Scores of adult-use marijuana enthusiasts from surrounding states have flocked to Massachusetts since the state began legal sales in November of 2018. This includes many New Yorkers who have turned to their eastern neighbor to find legal cannabis after the Empire State failed to pass its own legislation.
The result has left states wondering when it should legalize cannabis, and what is the impact of not doing so. While other states mull next steps, one thing is clear: Massachusetts is generating a great deal of revenue from neighbors wanting to get their hands on legal adult-use marijuana.
The Cause
People want to buy legal cannabis that they can trust. Even if a person has to go to Massachusetts to get it, they will. Caps on quantity and sales taxes be damned, people want to buy from a source that is legally certified. After years of being sold mislabeled products from a variety of dealers and illicit options, people will go the distance, literally, to get their hands on trusted cannabis products.
In Massachusetts, adults 21 and over can buy up to an ounce of marijuana, according to state law. If purchasing the maximum quantity, New York residents would not only have to worry about transporting cannabis across state lines – a federal offense – but also state law that allows for possession of up to 25 grams. The risks aren’t as much of a concern these days, though. New York police often opt against pressing charges for cannabis possession under a certain amount.
With risks in decline, consumers have another reason to make the trip. This writer’s own friends made the roughly three-hour trip from the Northern New Jersey to Pittsfield to buy cannabis and CBD products from the dispensary Berkshire Roots.
They chose to go through three states to buy cannabis that was slightly overpriced rather than going through an illicit local option. In selecting the long trip, they were able to obtain a strain that provided relaxation and physical relief confidently. With a local option, the reliability of the product’s labeling can make the reduced cost not as much of an alluring prospect.
Massachusetts could also find an increase in out-of-state visitors if the state moves forward with plans for marijuana cafes. With in-state residents saying they are not legally allowed to consume in many rented properties, the demand for cafes could satisfy local needs. At the same time, it could provide New Yorkers and others another reason to make the drive.
The Effect
One of the more publicized dispensaries in Massachusetts is Theory Wellness in Great Barrington, a town just 15 minutes from the New York border. In five months of business, Theory racked up $11 million in sales. CEO Brandon Pollock said the company generated 1,000 customers each day, with half of the business coming from carpooling New Yorkers.
While New York has earned much of the attention, Pollock noted that license plates from Connecticut, New Jersey, Pennsylvania and others are also often present.
Leland Radovanovic, Senior Strategist at Powerplant Global Strategies, expanded on the access many New Yorkers have to their neighbors’ legal cannabis market.
“The reality is that two million people live in the Hudson Valley and that New York State is ranked number one in emigration rates. Which means that ten percent of New Yorkers have a relatively short drive to buy legal adult-use cannabis in Massachusetts.”
Theory’s owners told Crain’s that 25% of the 50,000 customers Theory saw in the early months came from the New York City metro area.
Radovanovic added that consumers, as well as entrepreneurs, are happy to make the leap over to a friendlier market, with business not returning once it has gotten its pot. Discussing the collective damage, Radovanovic said, “Hundreds of thousands, if not millions of all tax revenue will be lost to Massachusetts if [New York] doesn’t make legalizing cannabis a high legislative priority.”
PrestoDoctor Business Operations Manager Ryan Lepore has worked in the cannabis space and New York State legislature. The ongoing flocking to Massachusetts shows why steering clear of adult-use sales is not the way to go.
“[It] shows us that prohibition or opting-out does not stop consumers from consuming, or cannabis use from existing – it rather causes users to go to exorbitant lengths to break more laws, or support illicit markets, and spend their money outside of a local business or economy,” said Lepore.
How Will Neighboring States Respond?
Theory and other first-to-market dispensaries have already seen their swell of business dwindle thanks to additional dispensaries opening in Massachusetts. However, businesses are still experiencing the benefits of being the only state in the area to legalize sales.
When New Jersey began to appear as the next state to legalize in the past year or so, New York’s cannabis community was abuzz at events. Conversations on how being sandwiched between two legal states would finally force New York to legalize adult-use were quite common.
In a previous article, founding partner at Sichenzia Ross Ference and adjunct professor at Hofstra School of Law, Marc Ross added that tax revenue is just part of the concern. Public health can’t be lost in the conversation. Ross explained that states seeing citizens drive to Massachusetts find themselves at risk of increasing driving under the influence instances.
Recently, New York Governor Andrew Cuomo and Connecticut Governor Ned Lamont went fishing and discussed legalization.
“We talked about policy issues like the marijuana issue, which is obviously also relevant to contiguous states,” Cuomo said at a post-trip press conference. “What Connecticut does on marijuana is relevant to New York, what New York does is relevant to Connecticut so we talked about that and a lot of issues.” Cuomo added, “We had fun.”
