By Dan Fastenberg

NEW YORK (Reuters) – The first licensed marijuana store in New York opened on Thursday, more than a year after the state legalized the drug and during delays in setting up the legal market to benefit people previously arrested for marijuana crimes.

The dispensary was opened in New York City’s East Village by Housing Works, a non-profit organization that fights homelessness and AIDS. The non-profit was among the first 36 groups or individuals that the state awarded with a marijuana retail license last month.

“We’re prioritizing repairing harm, harm that’s been done even by the state’s own policies,” Chris Alexander, the inaugural executive director of the New York State Office of Cannabis Management, told a crowded news conference at the store. “It’s no accident that disproportionately people who are incarcerated for possession and sale of drugs are people who are Black, Latino or Latina.”

In legalizing marijuana in March 2021, New York lawmakers required that it could only be sold by licensed retailers to adults over 21 years old, and that the first licenses would be awarded to entrepreneurs with prior marijuana-related arrests or convictions, giving them a toe-hold ahead of corporate retailers in the lucrative market. Retailers can also only sell marijuana that licensed New York producers grew and processed.

New York initially promised it would find ready-to-open storefronts and business loans for the first licensees, and that non-profit groups that work with previously incarcerated people, such as Housing Works, may qualify for some licenses. But the process has taken longer than expected.

A gray market has flourished in the interim, with unlicensed retailers illegally selling cannabis out of stores and slickly branded vans across New York City.

Mayor Eric Adams, a Democrat, has said unlicensed retailers will not be tolerated. Alexander, the state marijuana director, said local and state law enforcement have been educating gray-market vendors on the licensing rules, following up with cease-and-desist letters and, more recently, seizing merchandise.

Marijuana has been fully legalized by 20 other states, but remains illegal under federal law, which can make it difficult for vendors to access business loans and other banking services.

At Housing Works, some of the smokable flower, which sells for between $20 and $30 for an eighth of an ounce (about 3.5g), and the pre-rolled joints are from marijuana that Florist Farms in Cortland produced in upstate New York.

“This is a game changer for our company,” said Karli Miller-Hornick, the farm’s co-founder. “We’re going to be able to hire more people.”

New York’s marijuana sales will be taxed at 13.5%, revenue that will go to schools, public housing, addiction services and mental health services.

Peggy Pliscott, a 50-year-old hair stylist in the East Village, welcomed the dispensary’s arrival on Thursday.

“People can make a living,” she said. “People can buy what they need legally. Seems a win-win.”

(Writing and additional reporting by Jonathan Allen; Editing by Colleen Jenkins and Josie Kao)

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