This is Search Engine. I'm PJ Vogt. No question too big. No question too small. A year ago, when I was about 10 years younger, the team at Search Engine foolishly began to ask ourselves what seems like a simple question. How seemingly overnight had thousands of illegal weed stores sprouted in New York? Couldn't be too complicated to answer. Turns out, there's a story behind all this. A story that's not just about New York.
There are, as you may already know, 50 states in America. As each one legalizes, each one runs its own experiment in how to do this correctly. But many of these experiments end up being botched in weirdly similar ways. This week, we'll bring you the story of how New York malfunctioned, and we'll ask whether it can still be fixed. That's after these pre-rolls.
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In the last episode, we met a man named Alex Norman, a long time bedside resident who'd run a successful weed delivery service in the days of prohibition. He just goes to everybody that you know that smokes weed and say, hey, if you need weed, just give me a call. One day in March, he was giving me a ride. We hopped in his car, radio turned on. He was listening to a radio station I'd never heard before, which was just a 24-7 update on the Dow, the NASDAQ, the NikK. There was Bloomberg Radio.
I knew Bloomberg had a radio. It's a radio station. He financed all the time. Before he'd started his weed delivery service, he'd worked on Wall Street. What is your Wall Street? It's a financial advisor and Merrill Lynch. Oh, what? Do you like it? I loved it. Alex, a student, both of the markets, the close four and the ones that run on night. When New York State legalized cannabis, if there's anybody who should have succeeded in this brave new world, it was the man who's Kia.
I know found myself sitting in. In 2021, the Merrillana Regulation and Taxation Act had offered a very bold vision for legalization. The state wanted 50% of its new weed licenses to go to social and economic equity applicants. Most interestingly, justice involved New Yorkers, people who'd been arrested for weed like Alex or who had family members who had.
And then, once those entrepreneurs had their businesses running, the state would tax them and send a big chunk of that tax money to a fund earmarked for neighborhoods over police during prohibition, like Alex's neighborhood, Bedstuy. Some people were calling this reparations. I asked Alex how it felt that his arrest, which had been a liability, now might be a complicated kind of golden ticket.
Is it the first time in your life where you're like, oh, this thing that was like a mark in the major life was safe? Was it a strange feeling to be like, this is good now? Yeah, it was just kind of like a unknown now. Now it was like, well, how's this market going to look? You know, what's going to happen with all the listed operators, like other people that I knew that still had delivery services? It was just more curious, like, oh, like, I've been in the business forever.
Curious now, this new chapter, like, how's it going to look? How was it going to work? When the law passed, many of its finer details were left pretty vague. I told you in the last episode that I've spoiled a few dinner parties by talking about this story. All I had to say was that in New York, the government has legalized weed, and it has decided to prioritize giving licenses to sell weed, in many cases, to former dealers.
That sentence would just bounce and hit people's ears from some funny directions. Because if you're right of center, you just heard me say that the government, who you don't trust, is interfering with the free market, which you love, to help former criminals, who you don't like, sell weed. But then, if you're left of center, you just heard me say that the government, who you trust intermittently, is trying to do reparations, which you might be skeptical of, with weed.
The whole thing strikes you as very New York, progressives defeating themselves by trying to do everything all at once. And then, if you're, like, further left, now it's actually the least comfortable dinner. You love reparations, sure, Pasoarcai, a plan that undermines free market capitalism, yes, I'll have some more wine. Legal weed everywhere, great, I'll try the dessert quiche.
But, the key to this program working, many people believe, involves police enforcement, perhaps even the arrest of people who continue to sell weed without a license. Arresting people to fix the problem of having arrested people is not, it's the dinner's ruined. The broad strokes of New York's plan aligned with some people's values, but its details really seemed to fit no one's.
In New York, a cannabis control board was formed, a new government body, which had the extremely daunting job of ironing out all the wrinkly details. The rest of this story is about those details, and what would happen to the people who tried to iron them out. Hello and welcome, everyone. I am Tremaine Wright, the chair of the Cannabis Control Board. I'm extremely pleased to call to order the first meeting of the Cannabis Control Board, and to welcome all of you who are watching virtually.
Chapter 1. Meet the Board These board meetings would be recorded and published on YouTube. The first one is from October 5th, 2021. In the last century, many people have gathered in rooms to discuss how weed might best be sold in New York, but I'm quite sure never in a room like this. A drab conference room. The walls, a mix of wood panel and municipal gray. Pull in spring water bottles, the unofficial sponsor of interminable meetings everywhere proliferate.
Will include introductions and opening remarks. The leader here is Tremaine Wright. A discussion on ethics to guide the operations of the Cannabis Control Board. Chair of the board, a politician from Bed Style, with a hearty laugh and today, a light blue COVID mask. A former corporate lawyer turned New York Assembly Member, remains the boss here. At this time, I will call an executive director to provide his report. Alexander. Thank you, Madam Chair. Good afternoon, everyone.
This is Chris Alexander, head of the Office of Cannabis Management, OSEM. OSEM is like the DMV, but instead of issuing driver's licenses, OSEM will issue licenses to sell weed. As you know, Madam Chair and esteemed board members, the MRTA was signed into law on March 31st, but we're not able to begin the work of establishing New York's Canada. In these meetings, Chris often talks with this brisk note of urgency as if underneath all the back and forth, he can actually hear the ticking of a clock.
As such, we have a six month delay to make up. Therefore, one of my priorities out the gate is to staff up the Office of Cannabis Management. There's one last player in this I need to tell you about. Ruben McDaniel. The next member we're going to introduce is Ruben Arnick Daniel III. He is president and chief executive officer of Dazni.
The agency, Ruben McDaniel runs Dazni, usually handles construction for the state. Dazni have been brought into the weed legalization process to help future weed store owners build their shops. Once you have a weed license, you can go to Dazni for funds, start up capital to actually build your store. As board members go, I find Ruben McDaniel to be quite watchable. He speaks politician to a degree I enjoy watching but can't always completely understand.
Like the classic Ruben McDaniel contribution to a meeting is to briefly time out whatever's happening to just administer compliments to the board on the good job they've been doing that day. Madam Chair, before we take up this motion, I want to give a blanket statement about all of our employment actions today. When the governor, Hoko appointed me to be in this position, you'll want to think she said it was going to move fast.
And to move fast we need good staff. And so I just want to commend Chris and Axel and yourself on the work you've done. We'll talk about that seven days. Ruben speaks for a bit about the importance of government agencies moving quickly. That first meeting ends shortly after in a hopeful moment as Chair, Chair, Tremaine Wright asks for the votes for her last motion to finish hiring the staff for this board. May I have a motion to accept the resolution before us? Second. All in favor.
Aye. Aye. Any opposed? Abstentions? Resolution 2021-04 passes. We have staff. The team is complete and they're excited and ready to start the revolution. So that first meeting that was early fall of 2021. Let's move the ticking clock forward nine months to the next summer. July 2022. For me, that was when I just as a civilian started to notice something was up. When I'd walk around, I just see a lot of people selling weed out of their cars,
out of refurbished ice cream trucks or on folding tables outside of nightclubs. They'd have little PA systems where they yelled at you about the quality of their bud. I have been in states that legalized before and legalization had meant like stores. It hadn't just meant everyone suddenly starts to sell each other weed on the street. It was very funny, but it also felt like this could not have been the state's plan.
That summer was also the point at which post lockdown, it seemed like every formerly closed retail space had now opened as a weed store. That is what NOAA 19, back when we were walking around Manhattan in the last episode. Like, sort of, we walked maybe five minute walk. We have passed a lot of discount now, but like eight or nine stores? A lot of options.
What I didn't understand back in 2022 is that none of those smoke shops were legal. They were just as unregulated and fly by night as the guys selling weed on the sidewalk. Chapter 2. Does anyone actually know who's running the thousands of illegal smoke shops that suddenly popped up in the city? That's something that remains a bit murky, in part because the ownership is hitting behind LLCs that own LLCs that own other LLCs, so it's really hard to get to the ownership.
Ashley Settle covers cannabis and cannabis regulation for the New York Times. She's done a lot of reporting on these illegal shops. According to Ashley, some of these shops seem to be run by legacy operators, dealers from the old days who just don't care to apply for a state license, but Ashley also echoed something I'd heard from a lot of other people, which is that some portion of the market seemed to be, and this may sound at first blush somewhat random, run by Yemeni Americans.
In New York, a lot of our corner stores that bodegas are owned by people with Yemeni roots, and apparently some of those people or their kids have jumped into the regulatory confusion and just started selling weed. It's not clear how many stores there are to begin with, and it's not clear how many of those are owned or run by Yemenis, but the assumption is that they make up a significant portion, in part because even before legalization bodegas were sort of the neighborhood spot to get weed.
And the assumption is that that has now come more into the open. You can still go into some bodegas and go into some of these shops and they're selling snacks and they're selling CBD. But if you ask them, hey, do you have some gumbo, which is a strain developed by New Yorkers, they'll say, yeah, and they'll give you whatever green balls they have behind the counter now. Is it gumbo?
I don't know. But yeah, the ownership and who's pulling the strings a lot of us hit him behind the cloak of LLCs who owns them. A lot of them are not owned by people who were in the legacy market. Willie Mack, you heard from him a bunch in episode one, cannabis entrepreneur and activist trying to make sure New York did not end up a mess like California. Ask him about these illegal shops and his normally chilled demeanor evaporates. He started talking at podcast 1.5 speed, but in real life.
The people who come in out of town with people from other communities, which is like, I have an opportunity to make a bunch of money. I want to make a bunch of money. Maybe make, you know, half a million dollars a month, a million dollars a month. That's the type of numbers. Some of them are 200,000. Yeah, it means not paying taxes. So they're just buying weed in like California or something driving into New York, renting a store, putting up some neon lights and buying a parrot. And then yeah.
Yeah, and just sell it. And like the first maybe 25 people who doesn't like no one's got arrested and all of a sudden it becomes the explosive of like, oh, no one's going to arrest us. We can just do this. It's a free for all some mix of legacy weed sellers, the day owners and newcomer opportunists, although the exact composition of the market was unclear since these guys don't tend to answer the phone.
What was obvious by 2022 was that a year until legalization, the illegal market had flourished and the legal market was just a pile of red tape and good intentions. Whenever that legal market did spin up, when the state did start to hand out licenses, these new business owners who'd been promised at least for a while a monopoly would instead have competition. Fear's unregulated competition that could offer lower prices and had what was now stretching into a one year head start.
Chapter three, the card licenses. I'm pleased to call to order another meeting of the cannabis control board. And I welcome you all who are participating via real-time live stream. So this meeting will be recorded. In summer of 2022, back when I was wandering around noticing people trying to sell me weed out of their trucks, the legal market had just inched a little bit forward.
In July, in another drab office, O.C.M. declares on YouTube that it has finally finished writing all the rules about who can get a license to sell recreational weed. Here's Chris Alexander, head of O.C.M., Mr. Efficiency, the person in charge of designing that license program. They're calling it the card program. Card, conditional adult use retail dispensaries, and indefensibly bureaucratic acronym.
But this was the licensing program designed to get a license into the hands of someone like Alex Norman, a person who had a cannabis related arrest and a track record running a legit business. The application requires applicants to submit materials proving a qualifying marijuana related conviction. And the residency of the Justin vault individual at the time. The card program was also open to family members of people with cannabis arrests and a few nonprofits, but that was it.
With the application portal opened, Alex was more than ready. I had a couple of friends help me just kind of organize my application, but I had everything. I had an attorney that I was working with prior. He said, you can need all this paperwork. You should start getting your stuff together. So like two months before they opened up the card portal to submit for the application, I pretty much had all my stuff.
I had all my tax returns. I had my abstracts, my legal addresses, my fingerprints. I had my arrest records. Everything was already queued up. And so when the portal opened, I pretty much had everything done like within the first two weeks. A couple months later, the board approves the very first licensees to sell recreational cannabis. Alex wasn't part of the first batch. He'd get his license later. But here's the main right.
I'd like to ask Mr. Alexander to share remarks about this historic moment and some thoughts on the card applicants before us, please. Thank you, Madam Chair. It's a big moment for Chris Alexander, head of OCR. I can speak for all of us here. Those who care about equity and justice and those who have worked on this issue for for so long to say it's a minute on it or to be a part of this journey of legalization.
Chris Alexander, usually pretty business like this is the first time I hear him get emotional. He says his agency reviewed 900 applications in this first round and is asking the board to approve 36. They vote. I and I vote in the affirmative as well. And so 36 have been approved at this. 36 licenses approved really just a handful but still a few New Yorkers finally given permission to sell a plant that in the past the state would have thrown you in jail for it.
It was a beautiful moment for everybody watching at home. Everybody watching at home except the lawyers. Some lawyers watching this on YouTube lawyers who were rooting for the state to win could see something that they hoped they were the only lawyers noticing. I talked to one of them a sharp precise man passionate about this reparations project but with a lawyer's eye for detail Jeff Schultz.
You heard from him in the last episode. You are looking at this as a lawyer like what did you think as a lawyer when you heard the details of the program. The first thing I thought was quite honestly was that the card program was illegal illegal illegal it was not permitted under the bill for one very very specific reason.
Now that's completely separate and distinct from whether I thought it was ambitious and a good idea right so good idea to give these like yes. Of course this is what we should be doing this is part of. Ending the war on drugs legal but illegal for a very technical reason which is there's a I believe it's section 10 19 in the MRTA and there is a sentence in that section that says that the application window for retail licenses under the adult use program will open at the same time for everyone.
Everyone. Everyone. In other words the well intentioned move that O.C.M had made of putting justice involved people like Alex at the front of the line the way they done it may not have been legal because according to the law passed in New York the MRTA state actually had to let everybody apply at the same time.
You could see this was this like I'm not a lawyer to my parents' appointment like did was this like a super subtle thing or was this like you this is an intersection without a traffic light this is super obvious. I believe that was very subtle and and I think it was in most people's best interest to not really talk about this much because everybody wanted the program up and running just get it going.
So it's just like a loose screw and everyone just like hopefully this works a loose screw that was holding together the foundation of the launch of this market though which is to say it had massive implications. We reached out to O.C.M for this story the spokesperson to kind of comment but I can tell you about those massive implications a flood of lawsuits from groups excluded from the card program who now had a way to attack it.
These lawsuits would severely jam the system but they were still months away. In the meantime the people with freshly minted card licenses were busy signing leases dumping their savings into businesses preceding as if all of this was going to work. Alex Norman was approved for his license in the summer of 2023. He's been to his new business Badega his concept a high end weed store with bud tenders that sold you your weed and a cafe next door that could host community events.
He recruits his business partner his brother in law Lewis Cologne. Lewis has retail experiences of reform to sneaker head. He immediately becomes a disciple of these cannabis regulation YouTube meetings. When Alex brought me in in July I'm like that nerd guy that just deep dives into whatever I'm into right. So from YouTube clips to websites to the live chats I just kind of was able just to make those connections and learn the business really quickly. And you know they're still plenty to learn.
Lewis was studying these meetings to understand the thicket of rules that Badega would have to squeeze through. For instance now that they had a license where could they actually open their store like a liquor store you can't just put a cannabis store wherever you want. It has to be a certain distance away from schools from churches from other legal cannabis stores. Alex and I were doing the due diligence we were going on all the commercial websites.
I had multi browsers open per site so I would look at the location. Get on Google maps find the schools closest to it because we had to eliminate anything within 500 feet of a school. So we use a lamp which is the liquor mapping system to tell you how to worship schools and other liquor shops around there right. So a good red flag is too close we just eliminate them.
We will go to that get the number get the email reach out because one of the other regulations aside from distance to house worship school. And other cannabis medical space was the building cannot have a federal mortgage. Why? Oh because it's federally illegal. Listening to Lewis go through that investigative reporting project that is finding a spot for his weed store. I feel keenly the absurdity of his plant because meanwhile over a thousand illegal smoke shops have sprouted out.
Next to schools next to churches next to each other in the cracks between your couch cushions. The smoke shops were not consulting some government website to figure out where they could sell weed. But people like Alex and Lewis were playing by the rules because they believed if they did the government would take care of them. And the licensees were being offered one benefit from the government that was pretty special. Funding. Government funding to open a weed store. There's a logic behind this.
Remember once again California. In California legacy weed dealers had often gotten licenses but then watched their businesses fail. Legal weed businesses we now know are extremely capital intensive to run since weed is federally illegal most banks won't work with them and they can't deduct much on their taxes. So you need cash. In New York the state had come up with a solution for this. The government itself would provide startup funding. Chapter 4. Another loose screw.
The head of Dazzney again is Ruben McDaniel, the man who loves to compliment his fellow board members. Here he is announcing the government's social equity fund. We're very excited about this fund. It is a significant step the state of New York has taken. And other states have really had trouble with because access to capital is a big, big obstacle for many to. In the video Ruben likes. Actually in the video Ruben is in a Zoom window so small I have no idea how Ruben likes.
Ruben looks like a man hidden in a warehouse walled up postage stamp. Social equity fund will be a $200 million a combination of public and private partnership. Where we Dazzney and OCEM work together to identify locations, help build our facilities, and get people up and running to be able to distribute cannabis late 22 early 23. On paper it was a great idea. $200 million in the hands of card licenses to fund their physical stores. But there ends up being another loose screw here.
A pretty big one. The public money, there was no problem. New York state put in 50 million. But the next 150 million was supposed to come from private investors. And that money proved much harder to put together. Again, here's lawyer Jeff Schultz. The other 150 was intended to be privately sourced from investors. And I've spoken to and know many of the people that were approached to invest in the fund. And I don't know anyone that did. And why not?
I think philosophically it's a fund where you're investing in operators who have little to no experience operating cannabis dispensary. Now they do have obviously these are people that have been selected because they have owned and operated a profitable business in some other industry. But they're not necessarily proving cannabis operators, which astute cannabis investors will always point out. Have you done this before in this industry?
Also, I think what has overshadowed all this and goes back to the core issue of what about the competition from the illicit market? I think a lot of people chose not to invest because they didn't like the competition coming from the smoke shops. I see. So it's like somebody walks into my office, they say, hey, do you want to invest in social equity cannabis in New York?
Even if I, if that's an idea, I really support, I'm like, okay, this person, they don't have the kind of track record I as a person who is like inventor capital I'm used to seeing. And when I walked out my block, there's five illegal shops. So the competition seems really, really severe. I don't think so. Correct. There were other problems, for instance, interest rates happen to shoot up that year, killing all kinds of investment in all kinds of markets.
Ultimately, finding investors for this fund would prove much, much harder than Dazni expected. But in the boardroom that day, Rubens announcement of the fund had turned into something like an Oscar speech. So extremely excited. I want to thank the governor of our support, I think leadership, the assembly, and the Senate, their support. And you'll, a lot of lead and makes for spent. But a lot of people in this room and out of this room, that's one thing.
Chris, an axle of your team, you guys did a great job. I just want to shout out my team, maybe, spontaneous or general council and great arguments. Alex Norman of Badega, ultimately was not able to apply to Dazni for funding, which in the end, he thinks turned out to be a good thing. If you took Dazni money, you had to use their contractors, who seemed to charge more than anybody Alex knew.
The problem with Dazni is that they're straddling you with an inexorbitant amount of debt for the build out of the stores. So you saw the space that we went to, you already know our plans. Lewis and I think that we can get that store done in our own vision with about $300,000, $350,000. And on the flip side, that same build out through the Dazni program, I'm hearing costs anywhere between a million and a million and a half dollars.
Yeah, I mean, they're charging card licensees, like $20,000 for a display cabinet. Like, it's a box. The government had wanted to protect these licensees from predatory investors. But by inserting itself into the market, it had discovered what any person or institution discovers when they try to give people opportunities. Sometimes you end up disappointing them. We reached out to Dazni for the story.
Their spokesperson wrote to us, quote, The New York Social Equity Cannabis Investment Fund is a first of its kind public-private partnership that provided opportunities for social equity entrepreneurs, many of whom faced significant challenges accessing capital to start a business in a new industry in New York. End quote. So to summarize, the two big loose screws, the licensing program was written in a way that would allow it later to be jammed with lawsuits.
And the fund for those licensees struggled to raise money. The fund would eventually be capitalized, but in the meantime, licensees would go through a lot of pain waiting for their money to show up. And most people were not as mellow as Alex Norman. At the public meetings, though ones being broadcast on YouTube, things would get much more tense. That's after the break.
The New York Social Equity Cannabis Investment Fund The New York Social Equity Cannabis Investment Fund is a very important financial fund for those who are willing to invest in the financial fund. The New York Social Equity Cannabis Investment Fund is a very important financial fund for those who are willing to invest in the financial fund. The New York Social Equity Cannabis Investment Fund is a very important financial fund for those who are willing to invest in the financial fund.
The New York Social Equity Cannabis Investment Fund is a very important financial fund for those who are willing to invest in the financial fund. Search Engine is sponsored by Mint Mobile. My favorite spring cleaning takeaway is the post-clean clarity you get. How have I been living like this? It's kind of like when you find out you've been paying a fortune for wireless. When Mint Mobile has film plans for 15 bucks a month when you purchase a three month plan.
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Good morning everyone. Hello and welcome. I'm Tremaine Wright, chair of the Cannabis Control Board and is great to be here with all of you. In the Cannabis Control Board meetings starting from December 2022, the board begins allowing in the grand democratic tradition. Members of the public do you have comment? Again, we're asking everyone to please limit their comments to two minutes. New Yorkers from all over are entering the space.
You know who we are in New York City, you know who we are in Long Island, you know who we are in Rochester, you know who we are in Buffalo. They have things they want the board to know. There are people who can't get licenses. I did everything properly. Didn't go try to open an illegal dispensary. Hope that I was going to get it a dispensary. No, no one people with licenses were trying to figure out how to access the promised state funds.
You just like to know how to tap into the funds to build out our buildings. And where can we get these buildings exactly zoning issues again. Or one person fighting strangely poetic ways to express the idea that he remains hopeful. I love the opportunity to be in the opportunity even though the opportunity has it, you know presented itself yet. The tone is not mad, that would come later. But let's say confused with an edge.
The comment that caught my attention was a woman addressing the real elephant in the room. The illegal unlicensed weed sellers. I was shocked to hear the presence on Jamaica Avenue. Some of the young adults have a table. Marijuana. Selling it. It's resident from Queens. You can almost hear her raised eyebrow through the recording. And the police are standing right there. And the response of the police.
Well, oh, well, we can't do anything because we can't lock them up. Well, we can't arrest them. I think that goes back to the problem while we're here now. They should, the police should not feel that they can't communicate. You know, say, hey, young king, you know, that's not right. You know, you can't do this. But for them to feel that they can't say anything, if your committee can't work with the police department, because this is like an ongoing thing. It's a genuine puzzle.
What are the police supposed to do about the booming illegal market? They've been told, and we as a society have agreed, people should not be locked out for selling cannabis. But now, with cannabis legal, what do you do about the people who are now breaking the new rules? Again, here's activists Willie Mack, who remember, had gotten into all of this because he felt like police arresting people for weed was wrong. He now found himself pretty mad at the state for doing nothing.
You know, if I decided to open up a bar tomorrow and started to relabel pop off his belvedere and selling my cousins moonshine from another state and selling food, I'm sure someone in the state of New York or New York City would be like, why do you think you can open a bar without going to proper regulation? Yeah. But somehow, the state of New York and the city of New York are like, you can do that on cannabis, but you can't do it for a restaurant or a bar or a nightclub or anything else.
New York City is one of the most regulated places you can exist that I've been in. Yeah. Funny. Yeah. So you also have a backlash or just sort of like confusion from the other industries were like, hold on. I have to do how much compliance they run this bar or a restaurant, nightclub, and this industry just gets to not have to do any of that stuff. And what do you think, like in the meantime, like, what do you think enforcement should look like if it's not arresting people?
No, I think it is arresting people. You think it's arresting people? I think it's enforcement. I can't go open a bar tomorrow. What's out someone coming to my dorm and like, sir, what are you doing? Yeah. I can open a restaurant without someone being like, you don't have a license for this. You're going to get fined. And if you don't start paying these fines, there will be some other civil and criminal prosecution as you would any other industry. Right.
That's it. I'm not saying go drive people the street and beat them up in dorm and jail. I'm saying create a system that allows people to feel like I need to follow the rules. Regardless of the past, there are laws in place for civil society to exist. Do you think that if you could like go back in time and talk to yourself like in your 20s? And if you said like, look, there's going to be a day where weed is available on every corner in New York and stores.
And you're going to be pretty upset about it. And you're going to be pretty upset about it from a tax perspective. Do you think you'd be surprised? Yes. Yes. I would, I would, I would, Willie, little Willie would be like, what are you doing now? I'm just open up, I'm just, I'm just, I want to grow some weed and sell it. What are you talking about? But this in many ways has the structure of what could be some kind of reparational program for people who were harmed.
I hope and I trust that New York will get this right because we have to get this right. Willie's feeling is that these people selling weed illegally in New York, they're essentially stealing something that doesn't belong to them. An opportunity promised to someone else. Obviously, this is complicated. And part of what makes it hard to just morally think through is that the people behind these unlicensed weed shops, they're very difficult to talk to.
As Times reporter Ashley Sedele told us earlier, they mostly hide behind complex LLCs. But that doesn't mean they don't have a point of view. And I wanted to hear it. There was one person who I saw in the public comment of one of these board meetings who spoke on behalf of these much maligned unlicensed shop owners. They're champion. I'm Paula Collins, cannabis tax attorney. This is definitely an exciting time in New York cannabis. Chapter six, the defender of the illegal smoke shops.
We move into this new phase of our regulated market. I want to caution us to not forget about constitutional rights when it comes to compliance and enforcement of the unlicensed industry. Boyer Paula Collins represents some of the people who own illegal smoke shops. And in this meeting, she's cautioning the board against doing exactly what Willie wants. Arrests, search and seizure. She's saying, yeah, these clients of hers are operating without a license. But they have rights.
It would be tragic if New York enforcement agents acted unconstitutionally against a largely immigrant and first generation population of shop owner. While reporting this story, I'd find myself in conversations with activists, lawyers, reporters. And when I'd mentioned some fact or remark from Paula Collins, the response would almost always be the same. Along pause, along exhale, sometimes an eye roll. Paula does not have a lot of friends on the legal cannabis side of the aisle.
But she's one of the few people who speaks publicly for the smoke shops. Aster for an interview, she said yes. Do you have a mic? Do you have a mic? Yeah, should I bring it closer? We talked in person in the studio. I asked her whether her clients, the smoke shop owners, understood that they were breaking the law. Okay, so you've dealt with hundreds of these people. In your experience, for the most part, they're people who were selling marijuana. Sorry, I'm like, that's for the same marijuana.
They were people who were selling cannabis. Did most of them understand, if they're unlicensed, that they were entering into a legal gray area? Did some of them think that they weren't? Oh, excellent question. And by the way, we use marijuana and cannabis interchangeably because the law is the marijuana regulation and taxation act. Marijuana spelled with an H, by the way. Marijuana. Marijuana.
And there's, it's interesting because the original law spells it with the H, but the amended law that was just approved by Governor Kathy Hocal, May 3rd of 2023, did not spell it with the H. Oh, she did the J. She did the J. And so is that really a proper amendment of the law? We could start there.
But to your question, did they know this was a gray area for me to go into a shop and introduce myself, slide my business card across the counter and say to somebody, you know, I can help you get a license quite often. The overwhelming percentage of responses is we already have a license. We're legal. We don't need a license. It's all legal now, isn't it? Oh, that's crazy. That is crazy. Now, those are the employees.
When I go to talk to the business owner, usually they know that they are operating in this gray market, but they think that because there are shops all around them that they're okay. An opposing lawyer might say just because a smoke shop owner sees other people operating the law, doesn't mean they should break the law too. But according to Paula, the laws were changing. They were confusing.
And they were badly communicated by the state, hence this illegal market, which she thinks would be wrong to just now suddenly shut down. Of course, I pointed out that the downside of this thriving illegal market is that it undermines the promise of reparations. I tried to paraphrase arguments I'd heard from so many people that these newcomers were essentially stealing an opportunity from the legacy people who were trying to make a legal market.
The idea was like, people who had just gotten to New York, who weren't around for sort of the battle days, and were capitalizing in this market, but by the spirit of the law, shouldn't have been the people benefiting. I pushed back on that, and actually I'm a little bit offended by that.
I have had people yell, I mean, in lawyers' meetings, people yelling across the room at me about those Arabs or those Yemenis, or really disparaging people for their family's country of origin, not realizing that in many cases, just like we have Dominican families or families from Haiti or other countries, we may have been here for 30 years.
Why are we going to give opportunity to one person with brown skin, but not another, simply because that person comes from a Middle Eastern background, and another person comes from the Caribbean or from a Spanish-speaking background. I think it's a slippery slope to start pointing fingers and saying, you know, we'll take your social equity as serious, but your social equity we're going to call opportunist. Well guess what, buddy? They've been just as discriminated against as you have been.
Obviously, this is a very fraught issue. One is trying to weigh the injustice of unequal cannabis enforcement on black and brown New Yorkers against the injustice of the Trump administration's treatment of Yemeni immigrants, many of whom live in New York. That's a white person, obviously outside of either of those groups. I would say, I, as the person who they've done, I would say, I, as the person who they've done, this is not a social equity.
I would say, I, as the person who they've done, this is not a social equity. That's just my point of view. Anyway, that's Paul Collins, champion of the illicit market. There is a persistent message from OCEM from the media that the unlicensed market has held back the license market. There can be no doubt about it. The slow rollout was not caused by the unlicensed market, but by policy and misstep. Paula goes on for a while.
Her criticism of OCEM cross fading into her suggested solution just to give all her clients licenses. So then they can start paying cannabis taxes. Simply by creating a pathway by which the currently licensed unlicensed shop owners have a time limited opportunity to commend this. Excuse me, Ms. Collins, you're already over to two minutes. Thank you. You can submit it to us though and writing. Thank you.
By 2023, it seemed clear to anyone paying attention that in the battle between New York politicians and the owners of illegal smoke shops, the smoke shops were easily kicking the states butt. Governor Kathy Hogle announced that summer a real crack down on the shops, but it turned out what she meant was increasing fines on the shops somewhat, and in some rare cases having tax agents seized their cannabis. All right, so you're the owner, right? All right, can you find that?
There's a video from one of the unlicensed dispensaries where the state actually did show up, shot by the dispensary owner, who does not seem particularly cowed. If anything, he seems like a person experiencing an event he knows will probably do quite well on social media. Why are attorneys all on this?
The owner, who seems like the person with real authority here, hollers about his rights, behaves even as he's handcuffed as if the government agent here are just a temporary nuisance, some deer who have wandered into his driveway. On his way out, he tells his customers, don't worry. You guys will be sitting on the staff next month, and they'll take care of it. We appreciate it. And it turns out he's pretty much right. The store reopens for business that same day.
Chapter 7. Pandemonium fully sets in. By the fall of 2023, so many things have gone wrong, I'm just going to fast forward through some of them. Over at Dasney, the organization that was supposed to be building out these weed stores, things had gotten so messy that Rubin McDaniel, the nice compliment giving politician, was out. He'd left for quote another opportunity. At O.C.M., remember the office which was supposed to issue licenses, things were badly solved.
Several groups, veterans, owners of medical weed companies, had filed lawsuits that had ground the entire program to a halt. People like Alex Norman of Padega could not move forward. Other people were going broke paying for leases on unopened weed stores. Good morning and welcome everyone. I'm Tremay Wright here of the Cannabis Control Board and it's great to be here with everyone today. September 2023, this is where the meetings really start.
The board decides to give a green light to medical dispensaries. They can start applying for their licenses earlier than the board had originally promised. The problem is the independent guys, the card licensees, many of them hadn't gotten a chance to really open. And they thought this was going to push them out of the market. Medical dispensaries tend to be bigger businesses. Medmen in California had started as a medical weed dispensary.
The question now was, was New York just handing its license over to the big guys? The so-called ROs. We find especially going for these ROs at the Cognita deal for early entry had turned around and joined lawsuits designed to free the market until they can enter. Tons of people showed up to vent. These corporations are not our friends. They have at the heart of their DNA a priority that is in direct opposition to New York's social and economic equity agenda.
As a farmer, we were asked to grow cannabis from state of New York so we did. But you didn't deliver. Now you put up roadblock after roadblock. E-mails go unanswered. We have no point of contact. When we have questions, we reach out and it's nothing. Watching the meeting, you see a lot of frustration. You also get to see what this weed market is supposed to look like. It's a real mix. Just to be candid, more white people than I was imagining. A lot of the farmers in the market are white.
But racially diverse. People who look different from each other, but all countercultural. There's a dude with a ball cap that has a little holder for a joint in it. There's lots of dreadlocks, some dyed pink hair. The older folks look like they put in their time at dead shows. They're really serious about their businesses. And their mood ranges from anger to heartbreak about the way things are going. Here's testimony from one card licensee.
You know, when I got my license, we weren't expecting this. We did everything you guys said in the timely manner. Within the 60 days, our target open date was August 22nd. And we gave everything we had. We have nothing left. Absolutely nothing. We're paying rent on our location, on two locations. And we have no more money. We don't know what the future holds. So, you know, I just. Please don't give up, you know, like, please make sure.
That we make it through that we make it through to the finish line. Please make sure that the card programs succeed. Like we gave our all. We had, I mean, we spent our son's college tuition. And there's people that spent millions of dollars. Other card licensees that we speak to all the time. And we're encouraging each other to stay in there. I'm a very hopeful person. And I'm always for the fight. I fought my whole life. I can do it. And I don't know if I can, you know. So, please.
All the anger and hurt and frustration these people express for hours. The board members sit at the front of the room, absorbing it in two minute chunks. All of it together a big wave. They're taking notes, they're listening. But watching, you wonder, is any of this landing? The best thing to welcome everyone I'm sure you may write to you, the kind of this control board.
At a meeting in December, an emergency meeting called Days Before New Year's Eve, I get the strong sense that all this frustration has landed. Whatever's been happening backstage at the board, now will suddenly be on stage. Chapter 8. Civil War at the Government Weed Board. Happy holidays to everyone celebrating this season. I regret that we ended up to your last Friday of the year with this special meeting. The meeting begins badly.
One of the board members is obviously pissed that they're here meeting at all. I'm on vacation with my family. As a board, we are not an at will board. Whenever somebody wants us to meet, we meet every month. We've had our December meeting. There's no statement of what is an emergency for this to happen right now. This board member is asking why she's being called in to quickly approve the licenses for two big medical cannabis companies.
Why can't this at least be handled in two weeks at the regularly scheduled board meeting? And so I would just like some clarity on what's so important that I need to be here right now. Well, we have an agenda in front of us. Tremaine tries to make peace. She recommends circulating the bylaws to decide the procedure for emergency meetings. But then another board member enters the fricah, also in bureaucratic rage mode. Pardon me. Is any of this on the agenda?
Can I move that we get to the point of the knowledge and of calling here for a group of boarders? This board member is actually alone in his own conference room, addressing the main conference room over Zoom. I would like to get on with the agenda that we call in here for today that was published for the public for meeting the start in 20 minutes late. Anything else can go in other business. And those of us who are calling here to the agenda, let's get on with that agenda.
And then we can cover anything else another time or the end of the meeting outside this room across the state. The fragrant ocean of illegal cannabis is being sold by sellers, unconcerned with these state regulations, who have never counted on New York to get its act together. Adam, I appreciate that you want to get to the agenda, but I really want to know why I'm being asked to be here. The meeting quickly devolves into a deluge of points of order that Hadookin of bureaucratic infighting.
I'm going to ask you to please hold one second, just one to deal with the point of order. This is not in the agenda. I have three several tense minutes to fight resolves. The meeting moves on. I'm going to ask you to please hold one second. I'm going to ask you to hold one second. After several tense minutes, the fight resolves. The meeting moves on. But it feels like something has definitely shifted. People seem exhausted. And this fit with what I'd been hearing behind the scenes.
That even among the people inside the government, faith in this process was dwindling. A couple months later, the governor herself would come out and call the states roll out, a quote, disaster. Watching, I started to wonder if the illegal weed sellers and the legal weed sellers and the governor, and now even the board itself seemed to have lost faith in this very ambitious but very stalled dream. Did anyone still believe New York could get this right? Anybody? After the break, remain right.
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Check, check, check. Okay, what day is it? Thursday. Dish. Two search engine reporters, myself and Noah John, were outside in Manhattan on it turned out Thursday January 11th. January 11th, we're in the financial district of Manhattan, and we're heading into the Office of Cannabis Management. The building is like, it looks like if you told a child to draw a big building in a city, it's just like a big rectangle with lots of little windows on it. It's a very generic building.
Noah and I took the elevator and walked into the offices of New York State's first cannabis bureaucracy. A building I may have over described. We found ourselves in a conference room. Hi. I'm Dittin. It's me, Jessica. I'm Dittin. I'm Dittin. Traumane joined us. All right. Easiest question first. Can you just introduce yourself, say your name and what you do? Hello, I'm Traumane Wright, and I am currently serving as the New York State Cannabis Control Board Chair.
I had spent so much time watching Traumane from the other side of a screen, running these endless boring meetings that then turned into super contentious ones. And I'd had this assumption, I guess, that chair of the Cannabis Control Board was a job she'd been assigned. Who would want to seat so obviously designed to turn its occupant into a punching bag? But she told me, no, she was thrilled with the law passed. So thrilled that she lobbied for the job of manifesting it into reality.
I made it very clear to anybody and everyone that would listen that I was interested in being a part of bringing this into the office. And I was willing to do whatever part made sense. I'd reached out to our majority leader. I reached out to the governor's office. Then it was still Cuomo. I reached out to everyone and just let them know. I am ready willing and able. It seems like a job that contains a lot of headaches. Like, why did you want it? A lot of jobs contain headaches.
And this is the bigger picture. A lot of jobs frustrate you. So if you're waiting for the perfect job, we'd never go to work. But I do believe I have entrepreneurial spirit. I understood what the bill said and what the intent of it was. I saw this as New York's great startup. We had not started a new agency in decades. This is an industry that was ripe for opportunity.
It would never have occurred to me that for people who work in government, the opportunity to create a new agency is very exciting, like inventing a genre of music. According to Dermain, she knew things would be hard. They're not everybody would be happy. She said there were moments in the process where she herself felt frustrated. She said this thing I really liked. She told me she's not a patient woman, but that she does practice patients. I wanted to know about the smoke shops.
The question really that had brought us here. Do you remember when you first noticed them popping up? So I had a store for 10 years and right across the street from me was a cannabis place. It's not a reason phenomenon. So in many communities, they existed. New York State is, it has been the largest cannabis market in the world for many, many moves. It did not just occur when the past legalization.
So what we're trying to do are rope in a lot of players who will already end this market and say, hey, there's a pathway for you in our regulated marketplace. But these stores are generally not our traditional legacy players. And they are popping up like mushrooms all over the place. It was damn soil and they're just there and everywhere. And so they are unfortunately trying to exploit this moment where the state is transitioning people.
Do you have a sense of who these new entrants in the market are? Unfortunately, I don't know the answer to that. But if somebody does know, it'd be really great if they gave that information to our attorney general. I'm just going to say, because that is what we need. We need to know and understand who it is. There's a lot of LLCs, there's a lot of shell companies. The state just passed the law so that LLCs have to disclose more information.
I believe that will help us in this struggle and in this fight. And I know my local law enforcement is going to get mad at me for saying it. But they have the power to enforce currently and go into places that are making illegal sales. Because the illegal sell of cannabis is still illegal. Do you think the original bill should have passed with a more detailed strategy for enforcement? No. Why not?
Because I believe our majority leader had been fighting for almost 14 years to get this legalization bill in place. She's talking here, of course, about majority leader crystal people's stokes, the architect for this whole vision of progressive legalization. Tremaine is saying that in the 14 years it took to get this bill passed, Cuomo scandal had been this rare moment, a tiny window of opportunity to pass the version of the law that the activists wanted.
Waiting any longer would have meant waiting for the next governor, who, less embattled, may not have agreed to this more revolutionary version of weed legalization. Tremaine also did something which people I've spoken to disagree with, but which she believes she says that the rise of all these illegal smoke shops at this scale was hard to predict. No other state that legalized had the proliferation of illegal shops pop up the way it has in New York state. Who would have dreamed it up?
So we could have taken another three years to talk about what enforcement looks like, but who would have ever dreamt that it was going to look like this? No one. So giving us the power to enforce and then to come back and say, yes, now we're going to fine tune it for what exists in the world today is a far better path than trying to predict what we thought might have happened and waiting unnecessarily for whenever. We did the right thing.
We passed the bill and we are dealing in real time with the challenges that we are presented with. And anybody from the outside looking in that says, you know what, this is all easy. They should have done it faster. I would love for them to share with me their experience opening up a business quickly in a similar market because maybe we can learn from their experience. Such a diplomatic way to say that. That's what I'm talking about.
Trains says that while things have been rocky, the process is working. The government might move slowly, but ultimately it'll get there. When we spoke in March, there were about 40 legal dispensaries operating in New York City. Trains said more would come. But you see a future in which New York has a legal cannabis market and these stores are gone. That's exactly what I envision. Let me ask you, have you ever played Lotto? Yes. Do you know what preceded Lotto? Numbers game.
Do you see number spots all over your neighborhood? No. It's only been 40 years. There we go. It's the same thing. How do we get to the same place? We get a more educated consumer. They want better information. They want to know what the products are. I think that that's the same way we're going to see this cannabis market maturing. I'm going to borrow an old model. An educated consumer is our best customer. That is exactly what I know will happen here in cannabis.
The same way it did in our Lotto as in our alcohol. It will occur here in cannabis. Epilogue. There's no one. Not too long ago, just March. I met Alex Norman and his partner, Louis Cologne, at the space they released for their future cannabis store in Cafe. Badega. It was at the corner of Franklin and Pacific in Crown Heights. Do you want to just give me a tour of the place? Like right now, can you just describe what is here?
Sure. So right now, we are currently standing where the dispensary will fit. There's just a raw, empty room, but Louis Watcher on pointing out what we'd go where. Where the product would sit. And then where Alex is standing, there'll be table tops for product display. Where the bud tenders would stand. On your right hand side against this wall is where we're thinking about our bud tenders. And then there are all the boxes they'd have to take so that OCR inspectors would approve the site.
Like the plan to install vaults. So again, heavy cash business. You need to have a security and a vault build that's up to standards and regulations that were supplied to us from the OCR. And on. You have an ADA-compliant bathroom. And on. We also got to have temperature control storage for the product. So. I'd heard a lot of stories of licensees financially wrecked by the state's slow rollout. But Louis said he and Alex, they moved pretty carefully. They'd never taken on a big loan.
And they'd signed a lease they could back out of if things fell apart. Unlike a lot of others, they'd always seen this as a business. As despite everything, capitalism. Not everybody survives in capitalism. That is why they tried to be savvy. But for their business to succeed, they were clear on one thing. The state had to shut down the illegal stores. Do what it had promised. Padlock them. Alex is the least sentimental person I interviewed in this entire story, which is exactly why I liked him.
But when he talked about the owners of the smoke shops, there was a one time he started to sound. Not just like a businessman, but like someone who found their behavior distasteful. And a front to his values. 99% of these guys that have shops would not have these shops if they know tomorrow if a cop comes in, they're going to rikers. Zero chance. Zero chance. Do you talk to those guys ever? No, I mean, it's nothing. I'll talk to them about it. I mean, I would never dime them out.
Like, I've been here my whole life. I've been living in New York since 71. All my friends that we grew up with, we know this, you know, I'm not some gangster, I'm never. But we know the streets, we know how things were in the past. Like, this is, this is, I'm a New York guy. It's his corny. It's hard not to admire Alex's conviction that he can tell the difference between who's real and who's corny. And his belief that in the future, being real might actually count for something.
A couple weeks after we talked, I got a text. Alex and Lewis had gotten some bad news. The location they'd so carefully selected, OCM denied the approval. Another newly licensed dispensary had been approved less than 500 feet away. It hadn't been in the system yet when they'd found their site. So, Alex and Lewis would have to begin all over again. They say they're still hopeful. Music Music Music Music Sir Ch engine is a presentation of Odyssey and Jigsaw Productions.
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