NY’s Pot Shop Boom: Cannabis Industry Raises Alarm

NY's Pot Shop Boom: Cannabis Industry Raises Alarm

The Cannabis Association of New York is sounding the alarm bells, cautioning Governor Hochul’s cannabis regulators about the potential fallout from a significant surge in the number of licensed marijuana stores. Damien Cornwell, president of the association and owner of the ‘Just Breathe’ cannabis shop in Binghamton, penned a letter to the state’s Cannabis Control Board expressing deep concerns. He highlighted the presence of numerous illegal pot operators that have yet to be eradicated.

Cornwell emphasized the risks, stating, ‘We believe that this approach, if implemented without proper analysis and stakeholder input, will have disastrous consequences for the fledgling industry and public health.’ The concerns come as Hochul and regulators continue to face criticism for the slow and shaky rollout of the legalized pot program in New York, following the opening of the first licensed pot store in December 2022.

Despite the setbacks caused by lawsuits leading to delays in licensing and store openings last year, state officials have recently accelerated the licensing process. This acceleration resulted in the opening of 103 legal cannabis stores throughout the Empire State, a notable increase from just 26 in the previous year. More than 400 cannabis licenses, spanning from growers to retail establishments, have been issued this year alone, with 101 licenses granted during the April 11 Cannabis Control Board meeting.

Cornwell urged caution, advocating for a thorough evaluation of the market’s capacity before flooding it with additional licenses. He warned that handing out licenses hastily could result in oversaturation, business failures, and unforeseen public health risks. Considering that legal pot stores face tax burdens due to federal laws prohibiting deductions for ordinary business expenses, the industry operates under unique financial constraints.

Cornwell’s bold plea underscored the need for comprehensive market analysis and stakeholder consultations before making pivotal decisions affecting the industry. He stressed that the cannabis sector in New York, still in its nascent stages, faces challenges from the illicit market. Flooding the market with more licenses could exacerbate these challenges, leading to closures and undermining the state’s social equity objectives while jeopardizing the economic sustainability of vulnerable entrepreneurs.

To drive his point home, Cornwell highlighted the distinctive tax burden carried by cannabis retail stores, which cannot deduct essential expenses like rent, wages, and marketing costs due to federal restrictions. This situation places them at a financial disadvantage compared to other retail businesses, impacting their profitability and long-term viability. The industry’s plea for prudence and strategic planning resonates as New York navigates the complexities and opportunities of its evolving legal marijuana landscape.

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