New York State is at a critical juncture. Despite legalizing adult-use cannabis more than two years ago, the state has yet to implement a meaningful seed-to-sale tracking system. As a result, the illicit market is not just thriving – it’s dominating. Recent investigations show legal dispensaries selling out-of-state product, much of it trafficked from California and Oregon. In effect, New York’s cannabis market has inverted: unlicensed, untaxed, and unregulated sellers are outpacing the legal supply chain.
At the center of this dysfunction is the absence of a robust, enforceable track and trace system. Without it, regulators are flying blind. Legal operators are at a competitive disadvantage. Consumers are left with little assurance of product safety or origin. And the state is forfeiting tens of millions in tax revenue annually.
This is not a new story. In nearly every state where legalization has taken hold, one lesson repeats: without real-time, data-driven tracking, diversion and fraud become the rule – not the exception. Systems like Metrc and BioTrack are not silver bullets, but they provide the infrastructure to monitor inventory, audit compliance, and identify bad actors. Colorado’s RFID-based system has enabled everything from excise tax enforcement to rapid product recalls. California, by contrast, has struggled with widespread under-reporting and ‘burner distributors’ who disappear before regulators can catch up – despite having Metrc in place. The difference? Enforcement and integration.
New York has a chance to avoid the California trap – but only if it acts decisively, and soon. A functioning market requires a functioning spine. Track and trace is that spine. It allows regulators to reconcile reported inventory with actual product movement, flag unusual activity, and trace illicit supply chains back to their source. More importantly, it levels the playing field – making compliance visible and enforceable.
Instead, New York’s current framework has allowed gray market businesses to masquerade as legitimate operators. Legal product is priced higher, burdened with regulatory costs. Illicit product is cheaper, easier to buy, and untraceable. Consumers – rationally – follow price and convenience. Legal operators are being punished for playing by the rules.
It’s not enough to crack down on unlicensed storefronts. You can’t enforce what you can’t see. Surveillance and raids, without data infrastructure, will fail to dismantle the larger supply networks feeding the gray market. A compliance regime without traceability is enforcement in name only.
The fix is straightforward and overdue:
These steps are not radical. They are baseline requirements for any regulated market –particularly one expected to generate significant tax revenue and operate with public health oversight.
Track and trace is not just a regulatory tool – it is a fiscal one. States like Massachusetts and Washington now generate more revenue from cannabis than from alcohol. In Colorado, cannabis excise collections exceed cigarette taxes. In New York, the inability to track volume makes accurate tax collection impossible. Every day without a system in place is another day of revenue left on the table.
To be clear: this is not a technology problem. Off-the-shelf solutions exist. What’s missing is the political will to mandate implementation, support operators through the transition, and enforce compliance with consistency and transparency.
Legalization is not self-executing. It requires infrastructure, accountability, and strategic enforcement. New York’s current approach – issuing licenses without tracking infrastructure – invites the same chaos that has plagued California, but without the fiscal upside.
The window to fix this is closing. Every delay strengthens the illicit market’s foothold, discourages legitimate entrants, and deepens public cynicism. But it is not too late. New York can still stabilize its cannabis economy by investing in a regulatory backbone that prioritizes transparency, integrity, and enforceability.
Prologue is not destiny. But if New York continues down this path without a course correction, the legal market may never get the fighting chance it needs to succeed.
