From drug enforcement to building a cannabis dispensary in New York

A lot can change in 16 years.

In 2009, Cos Marte was sentenced to seven years in prison for drugs. This year, Marte expects to make $12 million from legal cannabis sales.

Marte, 39, is the founder and CEO of Conbud, one of the first businesses to be fully licensed to sell recreational cannabis in Manhattan, and the first on the city’s Lower East Side. After the first opening of the doors in October 2023Conbud has added a second location in the Bronx last April.

Marte’s business currently generates roughly $800,000 in sales per month, including nearly $100,000 in profit, according to documents seen by CNBC Make It. Marte projects a bottom line in 2024 of about $7 million, he said.

DON’T MISS: The ultimate guide to earning passive income online

After his early release from prison in 2013, Marte launched a fitness business called Conbody based on his workout regimen from behind bars. Then, in 2021, New York legalized the sale of recreational cannabis and expunged all previous marijuana-related convictions.

A year later, the state announced that entrepreneurs with past marijuana convictions would be eligible for their first licenses to sell recreational weed. Given his experience running Conbody and the state’s requirements for retail licensees, Marte saw a great business opportunity, he says.

“I followed that law, and they required two years of net income and a criminal record,” Marte says. “Now, how many people have that to qualify for a cannabis license? Not many.”

Marte grew up on the Lower East Side, surrounded by the illegal drug trade, which got him hooked at age 13 after he saw other teenagers making money that way, he said.

“When I was a kid, people used to ask me, ‘What do you want to be when you grow up?’ And I’d say, ‘I want to be rich,'” says Marte. “The first opportunity was in the drug world. So I started dealing weed.”

In prison, Marte was told by doctors that he was overweight and had dangerously high cholesterol. He began working out intensely, using bodyweight exercises he could do in the cell. After his release from prison, Marte contacted Defy Ventures, a nonprofit program that offers entrepreneurship training and business mentoring to formerly incarcerated people.

Thanks to a $10,000 grant from Defy, Marte launched Conbody in 2014, which now generates about $1 million in annual revenue.

Eight years later, Marte paid $2,000 to apply for a retail cannabis license. He put about $50,000 of his savings into Conbud, mostly from Conbody and paid speaking engagements, he said, and raised nearly $1.2 million in additional seed funding from friends and family who are now part owners of the business .

Marte owns 51%, as New York requires an “aggrieved” licensee to retain majority ownership.

Conbud’s seed funds paid a $400,000 security deposit on the Lower East Side mall, construction costs, labor and inventory, according to Marte. The business opened in October 2023 and was bringing in about $250,000 a month in revenue — while authorities to shut down hundreds of unlicensed operators selling cannabis illegally last year.

The crackdown in New York was a welcome development for licensed retailers like Marte, who have faced an uphill battle to establish a long-term foothold in the industry.

The state office of hemp management has advertised its commitment to prioritizing “social and economic equity” in the development of a legal cannabis market, but critics worry that smaller stores will eventually be squeezed out by larger corporations with nationwide reach.

Kuralistfor example, is one of the largest dispensary owners in the US annual revenue of over $1.3 billion. Company in 2023 began adult sales in Queens, New York.

Even the simple costs of doing business — especially rent and labor costs — are high, leaving Marte with a relatively thin 13% profit margin, he says. If hemp becomes federally legal, Marte will have access to federal tax deductions for payroll and other business expenses, and enhanced banking capabilities with lower fees.

“So that 13% will (eventually) grow to 25% of profit,” he says.

Both Conbud and Conbody almost exclusively hire workers with a history of criminal justice, meaning either they or a family member has been incarcerated for a drug conviction, Marte says. In total, it employs 72 people who meet these criteria.

Marte himself got out of jail with $40 and a bus ticket to “end up on my mom’s couch” trying to figure out how he could make a living with a drug conviction, he says. Without his second chance, he likely would never have been in this position, he notes.

“It’s a big, big community that’s growing with us,” Marte says. “I feel blessed, man.”

Want to earn extra money outside of your regular job? Sign up for CNBC’s online course How to make passive income online to learn about common sources of passive income, tips for getting started, and real-life success stories.

plus, sign up for the CNBC Make It newsletter to get tips and advice for success at work, with money and in life.