{"id":10915,"date":"2025-11-17T22:09:53","date_gmt":"2025-11-17T22:09:53","guid":{"rendered":"https:\/\/cannabisindustryjournal.com\/?post_type=feature_article&amp;p=37979"},"modified":"2025-11-17T22:09:53","modified_gmt":"2025-11-17T22:09:53","slug":"can-nys-legal-stores-compete-with-an-eight-billion-dollar-illicit-market","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/can-nys-legal-stores-compete-with-an-eight-billion-dollar-illicit-market\/","title":{"rendered":"Can NY\u2019s Legal Stores Compete with an Eight-Billion-Dollar Illicit\u00a0Market?"},"content":{"rendered":"<div id=\"wp_fb_like_button\" style=\"margin:5px 0 5px 5px;float:right;height:100px;\"><script src=\"http:\/\/connect.facebook.net\/en_US\/all.js#xfbml=1\"><\/script><fb:like href=\"https:\/\/cannitrol.com\/blog\/can-nys-legal-stores-compete-with-an-eight-billion-dollar-illicit-market\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div><img src=\"https:\/\/cannitrol.com\/blog\/wp-content\/uploads\/2025\/11\/can-nys-legal-stores-compete-with-an-eight-billion-dollar-illicit-market.png\" class=\"ff-og-image-inserted\" \/><\/div>\n<p><span data-preserver-spaces=\"true\">The recent Business of Cannabis Summit in New York City brought together industry professionals at the trendy Wythe Hotel in Williamsburg, Brooklyn, for a day focused on tackling the cannabis industry\u2019s toughest challenges: price compression, retail survival, and the slow but steady shift from legacy to legal markets. The conversations offered a candid look at what it takes to survive and thrive as New York\u2019s regulated cannabis industry matures. Many speakers agreed that while consumer demand is there, the framework that supports retailers is still developing, creating a volatile environment.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Joanne Wilson, owner and CEO of Gotham Dispensaries, offered a candid take on the current retail climate, warning that now is not the time to buy when asked about future expansion plans. \u201cThe market\u2019s going to fall,\u201d she said, predicting that many New York dispensary owners, especially small operators who invested personal and family funds, will face financial hardship as taxes and operating costs outpace returns. \u201cIt\u2019s really\u2026 the whole thing is just a shambles,\u201d Wilson added. Many panelists throughout the day were blunt about their dissatisfaction with the Office of Cannabis Management\u2019s rollout of the New York market. Several attendees said they remain hopeful, but stressed the need for more consistent enforcement and<\/span> <span data-preserver-spaces=\"true\">clearer<\/span> <span data-preserver-spaces=\"true\">rules of engagement for retailers and brands.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">David Vautrin, CEO of Fluent, echoed her caution, advising new entrants to<\/span> <em><span data-preserver-spaces=\"true\">start small.<\/span><\/em> <span data-preserver-spaces=\"true\">\u201cGo for a smaller space,\u201d he said. \u201cA lot of folks went big in the beginning, and the overhead is enormous. Your costs are only going up while your margins are going down. The tax situation is grim.\u201d With sales volume softening and price compression tightening profits, Vautrin said retailers must operate lean and avoid getting \u201ctoo far over your skis.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Vautrin points to being brand-centric. \u201cBecause<\/span> <span data-preserver-spaces=\"true\">we\u2019re restricted<\/span> <span data-preserver-spaces=\"true\">to three adult-use stores, our biggest opportunity has really been in wholesale,\u201d he said. \u201cOur wholesale business is growing very rapidly, and we\u2019re servicing a few hundred customers already.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">From a retail perspective, Vautrin said success stresses the importance of having the<\/span> <span data-preserver-spaces=\"true\">right<\/span> <span data-preserver-spaces=\"true\">SKU selection to build sticky customer relationships. There is a dizzying number of strains available. \u201cRetailers need to have a great menu, a good variety, and a very well-educated team<\/span> <span data-preserver-spaces=\"true\">in order to<\/span> <span data-preserver-spaces=\"true\">sell these products and help move people up the value chain,\u201d he said. His team partners with SeedTalent to train budtenders so they can serve as informed guides for consumers, ideally emphasizing terpene profiles and product effects, not just high THC numbers.<\/span><\/p>\n<h4><strong><span data-preserver-spaces=\"true\">Has the Market Reached Its Limit?<\/span><\/strong><\/h4>\n<p><span data-preserver-spaces=\"true\">\u201cI think we\u2019re there,\u201d said Wilson. \u201cAnd what\u2019s equilibrium anyway? In ten years, maybe, but five years from now you\u2019ll see a lot of large brands\u2014maybe Gotham will be one of them.\u201d She went on to explain her vision for a balanced ecosystem similar to other mature retail sectors. \u201cThere will always be large department-store-style dispensaries, but you\u2019ll also have smaller neighborhood shops, like the local wine or nail salons, where you know the owner and just need something quick. That\u2019s where we\u2019ll end up in terms of balance.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Wilson said the illicit market remains a<\/span> <span data-preserver-spaces=\"true\">major<\/span> <span data-preserver-spaces=\"true\">issue. \u201cEvery cop in New York City knows where these underground places are, and they have to be stopped, because that\u2019s business they\u2019re taking away from us,\u201d she said. \u201cIf you\u2019re going to grow a business, then give us the tools to grow a business. If they did this in the tech industry, you wouldn\u2019t have the big tech companies you have today. They would have all walked away.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Vautrin countered that<\/span> <span data-preserver-spaces=\"true\">true<\/span> <span data-preserver-spaces=\"true\">equilibrium is still a<\/span> <span data-preserver-spaces=\"true\">long way off<\/span><span data-preserver-spaces=\"true\">. \u201cWe\u2019re far from that stage,\u201d he said. \u201cWe haven\u2019t even captured a material chunk of the illicit market yet. In the long run, it\u2019s going to be a branding game\u2014brands that can build authentic relationships with customers will end up winning.\u201d He pointed out that \u201cgummy consumers tend to be the most loyal because they want to repeat that experience<\/span><span data-preserver-spaces=\"true\">, while<\/span> <span data-preserver-spaces=\"true\">flower consumers tend to be the least loyal because of the variability,\u201d suggesting that future growth will depend on how brands educate and build brand awareness.<\/span><\/p>\n<h4><strong>Bridging Legacy and Legal Markets<\/strong><\/h4>\n<p><span data-preserver-spaces=\"true\">Vladamir Batista, co-owner of Happy Munkey dispensaries, offered a more optimistic take, praising the OCM for creating \u201cbridges instead of moats\u201d that allow legacy operators like himself to enter the legal market. \u201cNew York has created a program where somebody who was in the illicit market can create a brand, open their own dispensary, and come to the legal market,\u201d Batista said. \u201cI\u2019ve already seen that happening with people I know, and it\u2019s going to continue.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">New York\u2019s legal market has generated around $2 billion in revenue so far this year, and many at the summit predicted the illicit market could be $4 billion. Batista thinks it\u2019s far higher than official estimates and is worth $8 to $10 billion. \u201cNew York City is the highest-consuming cannabis city in the world,\u201d he said. \u201cI keep my ear to the ground, the legacy market is definitely shrinking\u2014it\u2019s not as conducive as it once was because price compression in the legal market also drives down prices in the illicit market.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">He believes that as more legacy creativity and customer loyalty migrate to the regulated space, the industry will strengthen rapidly. \u201cAs more of that creativity crosses over to the legal market, more consumer emails and databases will get converted to the legal market. It\u2019s going to get really robust, really fast,\u201d Batista said.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Despite acknowledging challenges, he credited the state for giving social equity entrepreneurs a chance to participate. \u201cWithout programs like this, you\u2019d lose the battle against the legacy market every time,\u201d he said. \u201cAt the end of the day, they\u2019ve been around for 80 years. You\u2019re not going to overtake them\u2014you can only embrace them and help them cross over.\u201d<\/span><\/p>\n<div class=\"sharedaddy sd-sharing-enabled\">\n<div class=\"robots-nocontent sd-block sd-social sd-social-icon-text sd-sharing\">\n<h3 class=\"sd-title\">Share this:<\/h3>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The recent Business of Cannabis Summit in New York City brought together industry professionals at the trendy Wythe Hotel in Williamsburg, Brooklyn, for a day focused on tackling the cannabis industry\u2019s toughest challenges: price compression, retail survival, and the slow but steady shift from legacy to legal markets. The conversations offered a candid look at [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[10790,9290,9,50,10819,6845,1,3,61,1736],"tags":[10793,9295,2630,10820,6846],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/10915"}],"collection":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/comments?post=10915"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/10915\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=10915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=10915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=10915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}