"Legal cannabis still faces high hurdles in New York"

Just outside the Luxury Meets Cannabis Conference in New York City last Thursday, where a well-coiffed crowd in designer clothes sampled artisanal hemp beverages and checked out discreet packaging for hash pre-rolls, stores openly sold illegal cannabis in the streets around the city’s main railway station.

That’s a concern for Nidhi Lucky Handa, the owner of Leune, a California-based brand that’s operated for four years and is expanding into other states via licensing deals. Handa, in an interview next to Leune’s booth at the conference, said she’s interested in entering New York, but competition from the growing illicit trade is daunting. “How do you explain this to the consumer? It’s not just one shady thing in an alley,” she said. “It’s everywhere.”

The cannabis industry has shifted from calling it a “black market” to a “grey market,” — but either way, New York’s underground trade poses a stark threat to the licensed adult-use market that’s supposed to kick off this year. It was the main challenge discussed on the sidelines of last week’s conference, where optimism about the state’s plan to use licensing to lift up former convicts and encourage mom-and-pop shops seems to have been replaced by concerns about whether New Yorkers will even want to buy licensed cannabis.

“You’re sowing the seeds of destruction for the people you want to lift up,” said Mitchell Baruchowitz, managing partner of cannabis investment firm Merida Capital Partners, referring to the way New York has let the grey market proliferate. Repairing the harm from the disproportionate arrests of Black and Brown people for cannabis possession in the past is a worthy goal, he said. But if it slows down what should be the main goal of building a functional legal market, he added, the illicit market can grow, which increases the risk that the legal market will fail. If that happens, there won’t be any profits to help those harmed in the past, he said. 

To read the complete article, go to www.bloomberg.com

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