NY's Cannabis Rollout Could Destroy a Legal Entrepreneur

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:14)

And I'm Joe Weisenthal.

Tracy Alloway (0:16)

Joe, do you remember five months ago?

Joe Weisenthal (0:20)

No, it's all a haze.

Tracy Alloway (0:22)

Neither did I. I actually had to look this up.

You remember on 420, so April 20th of this year, we released our first ever narrative Odd Lots series all about the legal marijuana market in New York.

Joe Weisenthal (0:39)

Yes, and obviously, that was a fun experiment, and I hope we do something like that again. My big takeaway from that, I learned a lot about market structure. I learned a lot about the industry, but my big takeaway really from talking to everyone involved or lots of people involved in the New York attempt to legalize marijuana is that however complicated you thought it was and difficult it was to sort of bring in this new market, it's like infinitely more complicated than that.

Tracy Alloway (1:09)

Yeah, it can always get worse, kind of.

Joe Weisenthal (1:11)

That's another way to put it.

Tracy Alloway (1:12)

Yeah, well, it is true.

There was so much excitement about this last year and then even into early this year. And fast forward to now, I have the sort of latest figures in front of me. So New York signed the law that legalized cannabis possession back in March of 2021 So it's been more than two years. And we only have, I think it's about two dozen legal weed dispensaries, which I think is one of the lowest, if not the lowest number among all the states that have so far legalized marijuana. And meanwhile, we have more than 1,000 unlicensed dealers, which is pretty much the outcome that New York was trying to avoid.

Joe Weisenthal (1:57)

I mean, there's probably more than two dozen within a five block radius from my house in the East Village right now. And so I remember, you know, about a year ago, I think the first one opened up and it was like, I had, there was like a 10 minute walk from me and you had to show some card to buy there and I don't know. And then they just kept getting more, they're closer and closer and they're all in all of the bodegas now. And now basically, even though there's supposedly all these issues with payments at the legal one, at the illegal ones, you can buy them by product with credit cards. It really is crazy, but it stems from two things, right? There was an attempt to rectify sort of past injustices of the war on drugs by giving priority to people who had been negatively impacted by the drug war when marijuana was still straight up illegal in New York state. And then in the meantime, this tension now is like, okay, you have the people who want to take the regulated legal route and that's complicated.

And then the people who just open up a shop and there's been very little enforcement of that.

Tracy Alloway (3:00)

Absolutely. And along the way, again, it's only been five months since we released this series, but there've been all these different legal developments which we are about to get into. Because I'm very pleased to say that we really do have the perfect guests to discuss this.

We're bringing back Coss Marte and Alfredo Angueira. They are the CEO of Conbud and the chief compliance officer of Conbud. You might remember them from the series. They are aiming to open up their own legal weed shops. But of course, it's been far more complicated and taken a lot longer than perhaps they anticipated. So Coss and Alfredo, thank you so much for coming back on All Thoughts.

Coss Marte (3:40)

Thank you for having us.

Alfredo Angueira (3:41)

Yeah, thank you for welcoming us back.

Tracy Alloway (3:44)

Why don't we start with the basics? I mentioned some of the legal issues that have taken place over the summer. Why don't you just give us the state of affairs as it exists right now in relation to New York's legal weed industry?

Alfredo Angueira (3:59)

Have you ever seen that meme with the dog in the room?

Tracy Alloway (4:05)

It's fine.

Alfredo Angueira (4:05)

Yeah, it's fine. And everything is on fire. That is literally the state of the industry right now.

And I don't mean that in any kind of, you know, funny context.

Joe Weisenthal (4:17)

We just got the title of this episode, New York City Cannabis, it's fine and everything is on fire.

Alfredo Angueira (4:22)

Yeah, it's on fire.

So there's been, to say it's been a lot of flux is a grand understatement. Last time we were here, we had a lot of faith that the state, because of their vested interest in getting the tax dollars and in their vested interest and kind to trying to fix the social justice and equities, we're really going to get it right and had the opportunity to look to other states and say, well, what is it that they did wrong and what is it that they did right? And we can make the perfect model. We've have since learned that despite those best efforts, corporate interests will always rule, right? When you're talking about the country's largest cannabis market, and by way of that, the world's largest cannabis market in terms of consumption, we're talking about billions and billions of dollars. And the entities that are MSOs and the entities that are ROs aren't gonna sit by the wayside essentially. And they have been throwing every monkey wrench you can possibly imagine into the gears.