Smoke, Vape, and Convenience Stores versus The New Nimbies

The proliferation of smoke, vape, and convenience stores, not to mention trucks, vans, and individual vendors in virtually every neighborhood in the City of New York has created a new group of nimbies (people who cry out, “Not in My Neighborhood”): legacy participants.?

To go even further, it seems one of the few issues that regulators, representatives from MSOs and long-time growers, processors, and dealers can agree on is that the smoke, vape, and convenience stores are NOT representative of the marijuana market that they wanted to build in New York.?

Reasons cited include quality and content of product, proximity to schools and churches, attraction to crime, as well as a feeling that the new wave of shop owners surely must be? culturally-insensitive opportunistic capitalists, rather than dedicated and brave soldiers in the fight towards legalization.?

?Dare I say there is a turf war afoot??

Let me be clear: I have a very special place in my heart for the legacy business owners who have been in the trenches for decades, lurking in the shadows, and keeping the plant alive in modern urban culture. Sadly their business activities remain unlicensed and therefore illegal in the State of New York.?

However, I question my beloved legacy owners’ arguments that a shop that has sprung up since March 31, 2021 is necessarily the product of opportunistic greed, or that the products sold are necessarily of a poor quality. I also question whether we might have these same issues of quality control and greed in the years ahead when the so-called legacy operators open their store fronts. (Testing is not necessarily the answer, as my legacy owners have often pointed out.) And aren’t you really borrowing arguments that the regulated, “straight” society has used for years rationale for keeping marijuana on the Schedule 1 list??

Let’s be real: at least some of the smoke, vape, and convenience store business owners are also legacy participants who simply happened to score a lease for a storefront. They may have jumped the line to open and notorious dealing, but in many cases they were legacy operators who have now grown impatient. Store front, covert delivery service, or park vending – it’s all illegal right now in New York. No one group has rights over the other.?

The solution that this cannabis tax attorney sees is a three-part process whereby anyone and everyone who wants to participate in the sale of THC-containing products can register for a temporary permit. Within 10 days of registering for the temporary permit, they can log in to the Business Express and Department of Taxation and Finance sites and apply for Certificates of Authority to collect sales tax. Upon successful registration and validation of credentials, they can be issued a one-year conditional license. Upon proof of tax filing and payment, a two year license can be issued, renewable upon continued compliance and proof of tax payments.?

Simple? Yes. Based upon precedent on other pathways to quick regulation in New York? Yes. A serious discussion in regulatory meetings right now? Not that I am aware of, unfortunately.?

Let’s get back to the discussion of nimby-isms. Like them or not, the smoke, vape, and convenience stores in New York have served many purposes. For starters, the spaces they have moved into were, in many cases, distressed or long-vacant properties (not all – I said “many”). Given the urban decay that was already in place before the pandemic, it’s actually kind of nice to know that somebody, somehow can make a go of a business operation in a tough city like New York. Community leaders might push back and call their acquisition of leases and properties predatory. But that argument fails when one realizes that the shops are all over town – not just in the poor neighborhoods. And perhaps you need to police the landlords and real estate developers if you have a problem with who is opening shop in your neighborhoods.?

A second important purpose that the numerous smoke, vape, and convenience stores serve is that they have moved the conversation about adult use into the common discourse. Didn’t the Office of Cannabis Management (OCM) identify that as a motivation for their Cannabis Conversations? Well – the shops have certainly got us conversing. Just about everybody on the street has a question or an opinion about them. And it would be impossible to determine how many selfies have been taken by tourists in front of the neon signs!

A third purpose that the smoke, vape, and convenience stores have served is that they have brought to light the banking issues that plague the weed business. Why do you think they are targets of robberies? Well, because they have massive amounts of cash on premises. And why do they have massive amounts of cash on premises? Well, for starters, business is apparently booming. (They wouldn’t have so much cash on hand each day if people from the neighborhoods weren’t buying!)? Another reason for keeping massive amounts of cash on premises is that it is difficult for them to get a bank account. Even if they have a bank account they may not want to deposit thousands of dollars a day in cash and raise questions from bank regulators who question the source of the funds. The banking issue is a problem that will continue to arise unless and until we can get the SAFE Banking Act, or similar protections passed.

We have moved beyond the dawn of the cannabis industry in New York, and are probably somewhere in the mid-morning phase (to stretch the metaphor). It is unsurprising that we have a new target of scorn and dislike; that seems to be human nature. We always seem to need to have an “other”; a group that is new and hated.?

Based on client interactions and conversations with owners of smoke, vape, and convenience stores, the impetus for opening a shop now is something along the lines of, “If not us, then who? And if not now, when?” In other words, they saw a market and they responded. Is that opportunism? Well, yes. But show me a business situation that is not opportunistic. Isn’t part of the rationale proffered for legalization the very idea that cannabis is good for business and good for governments through taxation??

Moreover, a primary reason that the smoke, vape, and convenience stores have popped up is the simple fact that there is currently no path to licensure anywhere on the horizon in New York. March 31, 2021, which was the day that the Marihuana Regulation and Taxation Act (MRTA) was signed into New York law, seems like something from the distant past. Yet here we are, with no open application process. We don’t even have preliminary rules to scrutinize and plan for. Those conditional adult-use retail dispensary (CAURD) applications that were submitted in September? Not even a whisper of a response. We are running out of time to meet OCM’s goal of having a CAURD licensee open a dispensary in 2022. There surely must be a beehive of activity going on behind the scenes, but that activity does nothing to put food on the tables and pay the bills of shop owners, farmers, and legacy operators.?

The smoke, vape, and convenience stores are necessary. They put a public face on a market that is beyond ready for a proper, government-blessed birth.?

And guess what – they wouldn’t continue to pop up nor would they continue to be targeted by robbers if they weren’t showing all of us that there is tremendous monetary potential in the future of cannabis in New York.?

To my legacy participants, to other cannabis aficionados, to community leaders, and to regulators, I say let’s move beyond nimby-ism and realize that this is a result of post-MRTA and pre-licensure that is our urban reality, like it or not. Maybe – just maybe – the smoke, vape, and convenience store owners can actually be embraced as members of our ever-widening circle of cannabis advocates and specialists, and appreciated for the courage that they have to sign a lease and put out a sign that underscores that New York is open for business.?