The highs and lows of legal cannabis

Two years ago, Ryan Martin had finally opened his adult-use cannabis retail store, MJ Dispensaries, after an arduous time navigating the licensing process and legal challenges.

Today, he recently opened his fourth MJ location in the village of Geneseo and has plans for three more stores across Monroe County, opening soon.

“It’s really been a wild ride, but we’re excited for the future,” says Martin, who was a “legacy grower”—operating in the underground market before legalization—for over 20 years. “In the beginning, we were really struggling to pay our bills and whatnot, but once we opened, now we’re in this marathon where it feels like we’re unstoppable.”

It has been just over five years since the Marihuana Regulation and Taxation Act was passed in 2021, legalizing the sale of adult-use cannabis products in New York. The state appears to have found firmer footing after a rocky rollout.

Top leadership at the state regulatory agency, the Office of Cannabis Management, finally has settled a laborious licensing process that has slowly been improving, and interest in adult-use products continues to grow.

OCM’s 2025 annual report says adult use of cannabis rose over 3 percent from pre-MRTA 2018 to 2023. This growth has fed an increasing volume of retail sales.

In March, Gov. Kathy Hochul celebrated $3.3 billion in total sales since market launch, which translates to statewide revenues of $429 million from the 13% excise tax set by the MRTA.

“Five years ago, New York committed to building a cannabis market rooted in equity, safety, and opportunity,” Hochul said. “Today, that commitment is delivering real results.”

“I think it’s undeniable that more storefronts opening is increasing the total size of the market. I still think New York is far from its maturity point, though,” says Will Brophy, chief operating officer of Nabis, a logistics company that also operates in California and Nevada. “And I know it’s felt like a long haul for a ton of the operators to get to this point, but I would say we’re still in the early days of New York cannabis.”

While sales and retail locations continue to grow in the state, bumps in the road are still apparent. A track-and-trace system intended to support regulations was introduced last year through the company Metrc. The launch was messy, with many cannabis growers and retailers struggling to meet the tracing deadline.

“We’re all about track-and-trace, I believe in compliance, but it was a nightmare,” says Precious Brown, president of BLOOM ROC, a nonprofit cannabis advocacy group. “They could have picked a better partner and supported people’s concerns better.”

Locally, Henrietta town supervisor Stephen Schultz has raised questions about the tax revenue collected on cannabis products, and enforcement issues remain a challenge for customers and retailers alike. Another systemic issue is supporting social and economic equity through incentives for individuals disproportionally impacted when cannabis possession and use was illegal.

“We want to make sure they have everything (they) need in terms of operational support. Because many of them are just entering the market, (which) can be an uphill battle for everyone, no matter where you’re coming from,” Brown says. “If we’re truly dedicated to the promise of equity and repairing harm, you have to support those people.”

Rising sales

Optimism over the market’s continued growth appears fairly widespread. A 2023 report from the nonpartisan New York City Independent Budget Office estimates that a fully mature industry could generate $1.2 billion in annual taxable sales and $47 million in annual tax revenue for New York City.

Estimates from state Sen. Jeremy Cooney, chair of the Subcommittee on Cannabis, put the market’s potential at $5 billion and $7 billion statewide.

Although some news sources have reported a discernible decline from a peak during the COVID-19 pandemic, California remains the strongest state in monthly retail sales, regularly surpassing $300 million. Michigan is also at the forefront with a steady total of over $200 million in sales per month.

Sales in New York are already ahead of mature markets in Colorado and Oregon, as well as Illinois, which recently saw a drop from its usual stable pace. While monthly sales in New York still fluctuate, they have reached a floor of at least $100 million. Schultz says the typical tax revenue amount from the six stores in his town should be roughly $250,000 a quarter.

However, he believes the town is currently not receiving the full amount in taxes it is owed. Starting with revenues from late 2024 and early 2025, Schultz noticed that retail sale values were not matching with the typical sales numbers.

Excise taxes based on 13% of stores’ sales are paid to the state Department of Taxation and Finance. Those levies are transferred to the state Comptroller’s Office, which distributes 4% of that to counties, with the remaining 9% going to the state.

County governments take 25% of their received sum (equal to 1% of the original sale total), and the remaining 3% is given to the local municipality where the sale occurred. 

Schultz says based on OCM data, the expected 4% tax revenue from sales for the first quarter of 2025 was $526,738.

“But the check the county received was only $304,451, which represents a 42% reduction in what we should have been owed,” he maintains. “For Henrietta, that meant almost a $111,000 shortfall for the town, which hurts us a lot.

“I’m not trying to sound greedy, but it is taxes that the people paid expecting it to come here,” adds Schultz. “In fact, we have a number of people who, when we first started talking about this, jokingly said, ‘Hey, I’m glad I’m doing my part to help keep the town taxes down!’”

Schultz says the added revenue from adult-use cannabis has already been used in Henrietta for a wide variety of services including the hiring of extra law enforcement, filling potholes, helping to build a senior center expansion, spray park, dog shelter, and more.

He says that efforts to acquire sales and revenue data from the Department of Taxation and Finance through the Freedom of Information Law have been unsuccessful. Schultz also notes that he went directly to the stores, which includes MJ Dispensaries, to inquire about sales figures and the numbers still did not add up.

“Just the top three dispensaries alone accounted for something like 80 percent of the (sales) number. They were already well over what we received. So there’s something amiss,” he says.

The Department of Taxation and Finance did not respond to the Beacon’s request for comment.

BLOOM ROC is aware of the Henrietta situation. It supports greater transparency at the regional and town level, suggesting that the comptroller should produce a report to help illustrate how funds are collected and distributed. Brown also says this knowledge should permeate to the retailer level, and that education about the entire industry process is part of the nonprofit’s incubator programs and free educational learning experiences.

Illicit sales also continue to be a challenge for the state cannabis industry. OCM reported it seized 3,787 pounds of illegal product worth $20.3 million last year.

There have already been two large local investigations in recent months. In April, authorities said they seized $1.3 million in illegal cannabis products from smoke shops on Lyell Avenue and Chestnut Ridge Road. Last year, a raid took place at a store in Henrietta, which officials say had 27 pounds of cannabis flour and related paraphernalia illegally.

“In terms of the legal cannabis dispensaries, we’ve had zero issues. They’ve been great,” Schultz says. “I really wish the OCM would get more aggressive and (shut illegal shops) down. They are dangerous. They’ve had products that had 10 to 50 times the allowable THC content. They’ve had some products that had fentanyl in it, or in one case, some of the cannabis leaf was moldy.”

“There needs to be more done, but the OCM’s budget is only $60 to $70 million,” Martin says. “It’s just not enough money for them to be able to service the entire industry, whether that’s the licensing department, the compliance department, investigations. They need more funds to run this industry properly.”

Brown supports local authorities’ efforts to shut down non-licensed operators. However, she also believes operators should be educated about the legal opportunities that exist.

“After decades and decades of prohibitions, we have only been out of prohibition for a short time now,” she says. “If you did not grow up participating in government, if you were not civically engaged in your home, and now we’re asking you to actively understand these processes, that can be a lot to take in all at once.”

OCM states that, due to a court injunction limiting its inspection powers and the completion of a 2024 task force, enforcement efforts in 2025 were fewer than the previous year. Its investigation department plans to launch initiatives in digital surveillance, joint operations, increased testing and federal collaboration.

A bill recently introduced by Cooney could expand OCM’s enforcement powers as well by giving it the ability to conduct “reasonable searches” based on probable cause.

OCM is also continuing its cannabis law and regulatory enforcement training with localities in 2026. While the city of Buffalo and Ontario County were among the law enforcement jurisdictions mentioned by OCM as participants, Monroe County or the city of Rochester were not.

Secondary growth

The number of retailers and cannabis-related businesses in New York and the Finger Lakes has also increased.

Focused on the supply chain, Nabis continues to expand its footprint here, with plans to double its warehouse space. Brophy predicts the site will have 100 employees by the summer. 

Areas that could further grow include technology and compliance, packaging, and laboratory testing. In New York City, the second round of funding announced last month through the Cannabis NYC Loan Fund now includes businesses outside of retailers.

Since the Beacon examined the industry in December, six more licenses have been approved, bumping the total number of legal dispensaries in the region to nearly 50.

The Henrietta-based MJ Dispensaries accounts for one of those new licenses. After the firm opened a second store in Spencerport in late 2025, more locations were added in Honeoye Falls and Geneseo this year, after a long period of lobbying.

“I want to be the face of cannabis here in Rochester and opening up here in the area gives me more control over my brand and what we’re known for, which is our customer service. If you call us, it will always be a human voice,” Martin says. “But I’m doing this for the plant, not for my own name but to get this product in the hands of people who need it.”

Outside the city, Henrietta’s six stores give the town the second-largest industry presence. Penfield, East Rochester, Brockport, Spencerport, Victor, and Honeoye Falls also have at least one adult-use cannabis store.

“We looked at it and said, ‘You know what, we’ve got no schools, parks or churches on this stretch on Jefferson Road and West Henrietta Road. That’s our big retail stretch. Why not put it with all the other retail?’” says Schultz. “You know, I don’t see it as really any different than a liquor store.”

Ironically, this rapid expansion could be driving both increased consumer access and a retail slowdown, a 2026 report by Cannabis Industry Journal notes. This could increase the market’s competitiveness and outpace consumer demand, it suggests.

Martin, who credits Schultz with helping him secure the first MJ Dispensary space, does want to avoid a “race to the bottom” effect with new stores.

“We’re trying to avoid oversaturation at the retail level. If you look at Buffalo, there’s a dispensary like every 1,000 feet down there. Not only that, you have the (Seneca Nation) reservation nearby with nontaxed cannabis,” he says. “And then you have the border with Canada, where it’s all legal, so that’s a ton of competition without even talking about illegal shops.

But the Rochester market has plenty of room to grow, Martin believes.

“Rochester is not even close to saturated; in fact, it’s probably one of the least saturated places right now,” he says. “The Finger Lakes was held up longer than any other region when it came to the rollout.”

OCM’s report further complicates this picture by finding that sales remain concentrated among a limited number of high-performing locations. 

“As of Nov 30, 2025, the top 10 stores account for 29 percent of statewide sales, the top 25 for 43 percent and the top 50 for nearly 61 percent,” the report states. “The top performing 50 percent of all operating stores generate about 80 percent of total sales, reflecting early advantages in location, brand presence, and operational scale.”

The best-performing stores are in the Long Island region. As of November, Long Island made up 47 percent of annualized adult-use sales across New York’s 10 regions. OCM credits this performance to Long Island’s dense population and strong consumer spending power. Bright spots outside of that region do exist, however.

“There’s also a lot of players in Upstate New York who have been really holding their own and building dominant brands,” Brophy says. “(Syracuse-based) Ayrloom is one of the most dominant brands we’ve ever seen in a state. And they’re doing it from Upstate New York.”

Ayrloom produces THC-infused beverages and was born from a century-old family-run orchard and cidery, Beak & Skiff. Since its launch in 2023, the company has quickly become the top cannabis beverage company in New York and has employed hundreds of workers.

“Upstate is turning into a powerhouse of cannabis in many ways. It’s awesome to see as somebody who was born and raised here and lives here now,” says Brophy.

OCM plans to further study this issue with the formal creation of a market analytics team last year. A Workforce Composition Survey, which will help create evidence-based policy, was announced by the team for release in early 2026 but has not yet been published.

The equity question

When the legalization process was enacted in New York, an important factor was social and economic equity, or SEE.

“For too long the prohibition of cannabis disproportionately targeted communities of color with harsh prison sentences and after years of hard work,” said then Gov. Andrew Cuomo when the law was enacted. “This landmark legislation provides justice for long-marginalized communities, embraces a new industry that will grow the economy, and establishes substantial safety guards for the public.”

SEE businesses make up 55% of all licenses since the MRTA passed, with the largest share in adult-use retail dispensaries (77%) and adult-use microbusinesses (58%). Fifty-three percent of all licensees in the Finger Lakes region are SEE companies.

Statewide, women-owned and minority-owned businesses made up 57% and 50% of all license holders, respectively. Distressed farmers and service-disabled veteran-owned businesses each accounted for 7% of licenses, with individuals from communities disproportionately impacted by the war on drugs being another 15 percent of holders.

BLOOM ROC has strongly aligned itself with the equity mission, working to foster economic development in marginalized communities through the cannabis market. Its two-tiered training programs of incubation and bootcamp are part of that work.

Graduates from the program include High End New York, a Black family-owned dispensary located on South Clinton Avenue.

“High End is amazing. But it was hard for them to be able to have an opportunity in the market,” says Brown. “In order to have working capital, retail space, they had to make real sacrifices. So I wonder, where is the support?”

She believes that OCM needs to do more to support both SEE licensees and incubator programs like BLOOM ROC’s. OCM’s 2025 equity report concedes that there are gaps that need to be filled.

A survey conducted by the SEE team found that challenges faced by licensees and supporting organizations stemmed from limited access to clear, timely, and digestible information, and that additional funding was the top request to strengthen or expand incubator programs.

Even while it needs greater resources, BLOOM ROC does have public support at the local government level and robust fundraising efforts. An upcoming fundraising event is a French Toast and Flowers event for Mother’s Day, for example.

“We’re celebrating women who have mothered in a way that, now, we really want them to have the experience of being pampered,” says Brown. “It’s about celebrating and also being inclusive and inviting to take part in this industry.”

Other events planned for this year include the annual High Tee golf tournament and a Sky High 5K walk and run. This is in addition to educational experiences, which aim to inform the public about the cannabis industry.

This year, Brown says BLOOM ROC will take the public through sites and companies to show the entire process in producing cannabis products as well as a series with Daniela Vergara, a specialist with Cornell Cooperative Extension of Monroe County. 

Public education, an OCM priority, has always been an important part of BLOOM ROC’s mission. Brown recently held a “Mature and Informed” event with people 65 years and older who were interested in adding cannabis to their wellness routines. Experts such as pharmacists and doctors were available to answer questions and refer to potentially useful products.

“Our government has done a great job with misinformation so we have to do a better job at educating the community about the business of cannabis, the consumption and misuse of cannabis,” Brown says. “We need to recognize the damaging impact cannabis has had on Black and brown communities,” she adds, “and transform the stigma, rectify community harms, and empower meaningful initiatives.” 

Jacob Schermerhorn is a Rochester Beacon contributing writer and data journalist.

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