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What to Look for Before Starting a Cannabis Business
It’s crucial to understand the market of the industry you want to start a business in. Doing so will help you identify potential roadblocks and determine whether starting a business in that industry will be profitable.
Having a good understanding of whether or not an industry is growing, or declining, will be a key predictor of your business’s potential. Does the industry seem to be loaded with potential, and is it currently in a period of high-growth? Or, are businesses struggling, and is the industry declining?
You can find the answers to these questions by looking at the customer base, already established businesses, similar industries, and other details about the industry that reveal the long-term sustainability of a business. But it isn’t always that simple.
Each industry has different aspects and variables that can drastically influence the opportunity for new businesses. These can include regulatory environments, market saturation, consumer trends, and competition levels. The cannabis industry has its own unique regulatory challenges and it’s competing with the illicit market. Therefore, cannabis business opportunities will continue to evolve while the market establishes itself and changes come into fruition.
Understanding these nuances is essential before diving into the cannabis business landscape in New York. So, should you start a cannabis business in New York? Let’s explore this question in more detail in the next section.
Should You Start a New York Cannabis Business?
The New York cannabis market is a great example of a new market that’s in a period of high-growth, in an industry that is rapidly expanding. There is a high demand for regulated and legal cannabis shops that will continue growing as the illicit market gets shut out.
This means that there will never be a better time to start a cannabis business in New York.
According to the June 11, 2024 New York Cannabis Control Board (CCB) Meeting and Headset.io, New York is one of the most profitable markets in the United States. Total retail cannabis sales have hit 357.3 million, and the monthly sales for May 2024 reached approximately 46.2 million. May also hit a weekly sales revenue record-high average of 12.5 million dollars sold by cannabis retail stores per week. The 46.2 million dollars worth of sales in May 2024 represents a jump of nearly 40 million dollars from May 2023. This is a massive jump that signifies the rapid month-over-month cannabis market growth, which has led to a contrastingly high dollar amount of sales.
This growth trajectory highlights strong consumer demand and successful market penetration by cannabis businesses. The consistent upward trend indicates a growing consumer base, and market resilience.
Below is a graph that shows the month-over-month increase in cannabis sales from May 2023 to May 2024.
The New York cannabis market has seen a drastic rise in value that is closely correlated with the increase in legal cannabis dispensaries opening up statewide. There are currently between 132 open and operating adult-use cannabis dispensaries throughout the state, which have made up the entirety of New York’s adult-use cannabis revenue. As the number of legal dispensaries increase, the market value will continue to rise.
Take New York City as an example.
The Independent Budget Office (IBO) released statistics in 2023, showing their expectations for New York City’s cannabis industry by 2027. Using data generated from January to June 2023, the IBO determined that there could be about 243 dispensaries in the city alone by 2027. This figure assumes that about 24 dispensaries will open in the city every year from 2023 to 2027.
Estimates show that these 243 adult-use dispensaries in New York City could collectively generate nearly 1 billion in sales by 2027 if the rate of growth continues to increase and the average sale size remains the same. If that prediction becomes reality, then each adult-use dispensary owner in NYC would be selling just under 10 million dollars worth of cannabis and cannabis products.
And that’s just New York City. The expectations for the entirety of New York state are expected to soar well into the billions by 2027. But 2027 is still years away, and there’s a lot that needs to happen in the meantime.
What’s Next for New York Cannabis?
New York’s cannabis industry has seen tremendous growth since recreational use was legalized in 2021, but it’s still just the beginning.
New York’s Office of Cannabis Management (OCM) has been slow in rolling out adult-use cannabis licenses, and they have struggled to maintain clear licensing guidelines. This has caused numerous slow downs in the licensing process, and a large queue of license applications that have yet to be reviewed. However, as the licensing process continues to evolve and the OCM adopts a standardized process, starting a cannabis business will only get easier.
The other big challenge in New York’s cannabis industry is the tight hold that illicit shops have on the market. The exact number of unlicensed dispensaries selling illicit cannabis products in New York is unclear, but Mayor Eric Adams estimates that it could be as high as 2,800.
Even though the legal market is still much smaller than the illicit market, action to close illicit dispensaries is currently underway following new initiatives aimed at shutting down illicit cannabis operations and safeguarding the legal market as part of the FY25 Enacted Budget and New York City’s “Operation Padlock to Protect” plan.
As the OCM finds its way and illicit dispensaries are closed, New York’s legal cannabis industry will continue to grow. Establishing your NY cannabis business in the near future will allow you to get into one of America’s biggest cannabis industries on the ground floor. This will have a lasting impact on your businesses sustainability, market control, and overall success.
So, should you start a cannabis business in New York? The answer is yes! Now is the perfect time to get your cannabis business started. The sooner you begin the licensing process, the sooner you can open your doors and begin capitalizing on this extremely lucrative industry.
Working With New York Cannabis Licensing Professionals
CannDelta is the leading cannabis business consulting firm in New York, recognized for expertly navigating the state’s complex regulatory landscape. We assist clients in overcoming barriers to launching successful cannabis businesses by providing comprehensive application support, strategic site selection, CAURD license assistance, competitive strategies, and more.
As New York’s cannabis industry continues to evolve rapidly, CannDelta provides essential expertise and guidance to help both new entrepreneurs and established businesses succeed in this dynamic market.
Frequently Asked Questions
How Profitable is the Cannabis Market in New York?
The New York cannabis market is extremely profitable in 2024. As of the end of May 2024, there has been NY cannabis market growth of over %1000 since May 2023. In May 2023, NY retail dispensaries sold 6.7 million dollars of cannabis and cannabis products, while May 2024 saw 46.2 million in sales.
How Do I Get Into the Cannabis Industry in New York?
You can get into the cannabis industry in New York by exploring cannabis business opportunities and applying for the appropriate license. Getting your cannabis business license is the first step in opening a cannabis business in New York. Licenses can be applied for during open application periods. Alternatively, licenses can be purchased and sold in New York.
Are Cannabis Sales Increasing in New York?
Cannabis sales are drastically increasing in New York during 2024. There has been significant cannabis market growth in NY, and the state has now hit 357.3 million dollars in retail sales. The state also hit a record-high average of weekly cannabis and cannabis product sales in May, with an average of 12.5 million dollars each week.
Are Cannabis Dispensaries Profitable in New York?
Yes! Legal cannabis dispensaries are seeing record high profits with every passing month. As illicit stores are shut down and more legal cannabis dispensaries appear in the New York cannabis market, sales are drastically increasing as consumers decide to opt for certified legal products. Consumers will also have to make the switch to legal dispensaries as the state continues to close down on illicit stores, while more legal stores are opening.
