Why New York’s Underground Weed Market Isn’t Going Anywhere

In 1995, Lamont, a Black man from Harlem, New York, then in his mid-twenties, was arrested and charged with selling drugs as part of a vast criminal enterprise. Though he maintains it was a case of mistaken identity, the feds claimed he dealt cocaine and kicked profits up to a drug lord. His first trial resulted in a hung jury, but the second time the charges stuck. He was convicted and spent 21 years in prison.

When he was released in 2016, he came home to a Harlem he barely recognized. He was disappointed by the lack of Black ownership in the historically Black neighborhood, which had rapidly gentrified during his time behind bars. “I’m moving around, trying to adapt back into society, and I just was seeing how my community was hurting,” says Lamont, now 52, who asked to be identified only by his middle name. “All these buildings; none of them owned anything.”

He spent time living with his mother, he says, until he got back on his feet, eventually establishing a personal training business. Then, during the summer of 2021, a few months after New York State legalized adult recreational-use marijuana, Lamont rolled out his first weed truck at the corner of 116th Street and Frederick Douglass Boulevard. The vehicle was painted green, outfitted with a bright LED banner and branded Uncle Budd. Lamont and his truck operators accepted “donations” and issued marijuana products as “gifts,” a model many of the new weed vendors across the state — though mostly concentrated in the five boroughs — have adopted.

Over the next year, Lamont’s business expanded. At its height, he says, he was operating a fleet of 10 trucks, and Uncle Budd garnered substantial press as one of the growing number of so-called “gray market” marijuana distributors in the city. People of color, like Lamont, were behind many of them. The new state government body devoted to building New York’s regulated cannabis industry, the Office of Cannabis Management (OCM), promised social equity would be baked into its construction to help benefit Black and Latino people, of whom a disproportionate number were incarcerated under prohibition. Minority parties interested in building a legal weed business would get a fair shot.

But while the OCM asked for time to fulfill that promise, many didn’t wait — intrepid and eager entrepreneurs opened up various kinds of shops. Weed trucks, stores, and sidewalk folding tables filled with products, attracting customers who could now smoke freely anywhere a cigarette was allowed. 

There was one hitch: As far as the state was concerned, marijuana sales were still illegal, and would remain so until the OCM awarded sales licenses to vendors who passed through a vetting process and became tax-paying, regulation-abiding partners with New York. 

However, the out-in-the-open weed distributors, many distrustful of the government in part because of its past mistreatment of minority community members, carried on. They weren’t going to hang back and wait for New York State to rake in money through its cannabis market and, like they’d seen in other states, leave out the same people who were penalized for decades in the past. They felt they were within their rights to sell marijuana right away. 

AT THE CENTER OF THE GRAY MARKET explosion in New York is section 222.05 of the state’s penal law, which says “transferring” a limited amount of weed between adults is allowed, but only “without compensation.” Some weed entrepreneurs have interpreted this to mean that the donation model, as well as the club model — where a membership fee gets a person access to “free” weed — are permissible.

“The spirit of the law was really meant to allow individual users to exchange weed between each other,” says Morgan Davis, founder and CEO of Davis Legal, a law firm specializing in cannabis law and policy that serves entrepreneurs, brands and politicians across the U.S. “It is not meant for businesses to profit off of and avoid regulations and licensing for sale.”

For a time, gray market vendors were not penalized because, many speculated, the state wasn’t terribly keen on the idea of rounding up weed sellers, particularly those of color, after reversing past harsh policies against them. But as the OCM periodically announced progress in cannabis industry legislation and programming development, highly publicized crackdowns against weed distributors began in New York City. Shortly after Mayor Eric Adams told the crowd at a cannabis industry expo in June that law enforcement would not take a “heavy-handed” approach toward penalizing illicit weed vendors, trucks began getting towed en-masse out of everywhere from Times Square to Astoria, Queens.

In September, Uncle Budd was hit. Early that month, officers from the New York Sheriff’s Office towed a number of Uncle Budd trucks to a South Brooklyn lot. However, they were not confiscated from the streets for weed “sales.” According to a Sheriff’s Office spokesperson, Lamont’s Uncle Budd trucks were ticketed because the vehicles were improperly registered. Local law enforcement has approached penalizing weed trucks in a similar fashion before, towing them for unpaid parking tickets and violations tied to illicit food sales, as opposed to criminal marijuana distribution — though at times the NYPD’s messaging to the public about some of these seizures implied otherwise. Lamont says he was told his trucks required commercial license plates, but when he registered them with the DMV, such a stipulation for deployment was never raised.

The crackdown didn’t end with Uncle Budd’s trucks. On Nov. 14,  Adams formed a task force of personnel from the NYPD, Sheriff’s Office, and other city and state regulators to take on illicit weed vendors. Three days later, members of the task force arrested managers of a smoke shop in Brooklyn and charged them with illegal cannabis sales. The task force has also distributed 300 civil violations and more than 30 criminal court summonses to other weed distributors.

Lamont’s history of unwillingness to comply with law enforcement on this issue is tied to his disbelief in the OCM’s decree that it will provide people of color like him — as well as those who, like him, have served prison sentences for drug crimes — opportunities for market equity.

“We’ve heard people talking about social equity and cannabis since the beginning of this industry, and very little of it has come to fruition,” says Davis, the cannabis attorney. “Minority cannabis operators have a harder time getting funding, insurance, bank accounts, all the things that any cannabis business owner already has a problem with.”

Davis holds out some hope, though, rooted in her observation that, to this point, “New York has been very intentional about the social equity elements that they have included in their licensing.” She adds that, in her mind, the state has “gone beyond what we’ve seen almost any other state do when it comes to social equity.”

Damien Fagon, Chief Equity Officer at the OCM, says his organization is learning from the mistakes made by other state governments that did not provide well-paved pathways for people of color into the cannabis industry. “We are not going to erect the same barriers to entry that exist in other states,” Fagon says. “It’s very easy to not do that. We’ve seen what they did; we’re doing the opposite.”

On Nov. 21, the state awarded the first batch of sales licenses to candidates. The OCM reports that nearly 70 percent were bestowed to minority candidates, and 72 percent of the license recipients “lived within census areas consisting of the lowest median household incomes in the country.”

One of those licenses went to Suzanne Furboter, who co-owned a Queens gastropub and a wine bar for 13 years with her husband, Fernando Pena. But their joint business experience wasn’t her only qualification. She was also considered a “justice involved applicant” because Pena served time on weed-related charges. He says in 2003 he spent six months in Rikers Island jail, an experience that informed his own disillusionment with government and law enforcement. Now, seeing his wife’s name included among the list of the state’s first dispensary licensees, he says he’s “amazed” and “grateful” for the opportunity. “So far everyone we’ve met have been so welcoming,” Pena says, referring to cannabis industry stakeholders. “It’s a very supportive community. I never knew it existed like this.”

The OCM has announced it will issue a variety of licenses, allowing their holders to sell weed (in a dispensary or even via bike or scooter delivery), grow cannabis plants or operate processing facilities, among other business possibilities. The regulatory body has not finalized the cost of each license. According to the proposed annual fees, the cost of licenses vary widely, but for an adult-use marijuana distributor license, the OCM has proposed an annual fee of $7,000 per operating premises — not far off from fees for similar licenses in states like California and Colorado. (The first adult-use cannabis store is set to open Dec. 29th. The entity behind the business? Housing Works, a nonprofit that offers services to low income and unhoused people affected by HIV or AIDS.)

The OCM says it is doing its best to keep such startup costs low as a means of motivating weed entrepreneurs to operate within legal confines. “Criminality around cannabis is something we’re really trying to fight because it disadvantages social equity applicants in the business,” Fagon continues, “and it discourages people from joining the space or even respecting it as a real industry.”

Those who operate these small businesses, and their advocates, don’t believe this is going to drive away the current model. “There’s a market and somebody needs to serve it,” says Chris Day, CEO of Gateway Proven Strategies, a cannabis consulting firm focused primarily on emerging markets. “Politics continues to believe it can trump basic economics — supply and demand — which is their foolishness.”

WATCHING LAW ENFORCEMENT SEIZE his trucks has not meant the end of Lamont’s efforts to stay in the weed game. Eventually, he hopes to nab a legal state microbusiness license, which will allow him to cultivate, manufacture, and wholesale his own marijuana on a limited basis. Lamont’s waiting for the portal to apply for this type of license to open. (The OCM’s suggested fee for this license is $4,500.) While Lamont feels a microbusiness license will give an upstart like him the highest leg up in the state’s new cannabis industry, he says he ultimately answers to a higher calling than cash. “Uncle Budd is for my people,” he says. “Fuck me, bro. Seriously, this isn’t about me no more.” 

Though the OCM says Lamont is precisely the type of person they want to help establish a foothold in the regulated cannabis industry, until Lamont can get his state-issued license, he’s going to try and distribute cannabis the way it’s been done by others in New York for the better part of a decade: through digitally assisted delivery. 

“They took my trucks; four days later the app was up,” he says. “My motivation is my community. I want to change the narrative of what can be done. If I gotta be the punching bag for these politicians, let’s go.”