'This is illegal?' Why Illicit Marijuana is Booming

New York legalized cannabis possession in small amounts in 2021. Two years later, just five shops sell marijuana legally in New York City, while 1,400 bodegas, smoke shops and other outlets without licenses do, according to an estimate by the city sheriff.

The illegal marijuana trade is booming in states that have legalized the drug, my colleague Zusha Elinson and I wrote recently in a front-page story for The Wall Street Journal. Zusha tagged along with California law enforcement officials while they raided illegal grows in a Bay Area suburb. I walked around Manhattan, where it took little effort to find stores illegally selling cannabis.

The persistence of the illegal pot business in the face of state legalization reflects a variety of forces, Zusha and I found. Slow rollouts of dispensary licenses leave unmet demand that unlicensed outlets are happy to serve. Police and prosecutors, facing pressing problems such as violent crime, give little priority to stopping illegal pot. And high taxes on legal sales fan the embers of illicit ones. 

Yes, yes. I know that it’s actually been possible to buy marijuana in New York for quite some time. But what was striking was how open about and legitimate-seeming the unlicensed stores I visited were: one shop, on First Avenue, had a white and green backlit sign saying “Recreational Cannabis Dispensary.” The people who would walk by you in Washington Square Park stage whispering about the drugs they could sell you now have tables, mixed in with the art and book vendors, unbothered by cops I saw walking by.

A visit to the nearby Go Green Dispensary down the street found rows of jars filled with buds priced as low as $20 for 3.5 grams, or an eighth of an ounce, for varieties like Gelato or Oreos. The same amount of cannabis sold for at least $42 at a licensed store several blocks away.

Buds are the bestselling product, followed by pre-rolled joints, according to Jeremy Peña, who said he started working at Go Green in February. “It’s the best buy on the block,” he said, adding that the marijuana comes from California. (The shop owner listed on business records didn’t return a call seeking comment.)

The Empire State in March 2021 authorized possession of up to three ounces of marijuana. While some states that legalized the drug let medical-cannabis dispensaries expand to sales for recreational use, New York didn’t; it wanted to favor people affected by the war on drugs.

So the state’s first retail licenses were set aside for applicants who could show that they or a close family member had been convicted of a cannabis-related offense. Non-profit groups that serve formerly incarcerated individuals, like Housing Works Inc., also applied. New York even had a state authority find, lease, and outfit storefronts for the new applicants. The process, though has been slow, according to applicants.

Byron Bronson says he long sold marijuana illegally in New York under the “Buddy’s Bodega” brand, along with partner Lou Cantillo. They are the type of “legacy operator” New York officials said they hoped could be brought into the regulated market.

The two won a conditional permit in January to operate a marijuana dispensary, but said they have been waiting ever since to hear from the state about approval of a storefront location. While trucks and unlicensed shops have sprouted, their operation still isn’t open.

“Our No. 1 competitor is the illicit market.” said Matt Darin, chief executive of Curaleaf, which said in January it was pulling out of California. Unlicensed sales in the Golden State totaled $8.1 billion last year, dwarfing legal sales of $5.4 billion, according to estimates by New Frontier Data, a cannabis analytics firm.

New York City Councilwoman Gale Brewer, a Democrat, grew frustrated walking by an illegal pot shop across from her Upper West Side office. When she persuaded the city sheriff’s office to raid it in January, they seized 4.5 pounds of marijuana and 219 packs of edibles, enough to fill about 20 garbage bags.

“When we were busting them, people were coming up nicely dressed, suits and ties, asking: ‘This is illegal?’” Brewer told me. When I visited the store with her in March, it was restocked and selling THC gummies, according to a woman who told us she had just purchased them.

A spokesman for the city sheriff’s office said it and other agencies have conducted 235 inspections since November, seizing almost $12 million of illicit products and making 55 arrests.

On April 3, New York state’s Cannabis Control Board approved 99 new licenses for legal shops. The state has launched a $3 million ad campaign to push consumers toward licensed outlets.

Gov. Kathy Hochul announced last month that the news state budget included authorization to let the state tax department enforce cannabis rules—as it does with illegal tobacco.

“We are working so hard to stand up a legal business, and there are obviously startup challenges,” the Democratic governor said. “All these illegals popping up has made it more complicated.”

THE QUESTION: If you smoke (or otherwise consume) marijuana, where and how do you buy it? Are you still using the illicit market, or have you switched over? And what are your plans?

No right or wrong answer this week, folks. And I promise I won’t broadcast your habits. Drop me a line at jimmy.vielkind@gmail.com. Or just write with thoughts, feedback or to say hi.

THE LAST ANSWER: Springfield, Mass. has had more residents than Hartford, Conn. since the 1960 Census.