Another multibillion-dollar business opportunity would be lucrative for cannabis businesses, but industry members and insiders also are viewing the Empire State in a broader light. They think that having a prominent state such as New York enact legalization could ultimately influence cannabis’ future trajectory nationally and potentially help it shed its federally illicit status.
“This industry really deserves to be normalized like other industries,” he added.
In 2020, it is projected that sales of medical and adult-use cannabis totaled between $16.9 billion and $20 billion, according to Marijuana Business Daily. And though it’s a large industry already, those sales will continue to snowball as existing state markets mature and new states’ programs get under way.
If cannabis is in the backyard of the world’s biggest businesses and financial institutions, they’re bound to take notice, said Chris Walsh, chief executive officer and president of trade publication Marijuana Business Daily.
“Once you get the big financial players involved and interested — with their clout, their weight, their role as a key cog in the American economy, and their influence with lawmakers — I do think that could be a game-changer,” he said.
Big market with a big upside
For the cannabis industry, the timing of New York legalizing couldn’t be better.
Early projections from advisory firm MPG Consulting pegged New York’s annual recreational sales at $1.2 billion by 2023 and growing to $4.2 billion in 2027.
MPG estimates that New York could see annual tax revenue from recreational sales climb from roughly $360 million in 2022 to $1.3 billion in 2027. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association.
The law also appears favorable for New York’s existing operators, Viridian Capital Advisors wrote in a research note issued Wednesday.
“As the law stands today, existing operators will be grandfathered long-term advantages, creating an unequal playing field for new entrants,” according to Viridian, which noted that the 10 operators in the New York medical cannabis market — which include Acreage Holdings, Etain Health, Columbia Care, Cresco and Green Thumb — can have up to four stores now. Under the new law, they’d be able to add four more stores and have three of the eight for adult recreational use, while the others would be reserved for medical use. New entrants are allowed up to three recreational stores.
Curaleaf, which has positioned itself as an omnichannel consumer products business that runs its own dispensaries and sells branded products into others, sees only upside from increasing the number of operators in the market.
“For us, we want to get our products in as many dispensaries as possible,” he said.
Fixing the damage
It remains to be seen how specific regulations will shake out in New York. A newly created Office of Cannabis Management will fine-tune most of those details; plus, cities would have the ability to opt-out of allowing recreational cannabis dispensaries and on-site consumption.
Key objectives of cannabis legalization programs include mitigating the adverse effect of the War on Drugs and absorbing the illicit market for cannabis.
“The early states had more of a substance abuse/public health focus on revenues and generally no social equity programs,” he said.
“I will keep working in the Senate to end the federal prohibition on marijuana and undo the damage of the War on Drugs,” he tweeted.