As a Bronx teenager growing up in the 1970s, Gregory Pereira sold loose joints at clubs and after-hours spots for $1 a piece. It’s how he supported himself, since his mother was addicted to heroin and his dad lived on the other side of the country, he said.

“We would buy a $5 bag – we would call them pillow bags – and get 20 joints out of it,” Pereira explained, marveling at the return on investment.

Pereira, now 62, hasn’t sold marijuana for a long time and doesn’t toke up himself — but he’s looking to get back into the business as New York sets up its legal, recreational industry. It’s an opportunity he said his younger self would find very strange, given “all the times I hid and ran and got my ass beat by cops.”

Pereira is among the more than 900 current applicants competing for one of the state’s first recreational dispensary licenses — all of which will be reserved for people with past marijuana convictions or their family members. To qualify, applicants also need to have experience running a successful business.

The initial application window closed on Sept. 26, and the recently established New York Office of Cannabis Management now has the Herculean task of whittling those applicants down to about 150. That’s the number of licenses being distributed in the first round statewide, with about 70 to be located in New York City.

At the same time, state officials are scrambling to fulfill their promise to secure and build out retail space for the first group awarded dispensary licenses and develop a $200 million equity fund to provide startup capital to those who need it. The goal is to have the first batch of dispensaries up and running before the end of 2022 — less than three months away.

But this state-backed real estate process also comes with a lot of unknowns.

For starters, applicants can’t choose exactly where they want to set up shop. Instead, they submitted their top location choices by region – or, within New York City, by borough – and now have to wait to see where the state places them.

On a recent weekday evening, Pereira and other aspiring dispensary owners gathered at the office of the Bronx Defenders. They had pizza and ice cream — and celebrated simply having made it through the difficult, weekslong application process, which required them to dig up old tax forms and criminal records, among other documentation.

Eli Northrup, one of the attorneys who guided people through the process, offered applicants a note of encouragement.

“We think a good number of those [900] applications are from people who don’t even qualify,” Northrup said at the gathering, noting that hundreds were submitted at the last minute. “You all qualify.”

The Bronx Cannabis Hub, a project launched in July as a collaboration between the Bronx Defenders and the Bronx Community Foundation, was set up to identify candidates for initial licenses and help them get to the finish line. The group screened about 600 people, most of whom were not eligible, Northrup told Gothamist. It ultimately helped about 30 people submit applications before the Sept. 26 deadline.

“There were a number of other people that came to us too late and we just didn't have the capacity to help them, or, in the end, couldn't get everything together to get their applications in,” Northrup said.

Earl Jones, an applicant who worked with the Bronx Cannabis Hub, said he and his business partners avoided naming Manhattan as one of their top two choices for their dispensary because the rent burden might be too high.

“We think it’s not feasible for a startup like we are,” he said. Instead, they named Co-op City in the Bronx as their first choice.

“It's one of the largest housing developments in the country and has proximity to the major highways,” Jones said.

Getting to the finish line

The decision on where the retail spaces will be located falls onto a little known state office.

The Dormitory Authority of the State of New York is currently in the process of identifying locations for the retail shops and speaking with landlords, although it has yet to sign any leases, according to Jeffrey Gordon, a spokesperson for the agency.

Once the state secures retail spaces, it will work with companies that both design and build out facilities to set up the dispensaries before handing the keys to the license holders. The license recipients will then be responsible for paying rent — which could be a heavy burden, depending on where the sites are located.

Jesse Campoamor, who helped craft the Marijuana Regulation and Taxation Act and has been working with dispensary applicants as a consultant, said he is concerned that some of properties will be expensive “vanity locations” that will make it hard for applicants to see a quick return on their investments.

“The state's intention is actually pure and good here,” Campoamor said. “It's like, ‘Let's not give the [first] applicants some shanty store in a bad part of town.’”

Gordon said that in identifying potential properties for retail locations, the state is accounting for a range of factors, including location, size, and price.

Jillian Dragutsky, an applicant who listed Manhattan as her first choice for a retail space and Brooklyn second, said she is banking on being able to cover rent from the store’s revenue — despite some concerns about whether the initial marijuana supply will be able to meet consumer demand.

Cannabis plants grow in a field on a farm on Long Island; one of the farms that will source the plant for coming dispensaries.

The state’s first harvest mostly consists of biomass — meaning it will be processed into products such as edibles and oils, rather than sold as flower to be smoked. Because of federal prohibition, recreational retailers can only source marijuana from state-licensed farms, limiting the supply and variety.

Dragutsky and others are just becoming aware of this issue as they start talking to cannabis farmers who could supply their shops.

Northrup said that the Bronx Cannabis Hub was also approached by a range of people seeking to latch onto these first applicants as investors, but said his group always declined to make introductions.

“We're trying to be a place where people can come and trust that they're not being poached or manipulated or taken advantage of because that's a huge problem in the cannabis space in general,” Northrup said.

Declining outside funding can mean having to rely on loans from the state.

New York is seeking to establish a $200 million fund to provide loans to cannabis startups. Of that, the state is planning to put up $50 million, with the rest expected to come from private investors. But the state has only recently designated the firm that will manage the fund, and it is just now starting to raise capital, The New York Times reported.

Dragutsky said she is waiting to find out how much money she might be eligible for from the state before seeking outside funding.

Efforts to promote equity in the cannabis industry have had mixed results elsewhere in the country. While legalization advocates have praised New York’s approach as innovative, some still have concerns about how it will pan out.

Northrup said he is optimistic: “I think the Office of Cannabis Management wants to make this work.”

Finding their way back to cannabis

Those who submitted applications have started businesses in the past — ranging from food distribution to electrical companies to fitness startups. Some have experience selling marijuana on the black market, too, but many have never been in the industry.

New York legalized medical marijuana and its retailers in 2014 and passed the Marijuana Regulation and Taxation Act legalizing marijuana for recreational use in March 2021.

In Pereira’s case, he took a long path back to cannabis. He was never convicted for selling pot — it was his sons who had the marijuana convictions that qualified him to apply for a dispensary license. But he is in recovery from addiction to other drugs, and spent years working at various harm reduction organizations around the city to help others in similar situations.

Pereira sons were convicted of marijuana charges which qualified him to apply for a dispensary license.

Now, as an entrepreneur, he has established a business helping people set up child care centers. He also works with the Department of Motor Vehicles to run classes for people who have been caught driving drunk or high.

Pereira said he wants to open a cannabis shop that emphasizes responsible drug use. “That's kind of like my little niche,” he said.

Other dispensary applicants said it’s strange to view marijuana convictions that have held them back in the past as an advantage.

“For years, I was terribly embarrassed about it,” Dragutsky said of the marijuana-related felony she got in 2008, for which she served probation. “But now, it obviously is helping me.”

Dragutsky, who now lives on Long Island, was first exposed to the cannabis industry while growing up in Queens.

“I can remember as a child sleeping on bags of marijuana,” she told Gothamist in a recent phone interview, explaining that her dad was a wholesaler in the underground market. “I was close with my dad, who brought me everywhere, so I saw how he handled things.”

Dragutsky said getting into the industry herself was a “natural progression,” but she retired after her 2008 charge – until now.

“It surprised me that they were prioritizing justice-involved individuals,” she said of New York’s unique approach to legalization. “I’m just excited that the opportunity is being afforded to me.”

Editor's note: This story was updated to clarify one of Eli Northrup's quotes.