How ‘equity’ ruined cannabis legalization in New York

New York’s legal weed experiment is going about as poorly as possible.

Earlier this week, the state finally signed off on a handful of new dispensary licenses, a full two years after legalization.

Illegal pot shops, meanwhile, have gotten so common — and so attractive to criminals — that Gov. Hochul has asked Albany to approve five-figure fines and tough enforcement powers to help shut them down.

It remains to be seen whether any state can legalize marijuana without serious downsides.

But New York’s attempt has been particularly disastrous.

This is in large part because rather than prioritizing tax revenue or public health in the legalization process, Albany put progressive-tinged “social justice” strategies front and center in its policy design.

They admit as much.

Hochul has emphasized that New York State’s marijuana industry will benefit those who committed crimes under prohibition.

The state’s Office of Cannabis Management has said that “social and economic equity” is a “major focus” of legalization.

And the New York City Mayor’s Office promised to put equity “at the center” of the budding industry. You get the idea.

Amid all of this woke-speak, one message becomes clear: Cannabis legalization prioritized progressive interest groups over legality and common sense.

And indeed, “equity” has suffused every aspect of legalization — to catastrophic results.

First, the numbers: There are just seven licensed dispensaries in all of New York State, three of which are within half a mile of each other.

Why so slow? A federal injunction – now lifted – delayed dispensary roll-out in parts of Upstate New York. Far worse, however, is the state’s entire approach to licensing.

The first 150 licenses must, by law, be issued to people who had previously been convicted of a marijuana-related offense, or whose family member had been convicted. 

Finding, approving, and setting up businesses for such folks takes time — lots of it.

Nobly intentioned? Sure.

But if we want businesses to run smoothly, the state should have prioritized applicants with a history of entrepreneurship and business acumen, not breaking the law – even if those laws demanded a rethink.

Instead, it’s doubling the number of licenses open only to former criminals. 

The state has also said it will aim to award “50% of all adult-use licenses to social and economic equity applicants,” including minority- and women-owned businesses.

Yet again, applicants will continue to be selected based on their sex or skin color, not on who can best run a business.

With marijuana legal but virtually no legal retailers operating, New York has unsurprisingly seen a wave of unlicensed pot shops pop up.

Not only are these outlets polluting eyesores; but they’re also magnets for crime.

The NYPD has said that last year pot shops were robbed nearly 600 times. That they sell freely to kids isn’t helping either.

Why have the shops grown unchecked?

Because the consequences for running them – a paltry $250 fine — are essentially nonexistent.

Raided shops keep reopening, including one right across from City Hall. Hochul and Adams are now seeking tougher tools to shut them down.

But it’s unlikely that the legislature, which just rebuked the governor’s chief judge pick for not being left-wing enough, will endorse a crackdown on pot.

Beyond the faulty focus on equity, enforcement agencies need the ability to give more than just a wrist slap to illegal pot shops.

Gov. Hochul’s proposal to dramatically increase fines and expand inspection powers is a good start.

New York City should also clarify the Sheriff’s authority to inspect pot shops, as some deputies have raised questions about their ability to do so.

New Yorkers themselves also need to consider why they tolerate such flagrant law-breaking when it comes to pot, but almost no other businesses. 

Unlicensed shops aren’t unique to New York; they pop up everywhere pot has been legalized, contributing to anemic legal industry sales.

The reason is simple economics: Without the need to comply with costly regulations, the illegal shops are just cheaper — savings they pass on to their customers.

And under the current legalization scheme, unlicensed shops are insulated from the enforcement efforts pro-pot advocates inevitably decry as evil and racist.

A well-designed marijuana market — insofar as there is such a thing — minimizes criminal activity and maximizes tax revenue, which the state then reinvests in public health.

But New York’s attempt to center “equity” in its legalization agenda has produced the opposite effect, maximizing criminal activity and minimizing legitimate revenue generation.

Some marijuana market regulations are essential: no selling (or advertising) to kids, clear supply chains, controls on potency, etc. True, the costs of these regulations will be passed on to customers, making the gray market cheaper and more attractive.

But the more the state attempts to regulate the industry for “social justice,” the higher these regulatory costs will be in the long run.

This is why the state needs to stop handing out licenses to people as a form of “reparations” and start looking for licensees who can run a real business.

That will ultimately deliver meaningful — and lasting — cannabis reform.

Charles Fain Lehman is a fellow at the Manhattan Institute and contributing editor at City Journal.