CANNABIS CULTURE- In January of 2016, New York City saw its first dispensary, Columbia Care Medical Marijuana Dispensary, open in the five boroughs. Growth has been gradual, to say the least.
Since then, a dispensary in both Queens and the Bronx opened for business. Meanwhile, Brooklyn and Staten Island remain dispensary-free. This week, Manhattan saw the opening of its second medical cannabis location with the opening by Etain on East 39th street near Lexington Avenue in Manhattan’s Murray Hill neighborhood – a prime location not far from Grand Central Station.
The family-ran, women-owned business is one of New York State’s current five medical marijuana companies authorized to operate in the state. Etain sells an array of products including pills, tincture, sprays, and vaporizers that come in three distinct effects. While sales are a prime focus, education about the program is just as high priority.
Hillary Peckham, Etain’s founder and Chief Operations Officer, told Cannabis Culture that the move expands the company’s chances at growth. “This move provides us an opportunity to see more patients, create more awareness about the program and build that population.” She added that Etain has heard the demand for a New York City location since it opened a year and a half ago. She notes demand came from patients and practitioners alike. Etain currently operates four locations across New York in Syracuse, Kingston, Yonkers, and now Manhattan. The company moved its Albany location to open its latest dispensary. In making the move, Etain finds itself able to serve a significantly larger amount of patients in a more convenient location.
But is New York City ready for another dispensary? From a user standpoint, absolutely. But from a governmental and/or financial point, it becomes a bit less sure. It is clear that New York state’s medical marijuana program is lagging by its own standards and those set by some states with smaller populations. As Etain opens its doors, several factors could make or break its Manhattan location. More so, as the state pushes for further patient inclusion, will numbers reach what original expectations had originally intended? Even in the case of MMJ, anything has the chance to falter in New York City’s tumultuous markets.
A Struggling State to Date
Since New York State passed the New York Compassionate Care Act in July 2014, MMJ supporters have long-anticipated its impact on the city and state. Today, it is evident that the state struggles in dispensary availability and doctor access. As growth trails behind across the state, large portions of New York struggle for a local MMJ location in their area. Yet, for dispensaries like Etain, supplying those areas isn’t cost beneficial with a small number of patients. In the case with Etain, they expect to serve an unestimated amount more patients in New York City than they might have in Albany. This may change once access is expanded, but not at the moment.
Up until August of 2016, New York was criticized for having one of the strictest medical cannabis programs in the country. This made sign ups difficult for some commonly accepted cases in other states – including PTSD for returning veterans. The 2016 adjustment made access easier for patients and expanded symptoms covered under the program. Yet, the changes produced little impact in both patients and profit for the state so far. As of July 6, 2017, New York has only 1,105 practitioners along with just over 23,500 patients registered.
According to Peckham, sign ups are low due to a lack of market education about the program. This falls on the practitioners and many lacking education about the program. Because of this, Etain claims that much of its work today is focused on educating those physicians about the benefits of the program for patients and how it can fit into a practice.
Concerning profits, medical marijuana in New York has been a letdown since its enacting. Governor Andrew Cuomo’s administration had projected a $4 million boost to state revenues via medical marijuana sales. This was to come from a 7 percent excise tax on sales that began January 2016. However, underperforming numbers forced the administration to significantly dash its expectations through its fiscal year ending March 31. Recent figures estimate that medical cannabis sales stand to earn an estimated $500,000 in tax revenue with $1 million generated in following years.
Yet, despite slower growth than expected, the state planned to expand authorization to five more companies to work in the market. This was met by a lawsuit filed by the association of the five original companies, including Etain. “Right now, I think everyone is very concerned because it has been a slower start in New York than we’d like to have seen,” Peckham explained about the case. “It’s taking a huge amount of effort and work to get physicians on board for this program.” Peckham added that no company has broken even or covered cost to date – making expansion a worrisome prospect. She notes the collective goal is for the medical cannabis program’s long-term stability while patients rely on consistent companies.
Brighter Future on the Horizon?
Lagging patient numbers may come under revision once again if the state follows through on additional guidelines expansion. At the end of June 2017, the state announced efforts to meet demand in the practitioner space. With immediate effect, the state allowed for online registration that allows for same day patient certification. In addition to helping expedite the process, the NYS Health Department approved a second MMJ course for practitioners looking to enter the market.
Another issue that gained traction was the inclusion of PTSD sufferers to the program. A staple in many other states’ guidelines, the addition was approved this month in both of New York’s legislative houses. Governor Cuomo has yet to sign the measure. He plans to meet with experts before deciding on enactment.
The potential for New York to overcome its initial medical cannabis struggles appear likely yet far from confirmed. Despite reduced expectations, the state may just be hoping for a boost with the steps it is taking mentioned above. Across the country, it’s undeniable to see medical and/or recreational cannabis’ effect on cities and states. From tax revenue to the more visible indicators like storefronts and advertisements, marijuana is becoming more noticeable.
That’s no different in New York City. As of May, medical marijuana ads began appearing in city subways. The ads featured Queens-based dispensary Vireo Health during a four-week campaign this past spring and early summer. No data is out to prove the campaign’s success just yet. However, the ad is much like Etain’s decision to move from Albany to Manhattan, potential. With daily subway riders sometimes reaching over 6 million, the ads show a desire to be reach its market in one of the world’s most populated areas.
Additionally, the state is not the only one making it easier to obtain a license. Entrepreneurs are getting in on the mix as well. Aggregation and search sites like NuggMD and Dr.MedMar make it easier for potential patients to find a doctor. With more options opening, patient registrations could be on the rise. However, practioner integration will hold the key to the market’s true growth. If more can enter the market, the state’s true growth potential will reveal itself.
Surviving New York Real Estate
A struggle that Etain and any other business faces is the real estate market. New York City’s high rental costs sink notable businesses all the time. In fact, New York City boasts the street with the world’s highest retail rental space rates. While no dispensary is in that area, real estate is far from comforting anywhere in the five boroughs.
Compounded with the state’s tax rates, New York City is a volatile market. Today, New York City is seeing record high availability rates in the retail space. In Murray Hill, current rental prices run from $1,200 to upwards of $640,000. Etain’s rental information was not available for comparison.
Despite potentially high rent, companies like Etain choose this location for its central convenience. The area is a hub for travelers across the New York City and tri-state area via Grand Central Station. This was a significant point for Etain in choosing the location so it could reach a wider audience. The central site helps patients no longer need to make long trips to Etain’s Yonkers location. Peckham noted how some previous Yonkers patients would travel upwards of two hours from Staten Island and Long Island.
Despite the potential hurdles faced by the state and city, Etain remains confident as it opens its doors this week. It remains to be seen if the confidence will convert into revenue. Yet, with a built-in patient base and the potential for enrollment growth, Etain and other businesses could find success in New York City. The city of nearly 8.5 million people provides a large market to tap into. If guideline expansion continues, New York’s medical marijuana program could be back to hitting its original goals. If so, New York City’s own dispensary growth could come with it – despite the rent.
Source: Cannabis Culture