Politics
New York Is Succeeding In Establishing An Equitable And Competitive Marijuana Market, Despite Challenges (Op-Ed)
“New York’s success demonstrates that carefully designed market rules can simultaneously encourage diverse ownership, protect competition, drive innovation and prevent consolidation.”
By Damian Fagon, New York State Office of Cannabis Management
In the three years since New York legalized recreational cannabis, headlines have documented an industry wrestling with litigation, bureaucratic delays and public safety concerns. While these stories captured real challenges, their narrow focus obscured a significant development: the state’s success in establishing a legal cannabis market that is more equitable than any of its predecessors.
This was not inevitable. Indeed, it was not even likely. For decades, prohibition had operated as a machine of wealth destruction in Black and Latino communities—devastating families, erasing economic gains, criminalizing entire neighborhoods. Now, the very industry that once served as a weapon of oppression is becoming an instrument of repair.
The path to this point reveals something essential about markets: Their outcomes are determined not by good intentions, but by architecture. While challenges remain, mounting evidence suggests New York’s approach may succeed where others have failed.
Structuring Against Market Capture
The fundamental flaw in most legal cannabis markets lies not in their equity programs but in their underlying structures. Without robust safeguards, large multi-state operators leverage their capital advantages to maintain strategic losses, influence policy and capture market share.
Even the best-designed social equity initiatives become mere decoration on a framework designed for consolidation. Small business owners who secure licenses under such conditions often face financial ruin, perpetuating cycles of economic harm in communities already scarred by prohibition.
New York chose a different path. Unlike states that prioritized speed over justice, New York mandated a licensing process that placed small business applicants on a level playing field. It rejected the incumbent medical operators’ early mover advantage seen in Maryland and Illinois.
This commitment to small business participation and viability over expediency encountered fierce resistance and, given New York’s notably litigious business culture, produced numerous legal challenges that delayed the industry’s development by over a year.
The state’s signature innovation lies in its two-tier market structure, which separates suppliers from retailers to prevent vertical integration and consolidation. Strict rules around license ownership, controlling interests and management agreements ensure autonomous ownership rather than the “social equity in name only” schemes prevalent elsewhere. Strategic retail buffer zones prevent predatory clustering—a practice that undermined dispensaries in Michigan and New Mexico—while measured rollout of production licenses guards against the oversupply and price crashes that have plagued markets like California and Oregon.
These were not merely regulations—they were load-bearing walls in a new kind of economic architecture.
Small Business Takes Root
The numbers tell part of the story: Over 230 dispensaries and twice as many farmers, processors and microbusinesses operate statewide, with small businesses holding 90 percent of all market share. New York’s distributed network has generated more than 500 distinct brands across ever-widening price spreads.
Eighty percent of the first licensed retailers are independently owned by New Yorkers with prior cannabis convictions. Across all adult-use licenses, 40 percent are minority-owned and 45 percent are women-owned. In just two years, New York has more than tripled the number of Black-owned cannabis retailers nationwide.
Most striking is the industry’s accessibility: New retailers have launched with as little as $40,000 upstate and $250,000 in the City—a fraction of the multimillion-dollar investments required in vertically integrated markets.
With revenues approaching $1 billion this year and projections exceeding $3 billion by 2026, New York has created an ecosystem where small businesses can thrive. Average per-retailer revenue of $5.1 million sits well above the viability threshold, while careful controls against oversaturation and price compression are intended to protect the supply chain from the boom–bust cycles plaguing legal markets nationwide.
For investors watching from afar: Do not mistake unfamiliar faces for unsound business. New York’s licensees may not mirror the corporate cannabis executives elsewhere, but they bring something more valuable: deep community roots, authentic brand stories and intimate market knowledge that no spreadsheet can capture.
Consider Vladimir Bautista in Inwood or the Robinson family in Albany—entrepreneurs whose stories exemplify the power of second chances and restorative justice. Legacy growers and graduates of the Cannabis Compliance Training and Mentorship (CCTM) program are jumpstarting the state’s long-awaited craft flower market.
After record-breaking first-year sales, Long Island’s first dispensary established a scholarship for students of incarcerated parents. Social enterprises flourish—from Beacon’s arts-focused microbusiness to nonprofit dispensary owners like Housing Works and the Broome County Urban League channeling cannabis revenues into vital community services.
By the end of next year, New Yorkers directly harmed by the war on drugs are expected to command the lion’s share of a $3 billion market and the fastest growing industry in the state. This represents more than individual success—it’s about building enduring economic power and sovereignty in historically excluded communities.
When organized, these owners could wield significant political influence, shaping local and state policy and promoting issues their communities care about.
Redesigning Markets for the Many
The implications extend far beyond cannabis in New York State, where wealth inequality ranks highest nationwide. The state’s approach exemplifies what scholar Daniel Green calls the “access doctrine”—evaluating economic institutions by their power to enable genuine participation, not merely formal access.
New York’s success demonstrates that carefully designed market rules can simultaneously encourage diverse ownership, protect competition, drive innovation and prevent consolidation.
This work has been about reimagining who markets are built to serve. It is about understanding that structure determines outcome—that regulations developed after the fact cannot correct fundamental flaws in market design. Instead of focusing solely on helping historically excluded groups access existing markets, we must consider how markets themselves can be structured to naturally generate more equitable outcomes.
But the work remains unfinished and challenges remain.
Critical decisions loom about license volume and retail saturation. The DASNY-administered Cannabis Social Equity Fund continues to harm licensees through predatory loan terms and inflated costs. Legal battles have depleted capital reserves among those caught in protracted injunctions. Politically motivated leadership changes have generated market uncertainty and cost the agency valuable institutional knowledge.
For this experiment to endure, New York needs leaders unbowed by industry interests and committed to long-term stability over short-term gain.
Yet these obstacles should not obscure the essential truth: New York has proven that economic success and social justice can reinforce each other. Markets can be built to serve those they once excluded. The architecture of exclusion can be dismantled and rebuilt as a framework for repair.
The tools for building more equitable markets have always existed—New York is showing how to use them.
Damian Fagon is the chief equity officer for the New York State Office of Cannabis Management.
Photo courtesy of Philip Steffan.
