NEW YORK (1010 WINS) -- Dozens of unlicensed marijuana dispensaries are popping up around New York City using legal loopholes to sell cannabis before legal dispensaries open.
These stores continue to spread even as the state aims to open the first legal dispensaries by the end of the year and pushes back on the unregulated gray market shops.
Many of the semi-legal storefronts and trucks use a gifting model, according to Gothamist.
It is legal to gift up to three ounces of weed to a person who is 21 or older as long as there’s no compensation. Three ounces have an average street value of over $800 in New York, according to Oxford Treatment Center.
Enterprising smoke shops and fledgling unlicensed dispensaries are selling products that cost nothing to produce and gifting cannabis after the transaction is complete. A customer might buy a digital mixtape for $40 and walk away with an eighth of an ounce of weed, for example.
Vendors have set up shop in trailers, trucks, store fronts and homes to take advantage of the gifting loophole. Spots like Weed World, Street Lawyer Services, Popped.NYC, Barbershop Museum, The Green Truck and Gifted BK have been selling marijuana without a license for months now.
The state is currently issuing the first dispensary licenses to ex-convicts with cannabis-related offenses in an effort to provide reparations to some of the victims of the war on drugs.
New York has the most radical and progressive approach to marijuana equity in the country, but the semi-legal vendors who are now getting a head start in establishing a brand and relationships with customers could undermine this effort.
The Office of Cannabis Management issued 52 cease and desist letters in early February, NY1 reported, but many of the unlicensed dispensaries continue to operate, and more have opened since then.
“You are hereby directed to cease any, and all, illegal activity immediately,” wrote the OCM in the letters. “Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk. The unlicensed sale of cannabis is illegal and subjects you to substantial fines and possible criminal penalties.”
The state has not yet followed through on its threat to take legal action.
California, the first state in the country to legalize marijuana, has also struggled with unregulated vendors which have gone unchecked and grown to dominate the market.
Industry experts told NPR that 80 to 90% of cannabis sales in California come from gray market dealers.
A bill was introduced in March that aims to close these loopholes in New York and stop the proliferation of semi-legal dealers.
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