Housing Works, a nonprofit that helps New York’s homeless and HIV-positive population, has long supported itself with a network of thrift stores selling secondhand designer clothing, used books and its own activism-inspired merchandise.

Starting December 29, the 31-year-old organization has added another line of business: marijuana.

The Housing Works Cannabis Co. will open New York state’s first legal retail weed shop on the corner of Astor Place and Broadway in Greenwich Village, near the New York University campus. The official launch was set for 4:20 p.m. in a nod to marijuana culture slang. An hour before the doors opened, a line already stretched around the block.

The venture will be a key test of New York’s highly regulated adult-use marijuana industry, which will face legal and illegal competition, supply-chain challenges and high taxes that could add $1.25 billion to state coffers over the next six years.  

“At least in some respects, retail is retail,” said Housing Works Chief Executive Officer Charles King. “So selling cannabis isn’t that different from selling books or donated clothing and furnishings. It is a much more regulated environment, and so that has been a bit new for us to adjust to. But I don’t see it as being all that complicated.”

Housing Works got the coveted first-in-the-state status through its work helping and employing people who have been impacted by decades of prohibition. The preference for “justice-involved” individuals is a defining feature of New York’s legal cannabis regime, with the first 36 license holders all having some connection to previous criminal prosecution for illegal marijuana sales.

Housing Works is hoping for nearly $1 million in pretax revenue at the store in its first year. “Post-tax, that drops considerably,” King said.

“I’m so happy that Housing Works ended up as the first legal dispensary in New York state because it’s a perfect match with the philosophy and ideology,” state Senator Liz Krueger of Manhattan said at a preopening event for the media on the morning of December 29.
 
Krueger was the lead sponsor of the legislation legalizing recreational use of marijuana even though she herself is not a user.

“Even if you don’t like this product and don’t want to use it — and I’m one of them, and I hate the smell, I’m just letting you know — this is so critically important,” not only because of decriminalization but also because of the tax revenue that will support social services.

Taxed Twice

New York’s legal cannabis will be taxed twice — a potency levy on distributors on top of a 13% retail tax that could push the effective rate to as high as 50% or more on edibles.

And federal banking rules mean that Housing Works had to find a state-chartered bank to accept debit payments. That means no credit cards.

State and city officials have tried to clear the way for Housing Works with hundreds of criminal and civil citations against illegal smoke shops, which have proliferated in the span of time between decriminalization of possession in 2019 and the first legal store opening.

Greenwich Village’s renowned Washington Square Park, just three blocks away from the Housing Works store, has become an open-air bazaar of illegal cannabis sales.

Teagan Reid, a 22-year-old from North Carolina who was waiting in line, said she’s happy to pay the taxes because the money will support the de-carceration effort and that she’ll have more confidence in the quality and safety of the products.

“The illicit market is very, very dangerous,” she said. “But a lot of people are doing it anyway because they have nowhere else to get it.”

Interstate Competition

New York cannabis stores will also face legal competition from neighboring states. New Jersey began legal sales in April, and Connecticut is scheduled to begin later in January.

The opening will also be a test of New York’s cannabis supply chain, with its “seed-to-sale” tracking system and product marketing rules intended to ensure quality and keep illegally grown cannabis out of legal stores.

“The laboratory process has been incredibly cumbersome and slow,” King said. “I know the state is committed to expediting that, but in the meantime, a lot of producers have not been in a position to put their product out on the market just yet.”

Those growing pains mean that the first store will open with fewer than 100 different products — including pre-rolled joints, pills, vapes and edibles — from six different brands, with hundreds more products from dozens of brands available by the end of February.

For Housing Works, the revenue from the store is only part of the mission. The organization hopes to train a new generation of marijuana entrepreneurs, recruited in many cases from the ranks of former illegal dealers, to give them the business experience necessary to open their own licensed shops.

“We might well be training our competitors, and we have no problem doing that,” King said. “We really do believe that this business ought to be dominated by people who’ve experienced the harms of criminalization.”