One of the most anticipated legal markets in 2022 was New York, where regulators had spent well over a year gearing up to launch adult-use sales. New York officially kicked off adult-use sales in a single store at the very tail end of 2022, which will result in 2023 being a ramp-up year. With limited retail availability and stiff illicit competition, New York’s adult-use cannabis market will fall short of meeting the market size originally estimated in 2022, but even with all of that being true, New York is still set to be the biggest new US cannabis market in 2023.
Taking the Pulse on New York Medical Cannabis
New York has been home to a comprehensively regulated medical market since 2017, but with stringent regulations, limited licensing, and sparse retail availability, the state’s medical program saw sluggish growth, and even saw annual sales decline in 2022. Legal medical sales reached their peak in 2021, totaling ~$175 million before falling slightly to total ~$169 million in 2022. That equates to less than 1% of the total legal sales in the US, and just under 2% of total medical cannabis sales in 2022.
Adult-Use Cannabis Takes Center Stage in New York
There is a component of the adult-use market roll-out that is paramount to consider, and an important caution if comparing New York to other markets. Unlike many other new markets, New York is not allowing existing medical licensees to participate in the new adult-use channel, instead prioritizing conditional social equity licensees. As a result, some of the largest MSOs are excluded from participating in the first years of adult-use.
Balancing the large opportunity significant barriers, BDSA is forecasting New York to bring in ~$1.3 billion in total legal sales in 2023, with ~$1.1B coming from the adult-use channel. Despite a slower-than-anticipated start in 2023, BDSA expects the state’s sales to see strong growth in the coming years. Total sales are expected to grow to ~$1.9 billion in 2024(~46% growth over 2023), then ~$2.7 billion in 2027, with the vast majority coming from the adult-use channel. As has become the norm in past markets moving to adult-use, the medical channel is forecast to downsize in New York over the next 5 years. However, given how constrained the medical program has been from the start, the medical decline is expected to be less dramatic than in other states.
So What Next?
With New York on track to join the billion-dollar cannabis market club in its first year of adult-use sales, the state is on track to be the biggest new cannabis market in 2023. The Empire State is set to be the number one contributor to growth of US legal sales through 2027, so while there may be growing pains in the early years of the market, there is still huge opportunity for those who take a thoughtful, data-based approach to what is set to be a titan of the Northeast cannabis industry.
Interested in more insights about cannabis in New York? Check out our full report on the New York cannabis market, and join BDSA at MJ Unpacked NYC April 26-28, 2023 to get the top insights on where the biggest new market of 2023 is heading.