The Importance of THE Two-Tier Market
New York’s cannabis industry is organized into a two-tier marketplace, mirroring the market structure of New York’s alcohol industry. By law, licensees and their owners (also known as True Parties of Interest, or TPIs) are not allowed to have any financial or controlling interests in both the retail and supply side of the industry, with only a couple of narrow exceptions.
The two-tier marketplace is the foundation of New York’s alcohol industry and was established to prevent monopolization and consolidation. For example, a person can only own one liquor store, which has led to the proliferation of thousands of family-run stores throughout the state — instead of a market dominated by big-box retailers and chains. This model has kept profits in local communities while providing opportunities for small alcohol brands produced in New York to get on shelves and build their consumer base.
Regulators, lawmakers, and advocates have long recognized the necessity of strong legal and regulatory structures to protect small businesses and consumers from consolidation. A recent Guest Essay written by an FTC Commissioner, and published by the New York Times, describes how unfair price collusion between food conglomerates and the nation's largest grocery chains has forced thousands of independent grocery stores out of business nationwide, creating food deserts and high prices for consumers.
The MRTA was designed to avoid this type of monopolization and anti-competitive practices — and it’s working. Of the 1,000 licensed cannabis businesses operating in New York, the overwhelming majority are independent small businesses.
In the three and a half years since the legislature passed the Marihuana Regulation and Taxation Act (MRTA), establishing the Cannabis Law, New York’s cannabis industry has established itself as one of the most diverse, competitive, and largest in the nation. According to the New York State Office of Cannabis Management (OCM) Annual Report published in December 2024, consumers purchased over $750 million in cannabis products throughout 2024, generating $61.948 million in cannabis taxes collected between April 1st and September 30th, 2024. As of the end of 2024, the OCM had issued 1,175 licenses to businesses — 54.1% of which are certified Social and Economic Equity (SEE) — a figure that represents not only the OCM’s commitment to SEE, but the OCM’s demonstrated effort to uphold the spirit and purpose of MRTA.
ECMA was also incredibly encouraged to learn from the OCM’s Market Update, presented during the October 2024 Cannabis Control Board (CCB) meeting that dispensaries are selling hundreds of products from over 476 distinct brands— a testament to New York’s unique two-tier structure, and a reminder of its importance.