On a recent afternoon, a sales associate at Street Lawyer Services, a marijuana dispensary on the Lower East Side, scrolled through the shop’s inventory on a screen as Oliver, a return customer, looked on. Because of the store’s “gifting” model, he was technically there to purchase digital content such as a video or mixtape that just happened to come with a cannabis gift of his choice.
Oliver chose a $40 “content pack” that included THC edibles packaged to look like a popular brand of sour gummies. He weighed different options for a vape cartridge, finally landing on one labeled with a strain called “Girl Scout Cookies” for $60. His total for these and other goodies came to about $200, and he also opted to become a member of the shop. That way, he could get future discounts and perks, which include free access to the colorfully painted lounge in the back.
Oliver, who asked for his last name to be withheld because of the stigma still associated with cannabis, said he preferred this retail experience over texting a dealer.
“It’s a great thing,” he said. “I feel like it's more regulated and safer. I like walking into a store better than some random guy coming to my house.”
But as official as a branded storefront may seem, the unlicensed dispensaries that have been popping up on the Lower East Side and in other parts of New York City are just as unregulated as any delivery service. The main difference is the visibility with which they operate and the new era of the cannabis industry they represent.
New York City is already known for having one of the most robust underground cannabis markets in the world. There’s no shortage of potent products or sophisticated branding, and convenient home delivery has been the norm ever since the advent of cell phones.
But since New York legalized marijuana for adult use last March and lowered the penalties for unlawful sales, it’s also become increasingly easy to pick up a pre-rolled joint or bag of gummies from a store. That’s the case even though the first licensed dispensaries aren’t supposed to open until the end of 2022. Some shops point to loopholes in the law to make the case that they’re operating legally.
A vibe for every consumer
In addition to being on offer in Washington Square Park and at some bodegas and smoke shops, marijuana is now being sold at dedicated dispensaries. About a half dozen of these have opened near Street Lawyer Services just within the past few months, while another cluster has emerged along a corridor on 7th Avenue near Times Square. Other shops and trucks are scattered across the five boroughs.
The new storefronts offer a glimpse at the potential diversity of the future cannabis landscape.
There’s Weed World, which has brick-and-mortar operations in Midtown and the West Village as well as its signature trucks. Everything about the Weed World shop in Midtown is loud, from the busy décor to the music blasting and the sales associates shouting over it.
But anyone overwhelmed by Weed World can simply walk two blocks and catch a completely different vibe at Indoor Cannabis, a small dispensary that plays mellow hip hop while employees walk customers through a more curated selection of products.
Empire Cannabis Clubs, which claims to have opened the city’s first dispensary in Chelsea in September, has a minimalist Apple Store aesthetic and is working to be similarly ubiquitous. Empire opened a shop on the Lower East Side near Street Lawyer Services in January and has three more in the works in Williamsburg, Bushwick and on the Upper East Side, according to Steve Zissou, Empire’s attorney.
Some of the dispensaries that have opened seek to exploit loopholes in the state’s Marijuana Regulation and Taxation Act to make the case that they’re operating legally. Others have thrown any pretense that they’re not really selling weed out the window.
Street Lawyer Services’ gifting model is popular in Washington, D.C., where owner Lonny Bramzon, a flamboyant Miami-based criminal defense attorney, operates another shop with the same name. Several other stores in New York City have also adopted this approach. Under the law, it’s legal to transfer up to three ounces of cannabis to someone 21 or older as long as there’s no compensation involved.
Empire is modeled as a nonprofit club that helps its members access cannabis products. It’s a model that Zissou claims is both legal and more “sustainable” than gifting. Customers who don’t want to pay for a long-term membership can opt to pay $15 for a day pass upon entering one of the stores.
How long will they last?
Regardless of which scheme unlicensed dispensaries go with, however, state cannabis regulators aren’t buying it. But that’s not stopping these stores from multiplying, and it’s still unclear whether there will be any real consequences for running an unlicensed business as New York’s legal market gets off the ground.
The state Office of Cannabis Management has sought to crack down by sending out 52 “cease and desist” letters so far.
“Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk,” a sample letter from the state reads. “The unlicensed sale of cannabis is illegal and subjects you to substantial fines and possible criminal penalties.”
But those penalties are weaker than they once were, since part of the goal of regulating cannabis in New York was also to minimize criminalization. And cracking down on unlawful cannabis sales appears to be a low priority for the NYPD. In the last three months of 2021, police made seven arrests for cannabis sales and issued eight summonses, according to city data.
One recipient of the state’s “cease and desist” letter, Lauren Forsch, said she will stop selling THC products at her Manhattan shop because she doesn’t want to put her chances of getting a license at risk. But she said it was a tough decision.
How do I watch all these other people do this, and I can't?
“I'm a super cautious person, but I'm also a business person,” said Forsch, who owns Popped.NYC, a licensed CBD shop on the Lower East Side. “How do I watch all these other people do this, and I can't?”
Others say it’s worth the risk to be able to introduce their brand to consumers before their competitors. One cannabis industry veteran who opened an unlicensed dispensary in Manhattan in early March spoke to Gothamist on the condition of anonymity because they were concerned about getting shut down.
“We felt like we were late to the party on the West Coast,” said the owner of the shop, which also uses a gifting model. “There was just a tremendous amount of competition.”
California was a trailblazer in cannabis legalization in the U.S., having established a medical program in the mid-1990s. But more than five years after cannabis was fully legalized for adults in 2016, the state has become a cautionary tale. The industry there is still dominated by so-called “gray market” sales, which make up 80% to 90% of all sales, according to some experts.
“New York State is building a legal, regulated cannabis market that will ensure products are tested and safe for consumers while providing opportunities for those from communities most impacted by the overcriminalization of cannabis prohibition,” Aaron Ghitelman, a spokesperson for the Office of Cannabis Management, said in a statement to Gothamist. “Illegal operations undermine our ability to do that.”
State Senator Diane Savino, a Democrat who represents southern Brooklyn and Staten Island, introduced a bill in early March that aims to close any potential loopholes in the law.
Working in the gray space
While state regulators deliberate over the issue, both longtime dealers and consumers are trying to navigate the new gray-market landscape.
Beau, a delivery service operator who asked to only be identified by his first name because he sells marijuana, said he has seen a “slight dip” in sales since the beginning of the year as customers explore the new options available to them.
He said with stores like Empire operating out in the open, he feels more pressure to establish a visible brand — even though the nature of his business means he’s long sought to avoid too much attention. “The question is, how far do we stick our necks out to let everybody know who we are?”
State regulators have indicated that they want to create a pathway for “legacy” operators who have sold weed illegally to get licensed, but it’s still unclear whether they would be less amenable to those with ongoing businesses.
Beau said he also sees an opportunity to supply cannabis to bodegas and other stores that have recently started selling it. “We have our own systems in place to keep the customer as safe as possible and keep the product as consistent as we can,” he said.
But whether it comes from a bodega, a dispensary or a dealer, any non-medical cannabis product sold in New York right now is still unregulated. Some legalization advocates say they are concerned that having cannabis available in brick-and-mortar stores will lend undue legitimacy to products that are still unreliable.
About half a dozen cannabis users who spoke to Gothamist said they continue to rely on their dealers to some extent — even if they have sampled store-bought products — because they have at least established some level of trust.
“In a legal utopia, I’d prefer the retail/dispensary experience,” Bill Jones, a Brooklyn resident, told Gothamist over Twitter. “But that’s not the case here yet.”