Inspired by a trip to Europe, Jun Lee and his friend, Vince Ning, wanted to start a coffee shop with a cannabis twist in their home state of California, which had recently legalized the drug for adult use.

“Turned out, we didn’t have enough money for that,”Lee recalls. “But we learned a lot about the industry researching the possibility of it.”

Instead, the two friends shifted their focus to the logistics business, discovering a need for cannabis growers and retailers to have reliable, professional supplier service. In 2018, they founded Nabis, a cannabis wholesale purchasing platform and distributor, and last year the company expanded its operations to Nevada.

Now, Lee and Ning are betting that New York—which legalized adult-use cannabis in March 2021—is fertile ground for future growth. Nabis has opened a 30,000-square-foot warehouse in Rochester along with a smaller one in the Bronx, aiming to serve a statewide market that topped $1 billion in retail sales last year. 

The fast-rising sales have come even though the launch of legalized cannabis in New York has been rocky. Slower-than-expected licensing approvals, legal battles and disruption in leadership at the newly created regulatory agency have bedeviled the nascent industry.

“We’re just now launching the marketplace in New York, but we’ve been interested in it for quite some time. We felt strongly that this market was going to thrive in the long run,” says Will Brophy, Nabis chief operating officer. “We didn’t know exactly what the market would look like in the short run, but we knew this was a market that cared about cannabis and was going to be successful eventually, so we wanted to be a part of that.”

The cannabis logistics business draws on its co-founders’ years of experience in enterprise software. Ning was an engineer at Microsoft before founding Scaphold, a software company later acquired by Amazon. Jun worked as an engineer at Facebook, then founded Allganize, an artificial intelligence company.

Nabis’ wholesaling technology provides rapid order fulfillment, with two-day shipping to nearly all regions in New York, as well as payment processing, customer service, and compliance. The company says its software-enabled portal “coordinates the entire cannabis distribution lifecycle from production to delivery.” It also offers its retail customers analytics, bill-pay and invoice-factoring services.

Earlier this year, Nabis announced partnerships including a tech-integration collaboration with Dutchie, the industry’s leading point-of-sale platform, to offer retailers technology with features like automated order suggestions, custom pricing insights and market analysis tools.

A digital Marketplace, already up and running in California, was recently launched in New York. The online platform connects retailers and brands through Nabis’ ordering system, which Ning says will support established operators along with highlighting emerging smaller brands as well.

“The platform is launching with nearly 40 brands including local operators like Hepworth and Central Processors NY—which houses High Peaks, Generic AF and ZONK!—and multi-state operators like Jetty Extracts and Smokiez, among others,” a release from Nabis states.

Companywide, Nabis now has about 350 employees, 120 vehicles, and seven warehouses. Its growth has earned Nabis recognition as an Inc. 5000 honoree and a place on Fast Company’s Most Innovative Companies list.

Nabis’ warehouse in northwest Rochester, which opened officially early this month, occupies a former Eastman Kodak building and is nestled amid other small and midsize shipping companies, a stone’s throw from an Amazon delivery center. The company sees the location itself as meaningful, carrying on a legacy of industry innovation.

“Kodak is as Rochester as it gets,” observes Brophy, whose wife’s grandfather was an engineer at the company. “So, thinking about cannabis as an industry that’s helping to revitalize Rochester in many ways, it’s really cool and symbolic to be in an old Kodak facility.”

Since the state’s population is spread out across a wide geography, the company determined that expansion to New York required two warehouses. The Rochester location will be the hub in Nabis’ hub-and-spoke distribution model, serving as the primary deliverer for local retailers and those along the I-90 corridor. It will also ship products to the company’s Bronx warehouse, where they will be distributed to stores in New York City and Long Island.

The Rochester location employs roughly 15 workers. Brophy predicts that number will grow to 50 within the next year. The company’s “supercenter” warehouse in California employs over 100 people, which, depending on the growth of the cannabis industry in New York, could be replicated in Rochester as well.

Logistics companies also vying for a share of the New York market include the wholesaler LeafLink, which was founded in 2015, launched its New York online marketplace in 2023, and is live in 29 states and Puerto Rico; and the point of sale software company Blaze, founded in 2015, launched in New York in 2022, and operating now in 19 states.

Rochester was selected over Syracuse as Nabis’ hub location thanks to access to New York growers, in-company knowledge of the area’s capacity for this work (Brophy, who grew up in the area, now lives in Farmington), and an overall enthusiasm for the cannabis industry across the Rochester-Finger Lakes region.

“We knew it was a thriving community that would welcome a business like ours,” Brophy says.

Lee adds that state Sen. Jeremy Cooney, who chairs that chamber’s Subcommittee on Cannabis, was an early supporter of Nabis when it expressed interest in expanding to the state.

“What we are doing now, thanks to (Nabis’) help, is creating a legal market so that New York consumers can feel safe in purchasing cannabis and can enjoy it as long as they are legally of age,” Cooney says. “We are planting a seed for economic growth.

“What I hope our market recognizes is that we have interest from consumers. Now we need the infrastructure and the systems and the jobs to build up around them,” he adds.

The 2024 annual report from New York’s Office of Cannabis Management, which is governed by a Cannabis Control Board created to regulate adult-use cannabis, medical cannabis, and cannabinoid hemp, showed more than $1 billion in sales, which doubled projections made for that year. (Cooney has said New York’s total market could be $5 billion to $7 billion.)

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Nabis sees tremendous potential in the state. Lee says Nabis currently serves about 10 percent of New York’s $800 million to $1 billion in wholesale value and has ambitious plans to double that percentage of the market. The company says more than 400 cannabis brands are shipping with Nabis, and across all its markets it is fulfilling over 3,500 wholesale orders weekly.

At the same time, company officials use phrases like “an interesting ride” and “ups and downs” to describe their transition into the New York market. Obtaining a business license, which OCM handles, took about nine months longer than they hoped it would.

This experience mirrors what other adult-use cannabis businesses have encountered in New York’s rollout: a lengthy wait for licenses.

Most recently, a judge-ordered pause in December 2024 halted progress over retail space concerns related to several applicants through the Conditional Adult-Use Retail Dispensary program. (CAURD was started with the intention of “righting wrongs of the past” by prioritizing licenses for applicants who were impacted by the war on drugs.)

There has been some recent movement since the end of that pause, which lasted just over a month, with OCM approving an additional 74 licensees for adult-use cannabis businesses this February. However, there are still thousands of applications from the tail end of 2023 to review.

This slow process for licenses, coupled with operational space requirements, has been devastating for some retailers, who have been forced to continue paying rent for a store they cannot legally operate.

There are about 30 licensed adult-use retailers in the Finger Lakes region. Most of them are located in Rochester, which has nine stores, and Henrietta, which has six stores.

Top leadership at OCM has also been plagued with issues. For example, a letter from staff circulated to lawmakers, including Cooney, in May made claims that there was an overall environment of “fear and retaliation” at the agency. Cooney called the claims “concerning” and promised to closely monitor the situation.

This month, Cannabis Control Board leader Tremaine Wright abruptly exited after her $229,000 annual salary was eliminated from the state budget. Gov. Kathy Hochul noted that salaries for state government board positions are rare and then appointed CCB member Jessica Garcia to that role instead. (Other members of the control board have received a $260 stipend for days spent attending meetings or events.)

This leadership churn follows the departure of Chris Alexander, former executive director of OCM, in May 2024. Alexander, who faced criticism for the slow rollout, resigned after Hochul said she would not reappoint him at the end of his three-year term in September 2024. Some critics said Hochul used Alexander as a scapegoat for OCM’s troubles.

The influence of multi-state operators on New York’s fledgling cannabis industry is another concern. In other states, MSOs have elbowed local growers and processors out of the picture with their larger economies of scale and experience in the market.

New York centered its legalization plan on equity, local farming, and community reinvestment. Even so, a group of MSOs sued the state in 2023 alleging violations of the 2021 Marihuana Regulation & Taxation Act when OCM and CCB reserved the first 150 adult-use retail licenses for social equity applicants.

Cannabis businesses in New York also have complained about another “major problem”—the state’s adult-use tax and excise tax policy that requires licensees to front millions of dollars in tax payments to the state Department of Tax and Finance each quarter. Ning and Nicolas Guarino, CEO and co-founder of Jaunty, in April argued in an opinion piece that the state “should allow for 20 days after the end of the longest legally-allowable net terms period, so that operators have a chance to collect the revenue before having to pay taxes on sales that have not even come due or been paid for yet.” 

Despite these bumps in the road, Nabis’ leaders are optimistic about OCM’s progress and New York’s rollout. In particular, they give kudos to the focus on regulatory policies. That means legal adult-use cannabis is reliably safe, something that has been a problem in other states’ legalization processes.

“We want to make sure that we’re doing everything correctly, that we’re making sure products can be consumed. So, that’s a great part of what they’re doing, you have to credit OCM and New York for it,” says Lee.

Jacob Schermerhorn is a Rochester Beacon contributing writer and data journalist.

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