Retail Marijuana in New York: Where the Goliaths Bolster the Davids
Good morning. It’s Friday. We’ll get an update on a new New York industry — retail marijuana. And, in the heat of late August, we’ll look into why subway stations aren’t air-conditioned.
New York State began taking applications for retail marijuana licenses on Thursday. The state is giving preference to people in communities that were disproportionately affected by the drug wars of the past. But large medical marijuana companies want in on the state’s new retail industry, too. I asked my colleague Grace Ashford to explain.
At issue is a fee that the medical marijuana companies will have to pay to sell marijuana outside the medical program. How much might that fee come to?
This is the multimillion-dollar question — literally.
There is no figure listed in the law, so the decision will ultimately rest with regulators. Several different numbers and fee structures have been discussed, ranging from roughly $3 million per operator all the way up to $20 million per operator.
The medical marijuana industry has its own ideas, of course, including making the license fee reflect the value it will bring to a license holder, which would depend on the eventual size and success of the new legal market. Instead of one large lump sum, the industry has pitched a structure where the fee would be payable over time.
Industry leaders have also suggested tying a portion of the fee to their own revenue, which they say would put industry and regulators on the same team, supporting the medical marijuana program. That reflects their view that New York needs to help make itself attractive to the industry if it wants to build a thriving legal market — and clamp down on an illicit market that has become increasingly visible.
Regulators have a different view. They want to build not just a profitable market, but also an equitable one, and they say that collecting as big a fee as they can would help them do that.
What will the money from the fee be used for?
This is one of the unusual facets of New York’s cannabis law. The money from the 10 large medical marijuana licensees will go to bolstering their new, smaller retail competitors. In interviews along the way, I have joked that it’s sort of like a Robin Hood scenario, but consensual.
The intent behind this is the foundation of New York’s cannabis law, which aims to use legalization to right some of the wrongs caused by years of disproportionate enforcement of the drug laws. Specifically, the law promises to give 50 percent of cannabis licenses to what it calls “social and economic equity” candidates — women, minorities, distressed farmers, service-disabled veterans and people from communities impacted by the war on drugs.
If the medical operators are the Goliaths of the industry, who are the Davids? And why was Thursday an important day for them?
Thursday was a tremendously exciting day: New Yorkers who have been waiting to get in on the action were finally able to begin applying for the first round of retail licenses.
These first licenses will not go to just anyone, however. They won’t even go to anyone who meets the definition of social or economic equity. To qualify, candidates must have been convicted of a marijuana-related offense (or have a close family member who was) and have run a profitable business for the past two years, among other things.
The state has pledged to get the first retail marijuana stores open before the end of the year, so there’s really no time to waste.
But don’t the new retail shops need the medical operators, and wouldn’t that put the Goliaths back in a dominant position?
This is where the regulators’ hands are tied, to some extent. The state has issued provisional cultivation licenses to hemp farmers whose product will supply the first retail stores. But logistical constraints mean that there will only be a limited amount available, at least at first.
Given the tremendous interest in cannabis in New York — think of the sales to tourists alone! — officials don’t want empty shelves. The way to avoid that is to supplement the inventory with marijuana from the medical operators.
So the state will have to address the medical operators’ place in the market sooner rather than later.
Whether they take a dominant position remains to be seen. Ultimately, each will be able to open up to three retail dispensaries. And, thanks to another quirk of the law, they will be vertically integrated — a major advantage. But the regulators seem intent on ensuring that the new, small retailers get a real shot.
Prepare for a chance of showers and thunderstorms in the late afternoon, with temps near the high 80s. At night, showers and thunderstorms persist, with temps around the low 70s.
In effect until Sept. 5 (Labor Day).
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When the wait is hot for a ride that’s not
When you are sweating on a subway platform and longing for the beach, this is an obvious question: Why aren’t subway stations air-conditioned?
The short answer: The stations are old, and air conditioning is expensive.
Our writer Robert Klara did some back-of-the-envelope math, starting with the chillers at Grand Central Terminal. They not only cool the station for Metro-North passengers rushing to Pelham or Poughkeepsie, they also provide air for fans known as spot chillers in the adjacent Lexington Avenue subway station. The spot chillers may not work wonders, but they do what they can to make the platforms more endurable.
The math: There are 43 chillers at Grand Central. They cost around $10 million when they were installed in 2000, or about $17 million in today’s dollars. Multiply that by 281 — the number of underground subway stations — and the total comes to almost $4.8 billion.
“It’s a big number, even given the way the M.T.A. spends money,” said Danny Pearlstein, the policy and communications director for Riders Alliance, a transit advocacy group.
And the M.T.A. — the Metropolitan Transportation Authority, which runs New York’s subways and commuter rail lines — is facing a $2.5 billion deficit in 2025. Its financial insecurity runs so deep that it is looking to congestion pricing to bring in $1 billion annually from drivers to help fund mass transit.
But it’s August. If we can dream about the beach, why not dream about air-conditioned subway stations?
Dream on, said Jamie Torres-Springer, who heads the transit agency’s construction department. “The basic fact is that an old system like our subway system isn’t designed for air-conditioning,” he said, explaining that almost every mile of track is open to the atmosphere. There are stairways and sidewalk grates.
And then there are the trains themselves. The air-conditioning equipment that removes hot air from inside the cars pumps it outside, into tunnels and stations. So the ride is more pleasant, the wait less so.
Temperatures are noticeably lower in the system’s newest stations, including the 7 line’s extension to Hudson Yards and the three new stops on the Second Avenue subway, thanks to cooling towers, where fans draw air across pipes filled with a mix of cold water and glycol.
“It’s not a full air-conditioning solution,” Torres-Springer said. “But it can keep the temperature about seven to 10 degrees cooler than the ambient temperature.”
I was having dinner outside on the West Side. I saw my neighbor, an older woman who was wearing brightly colored yoga pants. I noticed that there were a couple of tennis rackets resting behind her.
I asked how her tennis game was.
She said her partner was blind in one eye, so she always had to hit to his forehand side.
— Mark Kinn
Illustrated by Agnes Lee. Send submissions here and read more Metropolitan Diary here.
Glad we could get together here. See you on Monday. — J.B.
P.S. Here’s today’s Mini Crossword and Spelling Bee. You can find all our puzzles here.
Melissa Guerrero and Ed Shanahan contributed to New York Today. You can reach the team at [email protected]