Why are there so many illegal weed stores in New York City? (Part 1)

Hi, I'm PJ Vote. This is Search Engine. Each week, we try to answer a question. We have about the world. No question too big. No question too small. We just announced that we have a new premium feed called Incognito Mode. It offers all sorts of benefits, like bonus episodes plus the chance to support our work. We announced it last week. A ton of people signed up. It was a huge shot in the arm for us. If you would like to join them, or if you'd just like to learn more about what Incognito Mode offers, go to searchengine.show. OK, this week's episode, after some ads. OK, check, check, check, check. No, where are we? We're on the Lansing Street. And-- I need to reserve the intersection. Delancy-- Two Search Engine reporters, myself and Noah John, were outside in Manhattan the other day. On, it turned out, the Lansing and Orchard Street. We were taking a short walk around the neighborhood. If you haven't been to New York since the pandemic, one thing has changed. One thing that when you just walk around and notice it, can be kind of staggering. It is everywhere. OK, let's go let's walk around. A new kind of business that sometimes feels like it's driving out every other business. Retail is version of an invasive species. OK, so technically we haven't even moved. And I can see one. There's a smoke shop called Flames Zone Convianced. Store is selling weed. The green signage. They're like, devil's house weed. I think that one's a new one. I've actually never seen that one. They're like popping up like mushrooms. A few steps away from Flames Zone convenience. Another weed spot. This we're passing a store called The Commission. They've got like the red velvet robes. Yeah, I'm just very good. They have a nice green couch. Looks like a nice felt. Some guy smoking inside. The commission had a sign outside advertising cannabis infused food. Hogies and other snacks. Noah and I paused for a moment to appreciate the concept. You can get a cheeseburger that will get you a hive from cannabis while you're eating it. Yeah, that looks pretty sick. Oh, I know we got another one. All right, Empire Cannabis. Just a couple of stories down from The Commission, Empire Cannabis, a big store. But today, their steel gates were down. They actually had a fire which shut them down for a little while. Hi, Teresa. We stopped for a moment to greet Trisha. One of Noah's yoga instructors. Oh, hi. What's your name? And I asked her the question that brought us here. Have you noticed there's a lot of cannabis shops on the street in New York City? Do I see a lot of cannabis? Yeah. Yeah, everywhere. See ya. That's your yoga teacher? Yeah. Trisha moved on, perhaps to instruct yogis. On our walk, on any given block, we'd usually at least see one weed store. Sometimes as many as four. Callie plug across the street. Most of them, little fly by night operations that sell flour and edibles, some more high end. But the sheer density. We were out there because I wanted to communicate it to you. Blue cookie right across the street from its competitor, Callie plug, each with a very similar product selection. Lunche, Sissy, crazy man. What's crazy, man? On another block, three shops in a row. I'll do by supply of bought and pre-rolls. How are they? They're pretty good. Oh, the guy there was nice, though. Wait, we're passing out. An exotic cloud smoke shop. I am struggling to convey to you the absurd density of all these stores. In our 15 minute walk, we passed one pharmacy, two pizza places, and 10 weed spots. And the thing that most people I've talked to don't understand is that all the stores we're looking at on this street are operating illegally. Weed was legalized in New York City in 2021, but it's like liquor. You need a license to sell it. These shops are all unlicensed. There's thousands of them. Who's behind these stores? We walk inside one. It's just like a big open week store. The walls are decorated with spray-painted images of a stone to chest through the cheetah and an even more stone to Captain Crunch. Looks like a slightly dingy candy store, except almost all the products are junk food or weed. A cool place for kids saying, "I don't know because it's like lots of candy." I walk over to the guy behind the counter. A stylish young dude dressed in all black with a black baseball hat. So wait, tell me, tell me, you start working at the cannabis store two weeks ago. Two weeks ago, yes, correct. And how did you get the job? Through a family, friend. And have you, are you like a smoker? I don't smoke, no. Are you like a, do you have cannabis expertise? Not really, no. Why did you take the job? You know, rent a New York expensive. I'm originally from Mississippi, just moved here. Got it. Yeah. Are you worried at all about like the legality of selling weed? No, not really. I mean, what's the worst? Is this store illegal store or not illegal store? Not sure, honestly. They don't just close out with us employees. What do they say to do if something happens? They reliable for everything. So pretty much if anything happens, they come and take care of everything. And you don't feel stressed out. No, not really. Not at all. [MUSIC PLAYING] We walked back out onto the street. Where suddenly I felt hyperconscious of how, despite all its mess and noise, most of New York is to me a cacophony of rules. Cops who put tickets on windshields and into the hands of the cyclists, trending stop signs, fire inspectors, and building inspectors and restaurant inspectors terrorizing every business we have here. New York, despite its chaos, is the most regulated, rule bound, fine administering place I've ever witnessed. Unless you want to sell weed. How is it that these weed stores are our sole concession to anarchy? How did the city get overtaken by thousands of illegal smoke shops? That was the question we started with. But the answer to that question, it's bigger than New York. It's part of a story that goes back almost 100 years. This week, we're trying to understand this funny pattern that keeps happening in state's fiddley-wise weed. They keep screwing it up. We're going to look at California. We're going to look at New York, which tried to learn from California. It's a fascinating story of very good intentions with very strange outcomes. We are now living in a world where in much of America, you can buy and smoke weed freely. But many of the activists who fought for that reality are heartbroken at what it actually looks like. That story of heartbreak and of people still trying to imagine a different kind of world will tell it across two episodes. Chapter one, "Refor Madness." About a year ago, I developed this habit of slightly ruining dinner parties by only wanting to talk about New York's illegal weed stores. People liked to theorize about what was going on here, but they just didn't have any answers to my questions. Until at one of those dinners, I'd ended up sitting next to Willie. Can you introduce yourself? Yes. Hi. My name is Willie Mack. I am the co-founder and CEO of a company called Frank White. I'm also a member of the board director of the Minority Cannabis Business Association, which is the largest trade association in the US looking to bring more minorities into the cannabis space, its owners and operators, and make sure we have patient care. Willie had had a strange journey with cannabis and possessed strong feelings about the meaning of those stores. They deeply, deeply upset him. So I brought him into the studio to ask him about it. So you are not like a professional political lobbyist. And you just want the story like how you ended up in this role. What is even your backstory with weed? Like what is your history with weed in your life? My history with cannabis, and I choose the word cannabis. So I'm not using the word weed? Can you use the word weed? I would not use marijuana because marijuana has supposedly is a history of racial connotation with that word. What is a racial connotation with that word? So if you go back to the 1920s, there's a couple of sort of things that were happening in culture and the world that kind of converged at the same time. And it all came to a head in New Orleans and New York because of jazz music. So this all goes back to music. It's all tied to the culture of music. Because what was happening was you had all this beautiful music being made by the most amazing people. I call cannabis the ultimate ghost rider because it's uncredited for most of the music that's been created in the US the last hundred years. Truly. And sometimes credit it. Sometimes credit it, but not really from a cultural standpoint. Credit it. Cannabis was there from jazz, every genre of music helping sort of fuel the creativity of it. So you had white people going to these jazz clubs and smoking pot and getting high and having fun and having white women around black and brown people and Mexican people and this sort of cross-cultural thing. But you know, Americans really like that black and brown people mixing with the pretty white girls. And one way to stop in this is to go after this plant. People are smoking and using to have fun and go dance in Harlem and in New Orleans. So they created this sort of scare. We knew that it was called cannabis. We rename it marijuana to make it sound more Mexican scary. There's this, you know, drug coming across the border from the Mexicans. This thing that the blacks, the Mexicans are using to take our women and make people go crazy and jump off buildings and all of that sort of re-form madness stems from that history in the early 1900s. So you refer to it as cannabis rather than marijuana because for you what's baked into that word marijuana is it's like a racial connotation to like make it sound scary and for it. Yeah, Mexican. That's fascinating. It's something a wee pot like smoke gas is all that stuff I don't mind. [MUSIC PLAYING] Attacking cannabis to attack some of the people who smoke it has been a longstanding American tradition. In the early 1900s, Mexican refugees fleeing a dictatorship brought both cannabis and the practice of smoking it with them to America. A 1917 federal report noted with a alarm that in Texas, the practice was spreading, even reaching, quote, "lower class whites." Over the next century, a series of increasingly severe anti-cannabis laws would pass, but the drug would only become more popular. Americans smoked through the Harrison Act, the Bogs Act, and despite Nixon's controlled substances act, the 1970s still occurred. You really can't understand anything that's happening with legalized cannabis today in New York, in California, anywhere in America, without understanding the 1970s. The moment when cannabis prohibition went into overdrive. In New York, near the beginning of that decade, Governor Nelson Rockefeller unveiled some of the most severe drug laws this country has ever seen. Drug laws would become a kind of national model. Under the Rockefeller drug laws, a person who possessed just one ounce of weed could receive a maximum of 15 years in prison. That meant a 19-year-old high school kid caught holding enough pot to share this friend could go to prison at least until he was 34. For weed. From the vantage point of the present, you can't help but wonder, how are people talked into this? "Badest in gentlemen, that's an unusual press conference." Well, this is the press conference where it all began. January 23, 1973. New York Governor Nelson Rockefeller unveiled his new package of drug laws. "I have one goal, one objective, and that is to stop the pushing of drugs and to protect the innocent victim." He's at the podium, a grandfatherly-looking man in a pinstripe suit with a vintage New York accent. "Next I'd like to call on Reverend Earl Moore." In the press conference, he's joined by a string of speakers. Mostly black community leaders who are there to support him. "We come today believing that our governor, our chiefs, and bears the mark of a hero." They're commending Rockefeller for taking responsibility for a city that had been collapsing. New York then, with five times more homicides per capita, is today. One after another, they draw scenes of life in a city on a scene from drugs, chiefly heroin. "I have seen the nation's number one state, New York. Some state of fear for more than 18 million law-abiding citizens." Finally, Rockefeller himself retakes the stage. He explains that before things got this bad, he himself was a bleeding heart type of guy. "That's right. I was on this kick of trying to get the addict off the street into treatment, and on the theory that if we got them all off the street into treatment, there would be nobody to buy the drugs, and therefore the pushes would go away." This was a beautiful concept, except it just didn't happen to relate to the realities because the pushes keep finding new people. Rockefeller is saying, "You can't treat drug addiction by helping people get sober. You actually have to target dealers, because otherwise the dealers or pushers, as he calls them, will keep finding new people to hook on drugs." So Rockefeller's bold new plan? "Life sentence for pushers." It's a rid of all of the drug dealers. In his eyes, a pusher was a pusher, whether they sold heroin or weed. At the same time Rockefeller is passing these laws, the Nixon White House was pushing for similar laws with similar ideas on a federal level. Years later, a former member of that administration, John Arelichman, would tell reporter Dan Bomb that the drug war hadn't just been about crime or addiction, but had come from an understanding that certain drugs, particularly cannabis, were associated with Nixon's political enemies. Here's Willie. The war on drugs became a way for the government to say, "We can't criminalize and say we're going to go after black people and brown people and people who are counterculture to the capitalist system of the them." So hippies, all of those things, but we can criminalize it by the fact that you're using this plant that's been grown for thousands of years and used all the world for centuries as a tool for healing and medicine. Okay, wait. So hold on. I asked you a totally different question though, not that everything you're saying is fascinating, but you, what is your history with? Oh, sorry. I think that I would not call marijuana. Thank you. Going weed actually makes you feel like a dad a little bit. We're older now. We're older now. Cannabis. My history is I first consumed cannabis in college and the first time I smoked I did in good-high. The second time I did, and I was like, "Oh, this feels like. " This is what it feels like. I can't smoke weed. It makes me think about all my personality effects, but I love the smell of other people's weed so much. Like New York right now where it's just like. Everywhere? I have enjoyed. A lot of people hate it and I'm like, "Hey, I get it, but it is what it is." And the funny thing is, I was afraid of weed. I was actually a really good kid in high school because I grew up doing the Nancy Reagan drugs and make your brain turn into eggs and maybe an omelette with a side of bacon. So I was just like. That all worked on you. Like that idea. It worked on me in the sense that I grew up in DC during the 80s, during the crack epidemic. So, drugs were definitely something that were like bad. Crackin' drugs in heroin and all that stuff was just all grouped together as one sort of like drugs or bad. I grew up in the church and I was the youngest kid and I was a good boy. I was a smart kid. I'd three like to study. I knew I was a gay kid, but I was an out. So I was kind of just kind of trying to be a good kid. And it was kind of like, "I don't want to go down that path." So that was the one part of it. The second part was. I had a cousin when I was probably like 13 to 14 who was diagnosed with HIV. And she, straight woman, was 17 at the time. So that was a whole big thing. I ran through the family and the church. We were kind of like, "Whoa, how do we deal with this?" She started to use some of the early onset of the HIV medications and one of this side effects was nausea. And I remember that my friends and other people were helping her get weed to smoke to help her eat. And I saw that, but I also knew that this was like something that was supposed to be bad. And I was like, "Well, I don't really understand." But it was just like confusion and confluence of different ideas. I know it's helping my cousin and helping people who needed it. And the gay community is fighting for it. I'm questioning all the information I've been getting from the public and the press and my parents about drugs are bad. This one seems to sit outside of the heroin crack, you know, the crazy ones. This belief, Willie, was arriving at, that weed might be different from the more hardcore drugs. That it might even be a good drug or that good drugs might exist. That belief was reaching him in part because it was being broadcast through the culture by a powerful cannabis activism movement. But even as culturally many Americans views on cannabis softened, the government kept going harder and harder with enforcement. And nowhere more than here in New York, the cannabis arrest capital of the country. From the late 90s to the mid-2000s, there were more than 350,000 arrests here for cannabis possession, and increase of more than 1,000% from the 10 years prior. I talked to one of the people swept up in all this, a man named Alex Norman. He's in his 50s, the son of Cuban immigrants, he lives in Bedstuy. Back in the day, he was what you'd call a weed dealer, or what today we would call a former operator from the legacy market. Can you tell me about your background in the legacy market as an operator? Yeah, I managed to manage the delivery service for a long time. How did you start a delivery service in the legacy days? You just go to everybody that you know that smokes weed and say, hey, if you need weed, just give me a call. And you show up on time and have good quality product and have it price well and be consistent. Alex had had a white collar job in finance. He left it with plans to go to business school, but he always smoked weed. And he thought maybe just for a little while that he'd try selling it. It was supposed to be very temporary. Instead, it turned out to be very profitable. So it was just like one of those things, I'm like, well, I'm going to keep doing this until I figure out how I can transition one way or another, but I can't just let it go. So it was just one of those things that I just kept doing. At the height of prohibition, stories in the press about weed dealers tended to portray them as ruthless criminals, pushers. In our current legalization era, stories in the press usually describe former weed dealers as desperate victims of circumstance. It was refreshing to meet Alex. A person who identified as neither, just a guy with an eye for an opportunity. Back in the day, Alex says he ran his service tight. When he did his deliveries, he only went to his regulars. He never smoked in the car, product in the trunk, car under the speed limit. But in 2005, he got caught. So everybody thinks that I got arrested by doing my delivery service and my delivery service never got popped. And never even came close. Because I had a delivery service, I became more ambitious and I wanted to start my own full vertical operation. So I wanted to start growing. It's just like the most natural thing. It's like growing up in New York City and you want to learn how to play basketball. Same thing with weed. Like if you smoke weed, you're around weed, everyone's just wants to grow a weed. So I was no different and basically I got busted because the door got kicked in at my grow. So I wasn't there. I was cutting without getting too much of the details. The guy that was working for me that day doing deliveries because I had worked Monday through Fridays, weekends. I had a delivery guy that worked on the weekend. The guy that was working, I didn't know, had gone on my bender and he wasn't answering my calls. So Alex is in the basement of an apartment building, trimming cannabis off of his cannabis plants. His driver is supposed to be delivering weed to clients, except he just isn't. The orders are piling up and around 5 p.m. that day, Alex mutters to himself the cursed phrase of middle managers everywhere. I guess I'm gonna have to do this myself. So I was like, I gotta fucking, I gotta stop. I gotta get this guy's full of shit. He's not, he's not, he's done like he's not waking up. So I basically left my apartment, plants were everywhere. I didn't really even get a chance to like spray down, kill the smell, burn the candles, air stuff out. And so I basically just left the whole apartment just with, imagine just fucking weed hanging everywhere and nothing bagged up. It was just, I rushed out of there and I came back that night. It was probably like 12 o'clock that night. I was coming back to clean up. The cops had kicked in the door at the basement and there was like four cops downstairs and they're like, hey Sarge, I got him and I was like, fuck, and he they got me. So then did you stop doing the service? No. No, I got me. I couldn't, without it, it was my job. I just had to be even more careful. Alex fought the case, managed to bargain down to a few years' probation. He continued to sell weed in New York throughout the 2010s and he never got caught again. By this point though, there's a real shift happening, not in New York but in other parts of the country. New York state still considered Alex a criminal but elsewhere other states were legalizing weed and even trying to make amends with the people they arrested. After the break, California. You should tell the people who we are and what our new show is. I'm Robert Smith and this is Jacob Goldstein and we used to host a show called Planet Money and now we're back making this new podcast about the best ideas and people and businesses in history and some of the worst people. Horrible ideas and destructive companies in the history of business. We struggled to come up with a name, decided to call it business history. You know why? Why? Because it's a show about the history of business. Available everywhere you get. Right now we are living through some of the most tumultuous political times our country has ever known. I'm David Remnik and each week on the New York Radio Hour, I'll try to make sense of what's happening. Alongside politicians and thinkers like Cory Booker, Nancy Pelosi, Liz Cheney, Tim Walst, Katangi Brown Jackson, Newt Gingrich, Robert F. Kennedy Jr, Charlotte Main the God, and so many more. That's all in the New York Radio Hour wherever you listen to podcasts. Chapter 2 California Well as of this morning, recreational marijuana is now legal in California. California joins seven other states and the District of Columbia where recreational marijuana is legal. In November 2016, California officially and to much fanfare fully legalized recreational weed. California is the largest market in the nation and that has many other states watching closely. Other states were watching California, not just because it was the largest legal market, but because its legalization plan contained an audacious idea and experiment. In some counties, the government was trying to build the weed market so that it would be lead by the same people who'd been arrested during prohibition. Those efforts would go awry that California experiment would be considered by many a disaster. By the time New York legalized, California would be a warning, a lesson in what not to do. But that would come later. In the beginning, things seemed miraculous. Willy Mack at that point, not yet a cannabis activist, just a marketing guru with an abiding love for weed, moved to California on the very cusp of recreational legalization. He got to watch as the old underground market prepared to step into the light. Move to LA. I was tired of the cold in New York and wanted a bit of a change, you know, sunshine. And then I fell into someone was like, hey, the California is going to become legal. There's a law firm that has a bunch of cannabis clients that are now looking to build more brands. His name is Eric Shevin, awesome guy, great friend. And he was like, my business as a defense attorney will some point start to go down because he was defending people who at the time were selling. My brain keeps you like don't say weed, but it's not so bad. You can say weed. Yeah, yeah. The my firm was up to. So he was defending clients who were getting arrested for selling pot weed. Yes. But he's like, oh, I can see over the next hill, which is that if legalization is coming to any California, I'm going to be out of business. Yeah. He was helping them get dispensary licenses, helping them to help. He's helping them transition. Yeah. And one of them was my clients who have transition. They're asking me for I need a cannabis accountant. I need a cannabis graphic designer. I want to build a brand like is you know anyone that might help us be able to do this because it was a new market and it's a whole new industry that was being built. Oh, it's fascinating. Because a person selling weed in pre legalization did not have to. Right. No, no, I'm not making it as a bad. I don't need an accountant. I don't have to tell them about my money I'm making. I'm about paying taxes to why don't you account. I don't want to show that I made any money. I want to make it as money and hide it. Maybe we have a lawyer in case I do get popped, but I don't want to have books. This is legal. I'm not having quick books manage my you know sales weed. So they don't need one. The scenes Willie describes of the old market joining the new one. To me, they're funny, but also a little bit beautiful. People who'd had to hide their businesses their whole lives. We're now joining the rest of the corporate world with all of its inefficiencies and annoyances. They were getting looped in. They were circling back. Willie's cell phone rang off the hook. Why would we get random phone calls? Hi, Mike. lawyer, Eric. Tell me to call you. I don't like talking on the phone. We meet face to face. When can you meet me? I'm like, sure. Were these guys like unused to just participating in modern capitalism? Like was it strange working with them? Yes. Like they did not understand what an IKA was or zoomed like a live zoom phone call like a conference call. Right. You're trying to calendar stuff. Oh, yeah. I'm trying to get them to use email. I'm trying to get them from like not texting me and being like, can we only meet in person and talking person because I don't like talking over the phone. Right. Like I'm trying to get them to just sit down and like review notes from a meeting. You know, they're tracking money and doing stuff and they're making millions of dollars. Some of them they built the whole industry for decades. So wasn't like it was in working. It's just it was working under the shadows and underground and in the legacy side. You can tell these were heady days, right? The potential was so clear and intoxicating. Even today, there are wealthy families who got their start generations ago as alcohol bootlegers. Maybe this people hoped could be like that. Generational wealth. But that dream would melt pretty quickly. What went wrong in California? I've heard a lot of different versions of the story. It's complicated. It's probably its own podcast. But let me tell you about the parts you need to know. Problem number one was access to cash. Picture the legacy dealers that Willie was talking to. They told weed, but maybe they'd never run a traditional business. Once the state gave them their official license. Now what? To start an illegal weed company, you might need $10,000 a car and the name of a guy with a grow in the Emerald Triangle. To start an illegal weed company, you need access to a lot more money. Mainly because weed is so federally illegal. It's crazy. I mean, even banking. You can't use credit cards. You can't use banks. You can't deduct taxes, cannabis businesses. You cannot deduct anything besides the costs of goods of manufacturing the product. So you don't have the opportunity to deduct any of the normal operating expenses right in the business. So every cannabis business in this country is still as a pay federal taxes, but you cannot deduct payroll, rent, insurance, any of those marketing, all that. Nothing. Nothing besides the costs of goods for the product that you're making. If you're a cultivator, you can deduct the dirt, cultivation facility, and the flowers, and all that, something goes to the product, but nothing else that does not tie to the cost of goods. It's just crazy to imagine a business I can't deduct expenses. Yeah, it's crazy. I mean, it's extraordinarily hard because you're now starting at what negative 60 cents are every dollar you make. So these are expensive businesses to run. Very cash-intensive with no access to traditional bank loans. The state gives you a license to sell weed. Cool. But if you want to succeed, you now need to find a ton of capital. I was talking about this problem with a corporate and regulatory attorney in the cannabis industry in New York named Jeff Schultz. Jeff, like everybody else here, is a student of the California story. He said one of the issues there was that the state was giving legacy dealers licenses, but often without any real business support. You can give a license to somebody, but if they don't have money to operationalize it, that's it's a license to lose. It's a license to do nothing. It's a piece of paper without the money. These legacy dealers licenses needed money, and typically they had to go to private investors to find that money. In California, that was problem number two, opportunistic investors. You have sophisticated investors coming in who are negotiating partnerships with relatively unsophisticated, financially uniting. unsophisticated, operationally unsophisticated operators. Those licenses aren't also necessarily going to people who have participated in the legacy market who understand the cannabis industry really well. They may just be people who have otherwise been harmed by the warrant drugs, but may not be actively engaged in the illicit market. According to Jeff, these newbies with licenses ended up making deals that were often good for investors and not so good for them. California created a situation where sophisticated investors often took advantage of the people entering the legit weed market as newbies. Jeff said, "If politicians are going to try "to create an equity market like this, "somebody also needs to make sure the deals are fair." - And we haven't really seen that. We've actually seen a lot of the opposite. We've seen in California, generally speaking, people taking advantage of social equity licensees and it starts with the lack of financial sophistication. I'm gonna give you X amount of dollars and we're gonna put it into a contract that you may not understand. And the state allowed for that. - So California broke down because legal weed businesses are expensive to run and these rookie business owners did not have the experience or access to capital to succeed. That's a version of the story. But there's at least one other enormous obstacle that helped sink a lot of those people. It actually came up when I was talking to Alex Norman, that New Yorker who used to run a weed delivery service. Alex Norman, of course, another student of California. - I was always watching what was happening in California and I had a lot of friends that were in New York that moved to California that were pie heads too and you know, used to hustle and were always telling me stories about like what was happening in LA with the elicit shops there and how the black market there was evolving and they're like people don't buy at the spendries. They still buy in the black market. And this is why, because like a lot of people, for people who believe that there should be like a legal market that tries to repair the mistakes that the state made with prohibition, they look at California and they say like yeah, it's good that people can buy weed without being afraid but it's also a failure. You know that the people in the legacy market were not set up to succeed. - But what was an example of that? 'Cause people say that they say that as a talking point, but we were exactly like what's the example of that? - You mean of where was the legacy market not set up to succeed? And how many actual legacy operators wanted to actually transition? - You're skeptical of that. - No, I'm not scared. I'm just skeptical of that premise because I think it's just a talking point because I talk about this all the time with people and I know a lot of legacy operators that don't want to transition. Alex's theory is simple. Problem number three, the black market. The people who sold weed during prohibition, many of them just didn't stop. And why would they? They already had profitable businesses. Now they could operate more freely than ever before. The new legal stores couldn't outcompete them because regulated weed is more expensive and crucially California counties could opt out of having weed stores, which a majority did. That left a ton of customers for the legacy dealers. - What happened in Cali built over time because it wasn't like Cali legalized dispensaries open, black market exploded. It was a slow buildup, right? So when the shop started opening, everybody was reading all the news articles about how they were making millions of dollars. This was a new gold rush and kind of just not recognizing like what was happening underground. - So to recap, competition from the black market, lack of access to capital, opportunistic or perhaps even predatory investors, those obstacles helped sink California's ambitious plan for the new weed market to address the wrongs of the recent past. It turned out though, the wrongs of the recent past made really good promotional copy. In this slick video made by Medmen, the venture capital backed cannabis company that would end up being California weed's earliest visible success story. - And you wanna witness in history? - Okay, back in the day, George and a few of our farming fathers had hemp farms. - Yeah, a president grew his own. - Look it up, it was normal. - Medmen got spike Jones, one of my favorite directors, to put this brand story together for them. It's gorgeous. It almost looks like a Nike commercial for cannabis. You see a series of dioramas, like a natural history museum, but these are scenes from the dark history of cannabis prohibition. - The point is these punishments have been harsh. Like 25 years in a prison harsh. This madness. The video is telling the same story Willie told us earlier about the war on drugs, but here it's a commercial. Marketing for a high end California cannabis brand aimed essentially at convincing wine moms that weed is now compatible with mainstream culture. - Every day good people are using it to comb their pain, their stress, their anxieties. - And a product that drove people to the black market is now creating a new global market. - If you've got a couple hours and don't feel like talking much, ask a cannabis activist their feelings about Medmen. - A company with two white founders that dominated the nascent recreational industry for a spell. A great place to shop that Apple store for weed, everyone says the same phrase, but nobody's idea of reparations for anything, really. Medmen does not even dominate California's weed industry anymore, but their name is where everyone always ends the story. The punchline at the end of a joke, no one found particularly funny. (soft piano music) And so, when word got out that New York was finally about to legalize weed, everybody agreed this time. Things were gonna be different. They had to be. (soft piano music) After the break, New York. (soft piano music) (soft piano music) (soft piano music) (soft piano music) (soft piano music) - Chapter three, New York. In 2018, Willie Mack decides he's gonna help start a cannabis lifestyle brand. His business partner, CJ Wallace, son of Christopher Wallace, the late notorious B.I.J., one of Brooklyn's most beloved former operators in the legacy market. CJ and Willie didn't just wanna start a business, they wanted to be activists too. Because over the past years, Willie had been disappointed and politically inspired by what he'd seen in California. With New York on the verge of legalization, CJ and Willie decided they wanted to try to shape things there. - I was watching California, and all these companies get legal. I'm like, well, one, and a lot of people look like me, and because I was CMO of a startup in California, I'm like, not a lot of black people and sea level roles, and not like gay people. And I was like, okay, so this is a problem. And as we see legalization happening, and watching all of the straight white men take ownership of the industry and make a bunch of money, and have this sort of, you know, the medmen, then all this massive run, and turn into Apple stores, but yet leaving black people, queer people, women behind, and like, well, fuck that. - A lot of people felt like fuck that. They'd been promised not just a legal weed industry, but a legal weed industry that would be equity forward. And in California, they hadn't gotten it. In New York, activists would get another run at the goal. And in New York, due mainly to several accidents of history, they would have way more political power than the California activists ever had. New York's activists were about to benefit for me very strange series of events. In February, 2020, the governor of New York is Andrew Cuomo. This is pre-COVID. And Cuomo was in, not a fight, but a political dispute about how New York's forthcoming weed legalization should go. (upbeat music) An assembly woman named Crystal People Stokes, the assembly majority leader from Buffalo, had sponsored her bill, which, if passed, would be the most social equity-focused cannabis law in the entire country. - Crystal People Stokes, thanks for joining us on New York now. We're really glad to have you here. - Thank you for inviting me, it's my pleasure. - This is a clip of Stokes appearing on New York now in February, 2020, explaining her vision. Stokes was convinced that her bill could actually fix the problems of California. - If you look at every other state or country that has legalized the use of marijuana, there have not been specific resources provided to invest in those communities that have received the most harm as a result of the mass incarceration. In New York, we like to do that different. - I've never drafted a bill, but even I can admire the elegance of Stokes is. In her plan, a big pile of weed licenses would go to people who'd been arrested or who had family members who had. But unlike in California, these licenses were set up as that an investor couldn't just come in and immediately take it away from the licensee. The licensee had to be a 51% owner in their own business, at least for the first four years. And they had to have a proven legitimate business track record. They couldn't be totally inexperienced. The state would even provide a fund of money so these licenses would not be without capital. Take that California. There were a few things Stokes and Governor Cuomo were betting heads over though. Mainly what would happen with the tax money the state would raise from cannabis. Stokes wanted 40% of it to go into a dedicated fund to rebuild overpleased neighborhoods. Cuomo wasn't into that. And at the time, Cuomo was extremely powerful. So is that dedicated fund kind of a deal breaker? You won't agree to a real thing. If we can't fix the problems that mass incarceration created, what would be the value of adding resources to the state's budget? New roads? You know. It's kind of amazing to hear a politician reference money for new roads and then just fit off. Politicians typically love to brag about building more roads. Others across the aisle love infrastructure. But Crystal people's Stokes is saying something you just would not hear outside of New York. The state getting more money from cannabis taxes and using that money for roads? Not good enough. The state needed to fix its mistakes. Governor Cuomo's plan, again, was more modest, although he was smart enough to talk the same talk. For decades, communities of color would disproportionately reflect affected by the unequal enforcement of marijuana laws. This is Cuomo in 2020, discussing his modest vision for cannabis reform. The one that honestly seemed likely to pass. This year, let's work with our neighbors, New Jersey, Connecticut, and Pennsylvania to coordinate a safe and fair system and let legalize adult use of marijuana. In Cuomo's bill, the money that legalization raised would go to a general fund. Others like him could then spend it however they wanted. It was hard to imagine what could break the deadlock. New tonight, a bombshell revelation from another former aide of Governor Cuomo's. In a published report, she claims he sexually harassed her. And then, in December of 2020, a sexual harassment scandal, plus a whole separate scandal involving the deaths of people from COVID in nursing homes. Now these accusations follow recent revelations that the governor and his team withheld data about the actual number of people who died of coronavirus in nursing homes. So far, several Republicans and even a couple of Democrats have called on the governor to resign. Relive in Midtown. Willie Mack was one of the activists supporting the Crystal People's Stokes version of the bill. He'd been frustrated by Cuomo's resistance, but now he got the pressure put on him and the legislature had unified. So now they are like, we have a bill we want to pass. We have the votes to pass it. You know, perfect storm of COVID and, you know, all of the things that were going on including his scandal made it so that it's like, all right, I guess I got to sign this now. All of a sudden it's like, we're voting soon, but we have the votes. I think we're going to get this passed. It was like, oh, really? Yeah. It's just not actually happened. It's like, oh, yeah. Well, it is official today. Marijuana is legal in New York. Breaking news this new governor Cuomo has signed a bill legalizing recreational marijuana in New York. The recreational marijuana now legal in New York after an historic vote in Albany and the governor's signature. The Marijuana Regulation and Taxation Act passed on March 31, 2021. The version that Crystal Peoples Stokes had championed was now law. We did leave away. We're in New York City with us. As you can hear in this side talk video, New Yorkers felt pretty good about this. It was a good day for smokers. I talked to Alex Norman, the guy with the delivery service in bedstie about that day. Do you remember when New York state legalized cannabis? I do because everybody on my block was outside of their front porch smoking weed. It was beautiful. Watching so many people do something they'd always done. But now for the first time without fear, here's Willie Mack. Did you celebrate? Yeah. I've been saving by, sorry, I mean. Smoking's weed, having some champagne. I think we probably had a little dance just like the teen was just like, wow. And I remember the first time I smoked to join outside, I was like, whoa, this feels so weird. All my life I've dreamt of being able to smoke a joint in New York. Yeah. And not be afraid of getting arrested. And now I can do that without getting afraid of being arrested. Everything was set up to go perfectly. The state just needed a little time. A little time to iron out the particulars. The details of how the new legal market would work. The politicians seemed confident. If they did this right, they could avoid the mess of California. There would be no medmen's in New York. That was March 2021. But the state failed to predict was the unique New York specific mess that would be created here. It is now March of 2024. It has become clear to New Yorkers that something is a mess. The local news can tell there are around 2500 illegal weed shops across the five burrows. The state says the tax loss is staggering. It seems like it's the only business you see opening up nowadays. Honestly, right. The people on TikTok can tell. Pfizer's smoke shop won every block now in New York. New York really said, let's put a smoke shop here. Let's put a smoke shop here. I'm not trying to be fucking dramatic, but I don't know what happened to my city. That old fucking delis turned into smoke shops. Noah and I wandering around outside on the street can tell. We walked maybe five in a walk. We have passed. We've lost count now. But like eight or nine stores? A lot of options. In New York State, there are 90 legal weed stores serving our population of 19 million people and thousands of illegal ones. The shops know and I saw outside that day choking the legal market before it really has a chance to begin. What happened? And is there a chance it can all still be fixed? This week we have the story of the mess and the people trying to solve it. Recordings from the meetings where it all happened. Truly an extraordinary story where we go deep into the battles of the tragedy and comedy of a very ambitious project of reparations. Don't miss this one. That is next week on Search Engine. [Music] [Music] Search Engine is a presentation of Odyssey and Jigsaw Productions. If you enjoyed this episode or any episode, please consider paying for the premium version of the show in Cognito mode. You can sign up at searchengine.show. I said earlier that a ton of people signed up this past week. The best part was just hearing where listeners are listening from. Australia, Japan, New Jersey and who these people are. Doctors, farmers, public defenders of former corrections officer who also confirmed a question we had from our scammy techs episode. They said quote, "It's 100% true that it made smuggle phones in their butts and charge them by wiring them into lights. What a world." If you would like to join in Cognito mode or learn more, visit us at searchengine.show. Search Engine was created by me, PJ vote and truthy pinnamanini and is produced by Garrett Graham and Noah John. Fact checking this week by Mary Mathis, theme, original composition and mixing by Armin Bazarian, special thanks this week to Amanda, Chicago Lewis and Eric Shevin. Our executive producers are Jenna Weiss-Berman and Leah Reese Dennis, thanks to the team at Jigsaw, Alex Gibney, Rich Perello and John Schmidt and the team at Odyssey, JD Crowley, Rob Miranda, Craig Cox, Eric Donnelly, Kate Hutchison, Matt Casey, Mora Kern, Josephina Frances, Kurt Courtney and Hillary Schuff. Our agent is Orrin Rosenbaum at UTA. Follow and listen to search engine now for free on the Odyssey app or wherever you get your podcasts. Thank you for listening. We will have the rest of this story next week. [Music]