Article by Scott Mazza, Founder of Buffalo’s Vitality CBD and Certified Headies
Gradually, then suddenly. After decades of prohibition, New York now has more than 600 licensed cannabis dispensaries with 19 (and counting) in Buffalo.
A lot has changed since my last article on the local recreational cannabis scene. Regulations are evolving, illegal vendors are on the back foot, and people are embracing the official route. Buffalo’s legal cannabis market is growing up, let’s take a closer look.
Buffalo’s growing, competitive cannabis market
Five years after the state legalized recreational cannabis, and three years after the first shop opened in Western New York, we’re seeing market maturity across the board. Licenses are slowly spreading across the region with West Seneca and Kenmore seeing particular concentration thanks to accessible real estate.
Licensed retail locations in the state roughly doubled last year from around 300 to 550. At the same time, 600 illegal cannabis outfits and “sticker shops” have been closed by law enforcement. The result is a market structure that encourages those doing the right thing and creates room for genuine competition – though not everyone sees it this way.
Some of the reporting on 4/20 – the unofficial cannabis holiday in April – showed a handful of early dispensaries crying saturation. One operator who had been clearing more than half a million dollars monthly was now “only” hitting $300,000. Keep in mind, this was one of the first 50 dispensaries to open in the state. I couldn’t help thinking: Of course your slice looks different – the pie just got ten times bigger and yet you’re still running an incredibly lucrative and well-supported cannabis business.
The operators I know tell a different story. Friends who opened locally in the past six months – even facing direct competition across the street – are generating healthy monthly revenues and serving well over 100 customers a day. They’re certainly not complaining.
To me, these are signs of a healthy market with space for both first adopters and new entrants. The numbers back this up: the Office of Cannabis Management (OCM) projects statewide sales to reach $2.6 billion by the end of 2026, up from $1.7 billion last year. More stores simply equals more sales. Cannabis continues to grow and, from where I’m standing, the appetite is far from satisfied.
Convenience is winning people over
It turns out that convenience is king for most cannabis customers. Being able to walk into a legal dispensary, day or night, and be in and out in two minutes is a big pull. Many are also finding the prices competitive and, much like finding your local butcher or bakery, customers often pick their spot and stick with it. Quality, familiarity, and selection are becoming defining characteristics of the cannabis experience.
The economics of running a dispensary, however, remain complicated by federal illegality. Banks want nothing to do with cannabis and block credit cards, leaving three payment options: cash, a debit card workaround ($3.50 per transaction rounded up to the nearest $5 with change returned), and ACH/QR code transfer (3% plus a small flat fee).
Similarly, taxation is a headache. In April, the federal government moved medical cannabis from Schedule I to Schedule III, a meaningful win for medical operators who can now deduct ordinary business expenses for the first time. But, for recreational dispensaries like the one I’m opening, marijuana remains Schedule I. That means we’re still subject to IRS Section 280E, a tax provision that bars cannabis businesses from deducting ordinary and necessary business expenses, such as rent, payroll, and marketing. You can only deduct the cost of the products you sell.
Fingers crossed this changes in June when a federal hearing considers extending Schedule III to all cannabis. If that happens, 280E disappears and dispensaries finally get treated like any other business paying taxes in this country. Most are managing their expectations – this process has been kicked down the road before – but it would be an important step toward parity for an industry that’s only just finding its feet.
Meanwhile, on the consumer side, Buffalo buyers are navigating a three-tier market. In addition to legal dispensaries, reservation stores are still flourishing with loyal customers and gradual expansion. This is a machine in and of itself. Meanwhile, the black and gray markets are quieter but still serving a niche. The three operate in tandem with their own ecosystems, though as the legal market matures and enforcement tightens, that balance will surely shift.
Politics needs to follow society on cannabis
The big picture is that cannabis attitudes are changing and we’re meeting an established customer base with a strong market. Three days before rescheduling, YouGov found that 59% of Americans already supported legalizing marijuana use and 84% supported legalizing it for medical purposes. Political progress follows public opinion – we just need regulators to play ball.
Rescheduling is a step in the right direction but it’s not legalization. Further, hemp was unfairly targeted during last year’s federal government shutdown after lawmakers buried a near-total ban on hemp-derived cannabinoids in the midnight bill to reopen. There’s a push to repeal the provision but full-spectrum products – the kind that contain trace amounts of THC alongside CBD – could effectively be illegal by November. Pure CBD isolate would likely survive, but virtually everything consumers actually buy wouldn’t.
The stronger and more legitimate recreational cannabis becomes, the harder it is for lawmakers to ignore or undermine what’s being built. The introduction of new license types in New York – like indoor cultivation and showcase event permits – shows the state is trying to meet the moment. THC- and CBD-infused seltzers are also showing up in some bars and restaurants around Buffalo, despite consumption sitting in regulatory limbo and the OCM acknowledging it won’t fully address this issue this year. Demand is outpacing the rulebook and let’s hope regulators will keep pace rather than get in the way.
So far, to the state’s credit, things are speeding up. When I wrote my last piece, I was still waiting for a license with no clear answer. I spent about five years navigating a process that, to put it charitably, wasn’t designed with applicants in mind. Those teething pains were real and yet here we are – recently licensed and opening Northtowns Cannabis at 2353 Millersport Highway in Amherst this summer.
Gradually, then suddenly. Buffalo’s cannabis market is growing up and fast. I’m glad to see it and finally be part of it.
Lead image: Photo by Budding