From Marketwatch.com
Story by Steve Gelsi
The Travel Agency: A Cannabis Store is in line to be the first cannabis retail brand in New York State with multiple locations, as the legal-cannabis business starts gaining a foothold over illegal shops.
Separately, Curaleaf Holdings Inc. said it received special-use approval to open its first New York adult-use store, which will be located in Newburgh, a city about 70 miles north of New York City.
Curaleaf planned to kick off delivery service from the location this past weekend, with a soft opening by the end of January, pending state approval. New York-based Curaleaf has been providing cannabis to the medical market since 2017.
Curaleaf’s stock rose 7% on Friday. The shares are up by 23.5% in the past year, compared to a 37.4% rise by the Nasdaq
New York State’s legal-cannabis business is speeding up after a slow start due to some headwinds, including the cost of real estate and competition from literally thousands of unlicensed stores hawking unregulated cannabis products.
New York’s licensed-cannabis market generated only $150 million in sales in its first year of operation in 2023, less than the $274 million generated by the smaller state of Connecticut, which also kicked off adult-use sales about a year ago.
Gov. Kathy Hochul plans to propose legislation to crack down further on unlicensed cannabis shops. She’s also including a cannabis potency tax repeal and replacing it with a weight-based tax to “ease tax compliance” for distributors.
Hochul’s proposal comes mirrors a proposal in the state legislature to scrap the potency tax in favor of a 9% wholesale excise tax.
The idea is that cutting some cannabis taxes may lower the cost at the cash register and make legal pot more competitive with unregulated pot being sold in unlicensed stores.
Paul Yau, founder of the Travel Agency, said the effort by the state to cut taxes and close down unlicensed shops marks a positive move for the business.
“We 100% support trying to get rid of illicit stores,” Yau told MarketWatch, noting that Hochul made “having safe, tested, clean products” a priority by including a mention in her state-of-the-state address.
Cannabis companies have been slow to open for a variety of reasons. If a major bank holds a mortgage on a property, it may not allow a cannabis business to be a tenant because pot remains illegal under federal law.
Cannabis company operating expenses remain high because of these and other obstacles, he said.
Meanwhile, The Travel Agency is readying its second store at 118-122 Flatbush Avenue, near the Barclays Center in downtown Brooklyn, close to major public-transportation routes.
“We’re looking to make this the premier dispensary in Brooklyn,” Yau said.
The stores will initially open as a pop-up with 3,500 square feet, with 60 full-time and part-time workers, and then expand to 4,800 feet.
While adult-use cannabis has been approved since 2021, legal shops have been slow to gear up as the state awarded its first licenses to non-profits and people affected by the War on Drugs.
Travel Agency runs its two stores for license holders The Doe Fund in Manhattan and GMDSS LLC in Brooklyn.
The Travel Agency’s flagship store opened a year ago under the name Union Square Travel Agency just south of Union Square in Manhattan as the third overall retail cannabis shop in the state.
Now, the Travel Agency name will be used for both the original Union Square store and its downtown Brooklyn location, under a re-branding effort.
In November, the state also officially sanctioned its existing medical-use licensees to take part in the recreational market.
Those companies include Columbia Care, Curaleaf Holdings Inc., Etain, Nycanna LLC, PharmaCann and Valley Agriceuticals LLC
Companies with an existing presence in the state’s medical program include Curaleaf Holdings, RIV Capital Inc. Green Thumb Industries Inc. and privately held PharmaCann.
