New York’s approach to regulating the marijuana industry is highlighting broader challenges in the state’s housing market, according to recent analysis. Lawmakers legalized cannabis with the stipulation that all marijuana sold in the state must also be cultivated within its borders. However, this requirement has proven difficult to enforce.
Reports indicate that between 50 percent and 80 percent of cannabis sold by licensed retailers in New York is sourced from outside the state, despite regulations. California, with its larger farmland, more favorable climate, and established industry, can produce cannabis at a lower cost than New York. Even after factoring in transportation costs and legal risks, out-of-state cannabis remains cheaper.
This influx of supply from other states has driven down the price of cannabis biomass in New York by 45 percent. The situation demonstrates how strong market forces can undermine regulatory frameworks when enforcement is insufficient.
The analysis draws a parallel between the marijuana market and New York’s housing sector. While rent stabilization policies are intended to keep rents affordable for about one million apartments through price controls, other regulations have made it difficult to increase housing supply. For example, replacing an old apartment building with a larger, modern one can take years or even decades due to tenant protections and complex approval processes. This often results in units sitting empty during prolonged transitions.
“It’s a classic case of how lawmakers have made housing more expensive in an effort to make it cheaper,” the analysis notes.
The suggestion is that reforms—such as easing property taxes, zoning laws, and other regulatory barriers—could help boost housing supply. Allowing developers to replace small buildings with larger ones while maintaining rent-stabilized units and protecting tenants’ rights could be one way forward.
“The economic lesson is simple: Weed sellers (and some farmers) are bringing down the cost of cannabis by buying it from states that have a surplus,” the analysis concludes. “Housing would be cheaper, too, not to mention nicer, safer and more energy-efficient, if we allowed developers to create a surplus. And it’s a lot better for you than weed.”
