Report: Legal Marijuana Brings ‘New Energy’ to Black Market

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Michael del Castillo
January 5, 2016

Local drug dealers in New York City who specialize in selling marijuana are seeing a renaissance in their industry, but not one that is necessarily helping their bottom lines, now that their product is becoming increasingly socially acceptable and in some cases legal.

In a lengthy report published earlier this week by Matthew Flamm over at Crain’s New York, multiple drug dealers shared how their operations are being impacted by Governor Cuomo’s expected announcement this week that legal medical marijuana dispensers can open for business.

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An image of a stick advertising a marijuana delivery service, taken in the West Village.

From the report:
The legalization wave is bringing new energy to the city’s illicit market, but also unsettling it. Dealers are offering more cannabis strains and products than ever before. Lower wholesale prices, driven by a glut in California—where growers are producing more marijuana than medical dispensaries can buy—have put some middlemen out of business. And in some neighborhoods, retail prices are falling so fast that the future is uncertain for some sellers.

“A lot of old-time dealers I know can’t command the same high prices they used to because there’s so much competition from guys who’ve got the same high-quality [product],” said Ric Curtis, an anthropology professor at John Jay College of Criminal Justice who has studied New York’s black market. He sees California weed even pushing out the lower-quality Mexican product in poorer parts of the city. “It’s hard to say how the market is going to play out, but it’s becoming saturated,” he said.

Regardless of the shake-out, when Cuomo officially opens New York State dispensaries for business, medical marijuana can only be distributed at the 20 locations, including four owned by New York City-based Columbia Care — one of which is in Manhattan — and three others in Queens, the Bronx, and Manhattan, owned by companies headquartered elsewhere.

Michael del Castillo covers fintech, bitcoin, manufacturing and Silicon Alley technology startups for the New York Business Journal. He also contributes to the Upstart Business Journal.