New York Takes Steps Toward a Freer Cannabis Market

New York legalized recreational cannabis in 2021, yet the illicit market still dwarfs the legal one, thanks largely to heavy regulations. Lawmakers might finally be catching on to this problem.

Last week, New York Gov. Kathy Hochul, a Democrat, rejected key provisions of Senate Bill 10643, which among other things aimed to raise the minimum wages for cannabis workers in the state.

The bill, which passed both chambers of the New York State Assembly in June, would create a three-member Cannabis Wage Board to classify cannabis workers based on their roles and recommend a minimum wage to the governor’s office and legislature. Another section would make marijuana license applicants disclose their “full ownership structure,” any management service agreements they’ve signed, and the pay and scheduled hours for every paid position to the Cannabis Control Board. The bills authors say that the wage board would be there to help to “ensure workers in the industry are treated fairly,” but the average New York cannabis worker actually makes $5 per hour more than an average retail worker in the state, according to the Albany Times Union.

​After the bill passed, the Cannabis Association of New York (CANY) told Marijuana Moment the bill would “create significant uncertainty for operators at a time when many are finally beginning to find their footing after years of regulatory delays, capital constraints, and continued competition from the illicit market.”

“It poses particular risk to the small, equity businesses that are the backbone of our industry,” CANY added.

Last Wednesday, Hochul signed S.B. 10643 on the condition that legislators eliminate the wage board and the additional reporting requirements. In a memo regarding her decision, the Times Union reports, she wrote: “The bill, as passed, would create uncertainty in the industry by imposing a burdensome reporting requirement on applicants, and by creating a wage board that could raise costs for licensees and drive consumers to the illicit market.”

Hochul also signed a law repealing the state’s requirement that cannabis businesses sign labor peace agreements (LPAs)—contracts businesses sign with unions agreeing not to oppose a union’s effort to organize its workers—to get a license. Hochul instead agreed to give the Cannabis Control Board the discretion to prioritize applicants who voluntarily enter such agreements.

That’s good news for the state’s dispensaries, which have questioned the rule’s legality. In April 2025, Hybrid NYC, which operates the Gotham dispensary in Brooklyn, sued the state, arguing that the LPA mandate is preempted by the National Labor Relations Act, which governs private sector labor relations. (A federal judge denied the state’s motion to dismiss the suit in December 2025, and the suit was still in motion before Hochul repealed the law.)

Similar battles have been playing out nationwide. In August, a federal judge vacated New Jersey’s LPA mandate for its cannabis industry, ruling it was preempted by federal law. Oregon’s mandate was struck down for the same reason in 2025. Meanwhile, Virginia imposed a similar mandate to New York’s. In public comment to Virginia’s Senate Rehabilitation and Social Services Committee earlier this year, Geoffrey Lawrence, research director at Reason Foundation (the nonprofit that publishes Reason), warned lawmakers that the mandate would preempt federal law. Another challenge is currently underway in California.

The continued dominance of illicit weed in New York demonstrates that cannabis users and sellers prefer a freer market. Rolling back the LPA mandate and blocking a cannabis wage board won’t fully fix the regulatory landscape, but they are promising signals that the state might finally be realizing that red tape is hindering the legitimate cannabis market.

The post New York Takes Steps Toward a Freer Cannabis Market appeared first on Reason Magazine.