Like any other ambitious college graduate, Alex Norman sought his fortune on Wall Street. Then he became a drug dealer. Now Norman hopes to bring his experience and expertise to New York’s newly legalized weed market.
He is one of hundreds who have applied for a license to operate a retail marijuana dispensary. In a special program, New York has set aside 150 licenses for those, like Norman, with legal convictions related to cannabis. To be eligible, they must also demonstrate experience running a profitable and legitimate business.
The idea is to share the bounty of the legal cannabis industry with those suffering from the government’s war on drugs. “We want to go to people who are persecuted and now say: you can walk in the legal market,” said Trivette Knowles, a spokeswoman for the state’s office of marijuana management.
This is, as Norman says, a “curious” development for someone like him, who spent years in the criminal shadows and is now looking for a partner with the government. “At this point, I can’t hide anything. It’s almost like a badge of honor to have caught weed.
New York became only the 15th US state to legalize marijuana for recreational use. After a plodding start, this is shaping up to be a pivotal year for its budding market. The first legal sales of recreational marijuana took place at a newly licensed Manhattan dispensary on December 29. Elected officials, community leaders and hundreds of excited onlookers came to witness what could be the city’s most famous drug deal.
Other dispensaries will be open throughout the year – selling cannabis vape pens, edibles, old blunts and more. The illegal market is estimated at $5bn in annual sales. By legalizing it, New York hopes to generate up to $677 million in tax revenue annually while reducing costs for marijuana-related incarceration.
But New York is open to business like any other weed market. In California and Michigan, for example, a glut of production has caused wholesale prices to drop 50 percent or more from the past few years, hurting farmers. High taxes imposed by some countries also make many consumers shop in the illegal market.
“Cannabis is now in a recession, if not a depression,” said Jeffrey Hoffman, a cannabis lawyer, activist and passionate user, expressing concern about New York’s prospects. “If you want the regulated market to succeed, you have to make the legacy market a partner – not a competitor,” he said.
Axel Bernabe, chief of staff and senior policy director for New York’s cannabis management office, believes the state has learned from others’ experiences and remains confident the legal market will grow.
“Once you give people a reasonable point of sale, a product that’s tested for quality and convenience – at the same price – you have a transition,” said Bernabe, a former antitrust lawyer.
New York is trying to develop a strong marijuana market that supports small and local businesses while avoiding a repeat of what happened when it introduced the state lottery in 1980. The newly legalized game replaced the city’s illegal “numbers” racket, siphoning cash and jobs from the language. Harlem long that. “It really created a vacuum there,” Bernabe said.
To support prices, the state will slow down when licenses – to grow, process and sell cannabis – are introduced. New York has also restricted the ownership of a single license in hopes of discouraging consolidation that has opened up elsewhere.
However, success may depend on the complex task of bringing legacy dealers such as Norman into the legitimate market.
Drug dealers, as Bernabe admits, generally distrust the government. “They’re all afraid that by admitting they’ve made a deal, they’ll be liable for taxes again,” he said, citing a provision in the US tax code.
Nor, as Hoffman noted, is it easy to involve dealers. “How do you reach the legacy market and say: send your representatives?”
Still, New York has tried, working with defense lawyers and community groups to open discussions. It has also created a mentoring program to equip dealers to operate legal businesses.
Given his experience, Norman would be an excellent candidate. The son of Cuban immigrants — a corrections officer and hairdresser — grew up in working-class Queens and graduated from Rutgers University in 1995 with a degree in political science and Latin American studies.
“I thought I was going to be a lawyer,” he recalled. Instead, a friend who worked on Wall Street got a job at an over-the-counter brokerage — the “boiler room,” essentially — making hundreds of cold calls a day in hopes of persuading people to buy penny stocks. He passed the Series 7 broker exam and then, after about 18 months, arrived at Merrill Lynch, where he worked in the private client group.
“Even the day after Thanksgiving, we wore suits and ties,” Norman said, recalling the formality of the old office. “I appreciate Wall Street more than any other industry. You produce. You move forward. That’s it.”
He left Merrill in 2003, after the first internet bust, and planned to use his severance pay to pay for business school. However, while waiting for time, avid weed smokers created their own weed delivery service. Before long, it was too profitable to give up. (“Always on time,” says Norman, revealing the secret of his success).
He started growing his own plants in his basement in Brooklyn. He suspected that the bad smell caused the neighbors to turn on him after the second harvest. Norman finally pleaded guilty in 2005 to possession of 10 kilograms of marijuana and, with several lawyers, received three years of probation. (Other New York special license applicants have spent decades in prison for involvement in larger drug operations).
Since then, Norman, now 50, has developed his own cannabis lifestyle brand, Budega, while overseeing the legal market in states such as California and Colorado.
How did he think New York would do? Many consumers will remain on the black market, Norman predicted. However, legal dispensaries must attract customers and enjoy a window of prosperity before the market becomes saturated.
“They will have, like, three to four years. Tourists will use them [the dispensaries] – and gentrifiers who have no local hook. . . These stores will make money.”