for people
Speaker 6: that have been justice impacted to be in there. First,
Speaker 6: I thought it was really unfair for these big operate
Speaker 6: usually white men, to run the industry when they had
Speaker 6: no experience in it and they're just looking to make
Speaker 6: a dollar. And this was a platform where we could
Speaker 6: be a voice for the formerly incarcerated, be a voice
Speaker 6: for individuals that been affected, whether it was being arrested
Speaker 6: or having a family member convicted for this and having
Speaker 6: done a deal with the I would say collateral consequences.
Speaker 1: So years after serving that seven year prison sentence for
Speaker 1: dealing Costs is still in the drug business. He's still
Speaker 1: a dealer. The difference is now it's legal and he
Speaker 1: has a business called Kanbud and a team behind him.
Speaker 1: Meet the Kanbud co founders, Alfredo Angueira and Junior Martinez
Speaker 1: and together they've applied for and received a New York
Speaker 1: City license.
Speaker 8: My name is Alfredo Angida. I am an attorney. My
Speaker 8: background phrenominantly was in economic development. Also assisted in mates
Speaker 8: on Records Island doing their pro state litigation motions, did
Speaker 8: a variety of things which ultimately led into me doing
Speaker 8: real estate and business. Currently, we own a couple of
Speaker 8: restaurants in the Bronx and now one of the founding
Speaker 8: partners of Combat and hopefully we'll be opening up a
Speaker 8: dispensary very soon.
Speaker 9: My name is Junior Martinez. I come from the hospitality industry,
Speaker 9: multiple restaurants throughout New York City, Bronx, Manhattan, real estate
Speaker 9: background and born and raised in Harlem. When New York
Speaker 9: rode out and legalized marijuana and started rolling out the guidelines,
Speaker 9: initially it spoke right to us. And once they started
Speaker 9: dishing out guidelines on their giving first option over to
Speaker 9: formerly convicted individuals of marijuana couse, Alfredo and I were
Speaker 9: sitting in a room and immediately we said, you know,
Speaker 9: let's go for this. Let's join forces and apply for
Speaker 9: one of the these licenses and hopefully we could get
Speaker 9: it because our qualifications were exactly what the guidelines were
Speaker 9: written for.
Speaker 1: And so they teamed up with costs.
Speaker 8: Cannabis is a billion dollar industry stop period, right, We
Speaker 8: all know this. So to get the opportunity as a
Speaker 8: business to get in on the ground floor on a
Speaker 8: billion dollar industry is huge. That's the changing of generational
Speaker 8: wealth for individuals who were impacted the most, for the
Speaker 8: individuals and the families who suffered the most from the
Speaker 8: War on drugs. So getting the opportunity to get in
Speaker 8: on the ground floor on that is game changing for everyone.
Speaker 8: New York State, the current state of the cannabis market
Speaker 8: in New York State has been a little bit topsy turvy,
Speaker 8: and that's because they're going at it fast.
Speaker 7: Right.
Speaker 8: They have a social justice mission. They understand what that
Speaker 8: mission is to them, but to execute that in the
Speaker 8: timeframe that they want to execute it, there are a
Speaker 8: couple of loose ends, but they have a strong framework.
Speaker 1: We asked them what the transition between a legal dealing
Speaker 1: and legal wead selling is actually like, because on the
Speaker 1: one hand, you can imagine guys like us have lots
Speaker 1: of experience with their product, but on the other hand,
Speaker 1: you have to imagine that some of the bureaucratic red
Speaker 1: tape and things like paying taxes are brand new and plus,
Speaker 1: of course they're still competing with the illicit sellers that
Speaker 1: we talked about on episode one.
Speaker 6: There's a lot of transferable skills that I'm using from
Speaker 6: the streets to the legal game. I think the biggest
Speaker 6: differentiation is taxes. Now I'm paying them to taxes. But
Speaker 6: I mean I had to learn what the product was.
Speaker 6: I had to be educated on what is going to
Speaker 6: be doing to the consumer. I had to market it,
Speaker 6: I had to brand it. I had to do p
Speaker 6: and ls in a different type of way. I mean,
Speaker 6: today I obviously know how to read a balance sheet
Speaker 6: in a P and L and how investment works. And
Speaker 6: in the streets, you know, it was a totally different
Speaker 6: way of investing. You know, maybe you get a friend
Speaker 6: who gives you some money and you pay them back
Speaker 6: after time. It's a handshake deal. It's different when you're
Speaker 6: dealing on the corporate side, when you have legal paperwork
Speaker 6: to I mean, there's a lot of differences between both
Speaker 6: of them, but a lot of similarities and a lot
Speaker 6: of things that I could carry over from what I
Speaker 6: learned in the streets to the legal market.
Speaker 8: I have to pay insurance for my workers. I have
Speaker 8: to make sure I have my workman's camp, I have
Speaker 8: my labor overhead, I have my inventory overhead, I have
Speaker 8: my taxes. On a business level, it is an unfair
Speaker 8: and unbalanced scale. Aside from the business aspect I had
Speaker 8: spoken to, it is a health issue, right, you don't
Speaker 8: know what you're getting. I'm from the Bronx, born and raised,
Speaker 8: my business partners from Harlem, my other business partners from
Speaker 8: ls and we're both Afro Latino. That's how identify. We
Speaker 8: all identify as Afro Latino, which for those who may
Speaker 8: not know, is black and Latin. So we're from the hood.
Speaker 8: And you know, I grew up with nutcrackers, people selling
Speaker 8: alcohol out of a cooler on Dykeman and I never
Speaker 8: took one because that was made in your bathtub.
Speaker 9: I really think that one those of us that have sold,
Speaker 9: we be for illegally. It'll be very hypocritical of us
Speaker 9: to really knock it down. On the other side, if
Speaker 9: the state is coming in and giving you an opportunity
Speaker 9: to make money legitimate and giving you the resources there
Speaker 9: to transition from a legacy black market into a legitimate business,
Speaker 9: then it's very foolish of you to not take that
Speaker 9: route and be able to convert quickly and rapidly into
Speaker 9: a legal market where you could potentially build a multi million,
Speaker 9: multi billion dollar company. And that's the route that we
Speaker 9: have chosen.
Speaker 3: In general, though, the combat team is excited for the
Speaker 3: opportunity and for what the future potentially holds. We actually
Speaker 3: spoke with them just after President Joe Biden announced a
Speaker 3: pardon of federal convictions for simple marijuana possession offenses in
Speaker 3: late twenty twenty two. It's a big deal for people
Speaker 3: like costs.
Speaker 10: Criminal records from marijuana p possession have led the needless
Speaker 10: barriers to employment, to housing, educational opportunities. And that's before
Speaker 10: you address the racial disparities around who suffers the consequences.
Speaker 10: While white and black and brown people use marijuana at
Speaker 10: similar rates, black and brown people are arrested, prosecuted, and
Speaker 10: convicted at disproportionately higher rates. So today I'm taking three
Speaker 10: steps to end this failed approach. First, I'm announcing a
Speaker 10: pardon for all prior federal offense federal offenses for the
Speaker 10: civil possession of marijuana or one thousand.
Speaker 3: President Biden's pardon affects more than six five hundred people
Speaker 3: who were convicted for cannabis related crimes between nineteen ninety
Speaker 3: two and twenty twenty one.
Speaker 6: I mean, well Biden has done. I think it's an
Speaker 6: incredible start. Still a lot of work to be done.
Speaker 6: He basically said he's going to release and part in
Speaker 6: all the individuals that have minor offenses. No one in
Speaker 6: federal prison has minor offenses. If you went to the Feds,
Speaker 6: you probably got caught with a lot of stuff, you know,
Speaker 6: So at first and foremost, so I don't think anybody
Speaker 6: with any amount of marijuana should be sitting in federal prison.
Speaker 6: Moving it from Schedule one would be a huge impact.
Speaker 6: I mean, if they could change that, it could change
Speaker 6: a lot of stuff. We could talk about, like Safe
Speaker 6: Banking Act, where we'll be allowed to make transactions with
Speaker 6: regular bank. We had to sit with multiple banks and
Speaker 6: they're charging us a crazy amount just to hold our money.
Speaker 6: If we open up this dispensary because it's federally illegal,
Speaker 6: you know, so it'll be a huge move if we
Speaker 6: can make that happen. On on the Biden side, I
Speaker 6: feel like it's an incredible opportunity. No matter what I
Speaker 6: feel like New York State is giving out some sort
Speaker 6: of reparation for the wrongs that they've done to people
Speaker 6: that have lived in these neighborhoods and people of color
Speaker 6: who've been targeted for years.
Speaker 3: And on Broadway in downtown New York, there's a glimpse
Speaker 3: of the future. There's a line of people snaking outside
Speaker 3: of Housing Works, charity dedicated to helping people affected by
Speaker 3: HIV and homelessness. You might be asking yourself what the
Speaker 3: connection here is with weed, and the answer is destigmatizing
Speaker 3: drug use. It became the first legal recreational cannabis store
Speaker 3: to open its doors in December twenty twenty two after
Speaker 3: getting a license from the state.
Speaker 7: It's been consistent business. I can't speak exactly to the
Speaker 7: amount of money that we've generated, but rest assured we have.
Speaker 7: We're about one hundred and fifty percent to our plan.
Speaker 7: We're killing our goals daily and monthly, and I'm really
Speaker 7: shocked by how much revenue we've generated over the past
Speaker 7: two months. It's really impressive and I'm happy that we're
Speaker 7: doing this for a clause.
Speaker 3: Sasha Nugent is a retail manager and budmaster at Housing
Speaker 3: Works Cannabis Company. The dispensary is located just blocks away
Speaker 3: from Washington Square Park in Manhattan, where the illicit market
Speaker 3: is thriving and sellers like Charlie from Episode one, our
Speaker 3: selling product that's unregulated. And although business is going well
Speaker 3: for Housing Works, Sasha says, there are still challenges.
Speaker 7: Number One, I don't know if people know, as far
Speaker 7: as New York regulations go, we can't do indoor grow,
Speaker 7: and I think that many customers are looking for that
Speaker 7: indoor grown cannabis from like a market like Los Angeles
Speaker 7: or California, rather New York is all out or grown.
Speaker 7: So that's kind of like eating at some of our profit.
Speaker 7: We have people who are die hard cannabis consumers that
Speaker 7: they love the cannabis from California, and it doesn't compare
Speaker 7: allegedly to the New York market, So that's kind of
Speaker 7: a challenge that we have. Also, like the price points,
Speaker 7: we don't have it in our power to drop the
Speaker 7: price as low as the gray market area does, but
Speaker 7: we can guarantee that you're getting quality flower that's been
Speaker 7: tested for mold and pesticides, and you don't have to
Speaker 7: worry about it being tainted with anything else. So there's
Speaker 7: an upside with us having those regulations in place, but
Speaker 7: the downside is that we don't have as vast as
Speaker 7: a menu as the grain market areas do.
Speaker 1: Not only has this dispensary seen competition from the legacy
Speaker 1: ilicit market, but meeting their own customer demand has been difficult.
Speaker 7: There has been a struggle to meet demand, and that
Speaker 7: is due to there being i think only six labs
Speaker 7: that are open in New York State that are doing
Speaker 7: the testing, and so that becomes tricky when you have
Speaker 7: really large purchase orders to fulfill and the tests aren't
Speaker 7: coming back on time. So that is something that we
Speaker 7: ran into several times actually, and also another factor like
Speaker 7: the weather. For example, we placed the purchase order for
Speaker 7: more edibles and more vade pens, and because they're upstate
Speaker 7: New York, there's a huge nor'easter winter storm advisory, so
Speaker 7: that kind of creates an issue with us getting our
Speaker 7: product on time and keeping products in stack.
Speaker 3: Sasha says she's experienced challenges with banking. Many of the
Speaker 3: weed trucks, like the one we were at earlier in
Speaker 3: this episode. US creative workarounds to be able to charge
Speaker 3: customers using payment systems like stating cookies or China needs
Speaker 3: take out on the receipt. Because cannabis is still a
Speaker 3: Schedule one substance, many banks just don't want to touch it.
Speaker 7: It was difficult finding a bank that would process our transactions. Also,
Speaker 7: we did run into an issue with our payroll provider
Speaker 7: that we work with throughout housing Words not accepting our
Speaker 7: payroll because of cannabis, So we had to find somebody
Speaker 7: who would support That was actually very tricky to navigate.
Speaker 7: That's another thing that you know, if it's betterly legal,
Speaker 7: we wouldn't have to deal with. I mean, that would
Speaker 7: be incredible because then we would be able to expand
Speaker 7: our menu, expand our partnerships with vendors and cultivators. Aside
Speaker 7: from generating a lot of revenue, it would just be
Speaker 7: an overall positive thing.
Speaker 1: I think it may be that New Yorkers have to
Speaker 1: sacrifice California grown weed in the name of both social
Speaker 1: justice and tax revenue, but for many that may be
Speaker 1: a reasonable price to pay in return for a safe
Speaker 1: and regulated market.
Speaker 3: So, Joe, we have reached the end.
Speaker 1: Of I'm really glad we did that. I found out
Speaker 1: to be a very fascinating conversation. It's you know, it's
Speaker 1: one of those things where I think people can imagine.
Speaker 1: It's like, yeah, we're going to open this new industry.
Speaker 1: There's lots of demand.
Speaker 3: It's going to be worth billions.
Speaker 1: It's going to be worth a lot of money. It's
Speaker 1: going to create jobs, it's going to create tax revenue.
Speaker 1: We're going to have an opportunity to redress the wrongs
Speaker 1: of the past. And it's I guess my big takeaway
Speaker 1: is that's way easier said than done.
Speaker 3: Absolutely. I also think there's an interesting tension here between
Speaker 3: some of these social equity ambitions that New York has
Speaker 3: stated and actually letting some of those smaller scale dealers
Speaker 3: out in the open. This is something that the weed
Speaker 3: seller we spoke to in Washington Square Park actually brought
Speaker 3: up this idea that, Hey, like, if you're talking about
Speaker 3: true social justice, letting this guy who was in jail,
Speaker 3: who used to be in shelters sell openly on the
Speaker 3: street and basically make a living, that's one way of
Speaker 3: doing it.
Speaker 1: Yeah, And then the other hand is if they're going
Speaker 1: to I guess the way I'm thinking about it is
Speaker 1: they clearly want the sort of the new legal licensed
Speaker 1: dealers to succeed and I think it's really important for
Speaker 1: the state and for the ambitions that they do succeed
Speaker 1: because I mean, think about how perverse it would be
Speaker 1: to imagine you have people who have come out of
Speaker 1: marginalized communities, many have spent time in prison. Then they
Speaker 1: go through this long process of trying to get a license,
Speaker 1: trying to get a place, significant legal costs, et cetera.
Speaker 1: It's pretty important for this state to just put them
Speaker 1: in an opportunity to succeed so that they're not further
Speaker 1: falling back or not further like you know, massive personal
Speaker 1: cost they're facing.
Speaker 3: My other big takeaway, probably the biggest takeaway from talking
Speaker 3: to everyone here, is that this is still all developing
Speaker 3: out in the open, and tomorrow we could wake up
Speaker 3: and maybe there is that big change on a federal
Speaker 3: level which immediately changes everything.
Speaker 1: To my mind, like that's still the huge sort of
Speaker 1: like mark structure game changer. And I think back to
Speaker 1: some of the things we talked about with Craig Wiggins
Speaker 1: and some of the investors, like we're nowhere close to
Speaker 1: having a Coca Cola of cannabis for better or worse,
Speaker 1: because every state is basically has to be within state
Speaker 1: and there's no national brands, and all kinds of issues
Speaker 1: that arise with payments, cross state imports and exports. You know,
Speaker 1: there's still the whole challenge of the fact that the
Speaker 1: unlicensed shops have access to California product that the license don't,
Speaker 1: all kinds of like very interesting, tricky market structure issues,
Speaker 1: and the lack of federal legalization still just seems like
Speaker 1: this huge problem, even if in a scenario in which
Speaker 1: all fifty states eventually legalized.
Speaker 3: It absolutely well. On that note, shall we leave it there.
Speaker 5: Let's leave it there.
Speaker 3: Potlots is a special limited run mini series presented to
Speaker 3: you by All Lots. I'm your host Tracy Alloway. You
Speaker 3: can follow me on Twitter at Tracy Alloway, and.
Speaker 1: I'm your other host, Jill Wysenthal. Follow me on Twitter
Speaker 1: at the Stalwart. And for more Bloomberg coverage of the
Speaker 1: legal marijuana industry, you should check out The Dose Tiffany
Speaker 1: carries weekly newsletter about the business of cannabis and psychedelics.
Speaker 1: Subscribe at Bloomberg dot com.
Speaker 3: Potlots is written and reported by me, Tracy Alloway, Carmen Rodriguez,
Speaker 3: and Joe Wisenthal.
Speaker 1: And it was produced by Carmen. She is found on
Speaker 1: Twitter at Carmen Arman. Our associate producers are Dashel Bennett
Speaker 1: you can follow him at dashbod and Moses Adnan. The
Speaker 1: awesome intro in soundscaping was engineered by Blake Maples. Special
Speaker 1: thanks to Sage Bauman are Head of Podcasts, Jilda de Carly,
Speaker 1: Jacqueline Kessler, Carly Snyder, and Molly Nugent.
Speaker 3: Thanks for listening.