NYC Cannabis Stores Don’t Have a Lot in Common With Wine Bars and Brewpubs — Yet

In February 2014, Sohan Bashar started a one-year stint at Rikers Island after being convicted of a cannabis-related felony. In February 2024, Bashar opened Silk Road NYC, a licensed dispensary in Jamaica, Queens. His arc demonstrates the evolution of cannabis and cannabis-related retail in New York City.

“Ten years later, I’m opening a store to then legally sell that product,” Bashar said. 

He’s not the only one. Smoke shops, weed concept stores, dispensaries and the like have cropped up from Jamaica to Williamsburg to Tribeca to the Bowery and beyond, with 85 licensed dispensaries in New York City as of March. Their spread begs for comparison with the rise of wine bars in the city 40 years ago and that of breweries and brewpubs a little later. There are key differences, though, and ones not easily erased due to legal restrictions and simple history.

While legal dispensaries are budding across New York City, the cannabis industry has yet to fully shake the stigma associated with the drug and, oftentimes, the people who sell it. New York state legalized marijuana recreationally only in 2021, after all. Alcohol has been legal since the end of Prohibition in 1933. Many landlords have left cannabis businesses high and dry, while the state Office of Cannabis Management’s license rollout has proven particularly messy, leaving many licensed dispensaries in limbo.

Despite challenges to find retail space and get off the ground, the city’s legal dispensaries have resoundingly reported a positive reception from the neighborhoods they’ve come to inhabit. Some reports suggest that Americans are utilizing cannabis more than alcohol, and weed shops function similarly to liquor stores, albeit with a more complicated reputation. 

“The number [of people who smoke cannabis] is only growing, as people now have the opportunity to return to a drug that has been egregiously closed down from the government with a false narrative to keep Black and brown people in jail,” said Joanne Wilson, founder and CEO of weed concept shop Gotham, which has New York City locations in, or pending in, the Bowery and Chelsea in Manhattan and in Williamsburg, Brooklyn, as well as one in Hudson, N.Y.

As legal dispensaries remain a relatively new phenomenon — with consumption legalization still pending — the exact impacts of cannabis-related retail in New York City are still to be determined. For now, the surge in licensed weed shops — in October 2023, there were only 11 open in New York City — seems to be paving a new path, both for individual neighborhoods and broader drug culture.  

Darius Eli Niknamfard, an associate at law firm ArentFox Schiff, noted a greater parallel between dispensaries and liquor stores than dispensaries and wine bars or brewpubs. The arrivals of both wine bars and brewpubs were each early harbingers of a neighborhood changing, for better or worse — a characteristic that dispensaries now share. The similarities largely stop there, though. That’s mostly because dispensary customers in New York City right now can’t consume the product on-site, and therefore can engage with neighborhood dispensaries only in a grab-and-go manner.

Midtown’s Urban Leaf Dispensary and Tribeca’s Alto take the correlation between alcohol and cannabis more literally, because both businesses occupy buildings that previously held pubs. Alto once housed the Patriot Saloon, and many of the bar’s customers have rolled over to the dispensary, said Andre Savocchi, Alto’s co-owner and a licensed real estate broker. However, the store opened in August, so “it’s still kind of unraveling.”

Yet, unlike liquor stores or bars, cannabis dispensaries carry a reputation weighted by leasing difficulties and neighborhood interactions. You can bring kids into a liquor store, said Wilson, so “why the hell can’t you bring your kid in a [cannabis] store?”

For Wilson, some landlords had no interest in leasing to a dispensary, while others didn’t care whatsoever. Bigger landlords, in particular, “don’t necessarily want to get involved with [cannabis], especially since it’s federally illegal,” said Savocchi.

Real estate loans often come with provisions requiring building owners to comply with all laws. “By entering into the lease with a cannabis vendor, you’re violating federal law because you’re leasing space to an illegal substance dealer,” explained Niknamfard. “So, some banks are just not accepting it.” 

However, banks are warming up to the fact that cannabis retail is a regular kind of business, so it’s increasingly becoming an avenue considered by landlords, Niknamfard added.

Meanwhile, mom-and-pop landlords may be more hesitant to take on cannabis tenants due to uncertainties over whether they need to refinance the building, change their insurance, or other concerns related to property management, Savocchi said. 

As cannabis licensees struggle to carve out space in a neighborhood, landlords can take advantage of that demand and quote higher prices. Savocchi experienced this firsthand, as landlords quoted rents for his dispensary that surpassed those given to a convenience store or other retailers.

It’s also easy for landlords to dismiss smoke shops after hearing news about people convicted of felonies receiving licenses, Bashar said, though the news seems to be evolving beyond the stigma, as studies suggest a positive interplay between neighborhood dispensaries and real estate value. 

This August, for instance, Newsday reported that a town in Long Island made $1.16 million in taxes and fees related to cannabis sales, while that same month legal weed sales in New York surpassed the $500 million mark, per the New York Post. Meanwhile, a 2023 study from Real Estate Watch found that homes in states with legalized cannabis exceeded residential values elsewhere over the last 10 years. Better press in general over the last year translated into fewer difficulties.  

“After there started being some publicity around it, I had landlords that were ignoring me starting to reach back out to me to try to work out a deal,” said Savocchi, who found his space after his broker emailed him about a landlord willing to work with cannabis businesses. 

Yet it’s not just landlords who have pushed back against weed. Neighborhood organizations often put up resistance. The local community board objected to Savocchi’s Tribeca plans, as state law stipulates a distance of at least 500 feet between a dispensary and a school on the same street. Alto exceeds this distance from a neighborhood school, yet the board still raised concerns, which required a surveyor to prove Savocchi’s point. Only then did the board give its approval, he said. 

Bashar, likewise, jumped through hoop after hoop in his leasing experience in Jamaica. Initially, he received what’s called a Conditional Adult-Use Retail Dispensary (CAURD) license from the Office of Cannabis Management, which in 2022 started to award the first set of licenses to those convicted of cannabis-related charges. Bashar started his lease search with the Dormitory Housing Administration of New York (DASNY), which was put in charge of finding leases for and subleasing to licensed dispensaries 

The DASNY process, however, came with its own caveats, including a quick turnaround to decide on DASNY’s chosen location as well as high rents and repayment. After rejecting DASNY’s lease, Bashar eventually signed one at 166-30 Jamaica Avenue, the site of a former McDonalds he frequented as a kid. As a member of the neighborhood in which he now operates his business, Bashar says he understood the neighborhood’s best interests, and organized his space accordingly. For instance, there’s a check-in area before the actual dispensary, with a bulletproof booth intended for customer safety. 

Likewise, his store allocates 1,900 to 2,000 square feet for the dispensary, but also uses roughly 1,400 square feet as an event space. Currently, that space hosts community events such as karaoke, video game tournaments and themed parties, like for Halloween. 

As of now, it’s illegal in New York to consume cannabis inside a dispensary, but consumption lounges are likely coming in the near future, with the potential to crop up as soon as 2025. Once consumption regulations are issued, Bashar hopes to transition the event space accordingly to meet his neighborhood’s demands.

“We are legacy, we know New York, and [customers] don’t want to just buy their stuff and go,” said Bashar. “If we give them a place to sit and consume this, this is the next level of what it should be. And this is essentially the new Amsterdam that we expected this market to be.” (Amsterdam, the Dutch capital, is famous for coffee shops that sell marijuana for on-site consumption.) 

Savocchi is likewise open to the consumption aspect of the business — the bar-turned-dispensary has a second floor ideal for that very purpose — but noted that retail in and of itself was an exhausting process. For Alto, two years passed between applying for licensing and opening the store’s doors.

Like Savocchi, Gotham’s Wilson will also consider on-site consumption, but it depends on what that licensing looks like. She compared on-site cannabis use to smoking indoors, as many people don’t want to sit near cigarette smoke — and “maybe a lot of people feel the same way about cannabis.”

Either way, consumption may be a moot point if a dispensary doesn’t pair it with a money-maker, such as Bashar’s community events or food and drink options. “[Consumption is] a nice concept, but people go to a bar and drink multiple martinis,” Wilson said. “Nobody’s walking into a cannabis place and smoking a quarter pound of pot at one sitting.”

Even with just retail, dispensaries serve a variety of neighborhood purposes. 

“For me, it kind of brings the community together,” said Savocchi, whose customers tend to either be commuting through the area or live nearby. People often connect inside his store, which offers conversation starters and a level of approachability. 

Across New York City, legalized dispensaries also bring foot traffic and money to communities disproportionately impacted by the war on drugs. Four percent of sales are reinvested into neighborhoods, as outlined in local taxes, said Bashar. 

Neighborhood dispensaries also indicate an element of safety and security for community members. In illegal dispensaries, “you don’t really know what product you’re getting, whether it’s safe,” said Niknamfard. Cannabis regulations guarantee customers are buying a product that is tested, rather than moldy, tainted or handled unhygienically. 

Granted, some neighborhood demographics care less about the drug’s legal versus illegal components than others. For example, cannabis businesses interested in signing a lease may assume that an area around 14th Street and New York University would be an ideal hub, thanks to its younger population. However, areas with older demographics tend to have larger cart sizes and higher ticket prices, said Savocchi, as older customers often pay more attention to a product’s reliability. 

“The older consumer wants to know what they’re taking,” he said, noting that his ideal neighborhood has a mature population rather than a young, professional crowd. 

These regulations for cannabis retail also protect those selling the drug, allowing them to operate in a modern world. 

“I think [a dispensary] indicates that the community is getting up with the times,” said Bashar. “It shows that there is understanding and that we have come a long way, because this was used as a vehicle to over-prosecute or jail us. … What it does bring is restorative justice.”

Anna Staropoli can be reached at astaropoli@commercialobserver.com.