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Driving to Morales Natural Farms in Mount Morris on a summer morning can elicit a fantastic sense of jealousy in a city-dweller.
Something about driving past wide-open, tractor-manicured fields, turning onto side streets lined with too many lush trees, and passing the kind of farmhouses that define the Americana motif can make a person dream of leaving everything behind to start a simple life on beautiful land.
“I wanted to live in the country,”said Marvin Morales, who moved to Mount Morris from Denver. “I wanted to live more of a natural life.”
Back in 2005, Morales made this dream a reality when he left an engineering job at Ball Aerospace in Colorado to buy farmland in his native New York State and make a living growing organic crops. He transitioned to hemp in 2018 and last year planted and harvested marijuana after receiving an Adult-Use Conditional Cultivation license.
On paper, Morales is living his dream. But the reality of his situation is looking increasingly bleak.
Morales is one of 280 hemp growers that New York’s Office of Cannabis Management and Cannabis Control Board licensed to grow the state’s inaugural legal marijuana crop. Messaging from regulators and lawmakers sounded something like a “Field of Dreams” reference: ‘Grow it, and they will buy.’
But more than a year after the CCB issued the first grower license, fewer than 20 legal dispensaries are currently open for business, and Morales is one of many licensed cultivators unable to sell last year’s crop – while again planting seeds not knowing if this year will be any better.
A mixture of regulatory hurdles, limits on grow operations and delayed announcements from government officials has left Morales and partners wondering if independent farmers like him will be able to survive in the Empire State’s supposedly small-business-focused legal weed industry.
“In a million years, I never would have thought there wouldn’t be a retail outlet,” said Joann Kudrewicz, CEO of Ravens View Genetics and chair of the Cultivation Committee at the Cannabis Association of New York.
“All the stats and data that we used to project our revenue were correct … the problem is that the state didn’t deliver,” Kudrewicz said.
Getting to growing
Morales didn’t catch the cultivation bug until later in life. As a young man, he was more into engineering, and joined the U.S. Air Force – eventually stationed at Lowry Air Force Base in Colorado as an electronics instructor.
As he transitioned from a career with the U.S. military to a job designing and developing antennas for smart bombs and drones at Ball Aerospace, Morales became more health-conscious and interested in growing organic fruits and vegetables. Though the subdivision where he and his wife lived didn’t offer much opportunity for farming, Morales was still able to grow onions, peppers and some other foods on a small plot of land.
In the years that followed, he became increasingly passionate about organic farming, while growing increasingly disenchanted with his day job. Several factors contributed to the trajectory, he said. He became more religious, which made it harder to work for a weapons contractor, he said, and over time his desire to live closer to nature increased. But the breaking point may have been the U.S. invasion of Iraq, and the yearslong war that followed.
“In the back of my mind, I did realize that what I was doing – in regard to designing these antennas – was guiding missiles to a target; which meant that there was a human target,” Morales said. “Growing vegetables and serving the public with an organic food source was more to my heart than designing and developing bombs.”
Morales, who grew up in Geneva, N.Y., moved back to New York State with his wife and two young daughters in 2005 with a plan to buy a house on a farm where he would grow and sell organic vegetables while his wife continued working her job for an investment firm.
The family bought a house and 12 acres of tillable soil in Mount Morris. The following year, Morales grew and harvested carrots, potatoes, tomatoes, and peanuts, some of which he sold to local restaurants and health food stores under the business name Morales Natural Farms.
Business was alright, but it didn’t come close to the paychecks Morales brought home as an engineer for a weapons contractor.
“Growing vegetables is not very profitable,” he said. “It’s OK, but it’s not really profitable.”
Gold rush mentality
When Congress passed the 2018 Farm Bill, which legalized hemp and CBD, Morales was among those farmers who saw a huge opportunity. Many states had already legalized recreational cannabis, and New York seemed poised to follow suit in the next legislative session.
Once New York regulators launched a state hemp program, Morales got a license and planted his first harvest in 2019. He’d used cannabis in his teens and early 20′s, but drifted away from weed as he got older. While researching growing techniques, Morales learned about the health benefits that CBD, THC, and other cannabinoids can provide to people living with cancer, epilepsy and other ailments.
His first grow yielded about 120 pounds of hemp, some of which he processed into oil for tinctures, which he then sold to local health food stores under the brand Mo Hemp.
The money he made on the crop wasn’t much better than organic vegetables, Morales said, but he and other farmers had their eyes set on what they thought would be the real big-money crop: recreational marijuana.
“All the farmers that were growing it basically had the thought in mind that they’d make millions,” Morales said. “I basically had the same mentality; that it would be really profitable, and it would at least end up being a business that would provide for my family, and that my wife could quit her job.”
The semi-rational exuberance seemed to spread to state legislators and regulators a few years later, when Gov. Kathy Hochul signed into law a measure that created a conditional license for hemp cultivators who wanted to transition to adult-use marijuana.
An exuberant time
News outlets – this one included – have spilled gallons of ink and miles of pixels about New York’s 2021 passage of the MRTA, which legalized recreational cannabis.
The same can be said of the scandals that soon after consumed then-Gov. Andrew Cuomo, eventually leading to his resignation.
But we don’t often revisit the optimism that existed in early 2022, when growers and processors were clamoring for the opportunity to get seeds in the ground as quickly as possible.
In early 2022, the New York Cannabis Growers and Processors Association – which is now the Cannabis Association of New York (CANY) – listed conditional licensing for growers and processors as one of their top legislative priorities.
At the time, Allan Gandelman – the organization’s president – said a provisional licensing program would give small and medium-sized cultivators a chance to grow a harvest, so that forthcoming dispensaries could buy from local farmers, rather than large multi-state companies.
But legislation that created the Adult-Use Conditional Cultivator (and Adult-Use Conditional Processor) license seemed to have assumed that hemp growers could seamlessly transition from hemp to marijuana, said Kudrewicz, CANY’s Cultivation Committee chair.
When state officials began handing out AUCC licenses in April of 2022, they appeared to assume farmers already had what they needed to be successful, and that dispensaries could open quickly enough for licensed cultivators to sell whatever they grew that year.
“I think there was this misconception among the OCM and the folks who were putting this together that the farmers already had infrastructure in place that they would need; that they already had been growing and knew what to do, and this would be an easy, smooth transition,” Kudrewicz said. “I think that was a huge failing on their part.”
A partnership formed
After legislators created the AUCC program in early 2022, Morales partnered up with Michael Rumrill, CEO of Rochester-based environmental engineering firm Leader Professional Services, Inc, and Alan Knauf, partner at Rochester and energy law firm Knauf Shaw LLP. The partners provided an infusion of cash that funded several greenhouses, tillers, genetics, security fences and other growing infrastructure.
Rumrill and Knauf had originally planned to apply for a license themselves, but after a fair amount of lag time between the passing of the MRTA and the creation of the AUCC license, they sought out a partner.
The two had bought property in Wellsville they intended to use as an indoor grow facility, and had planned to find a cultivator to farm there. However, AUCC restrictions on indoor growing meant it’d be advantageous to find a partner who already established an outdoor operation.
Their networks led them to Morales.
“He had a licensed hemp business in Mount Morris … so we contacted him and said ‘we’re interested in the cannabis business,’ and he said, ‘yeah, I’m looking for somebody to invest in me and develop a cannabis business,” Rumrill said.
“We teamed up, and Al and I invested in Marv, and that’s how it happened,” he said.
The team established the cannabis cultivation company Morales Family Farms, LLC.
Rumrill and Morales both recall people inside and outside the industry predicting a large windfall for licensed cultivators in New York State. A market that includes New York City could be among the world’s largest, some industry experts said, and Rumrill even heard some in the industry claiming farmers would be able to sell flower at $2,500 per pound.
When forming their business plan, Rumrill was much more conservative, estimating they could get about $1,200 per pound.
That turned out to be much more optimistic than what transpired.
“We were hoping to have anywhere from 1,000 to 2,000 pounds of material to be able to turn into biomass, and an influx of at least $500,000,” Morales said. “That didn’t pan out at all.”
The inability to set up an extensive indoor grow operation left Morales feeling hamstrung, as he grew about half his first commercial cannabis crop outdoors and half inside a greenhouse. By the time he harvested, he had only about 150 pounds of product for which testing showed a THC potency of 17%.
Morales and partners looked for processors to buy their weed, but it was a buyer’s market, and processors were also trying to recover some of their investments, Rumrill said. Offers from processors were often something like a 70/30 split of the flower itself (meaning the processor takes 30% of the product for themselves), and then $200 per pound of the remaining 70% of flower.
After fielding multiple offers like this, the partners decided to sit on the product rather than take such a deal.
“I feel that I could definitely – without a doubt – have been more profitable and more successful had certain hindrances not been put in place,” said Morales, who does all the farming himself. “If I had been given a longer leash … I’d have employees, and I would have a better operation going right now.”
Rumrill, whose job requires him to work with state and federal bureaucracies on a regular basis, said he thinks the OCM’s rules and guidance seem pretty common for a regulatory body. What he really didn’t expect was the dearth of retail outlets open for business by the time Morales harvested their initial crop last year.
“We thought, like everybody else, that we would be able to sell our first harvest last year, and we harvested in early November,” Rumrill said. “The state hadn’t licensed the dispensaries yet, so there was nowhere to sell.”
Expectation vs. reality
That expectation of retail outlets wasn’t unwarranted optimism. It fell in line with what top state officials promised. In fact, Gov. Hochul told an Advance Media editorial board in October that 20 Conditional Adult-Use Retail Dispensaries would open by the end of 2022 and to expect “another 20″ to open every month or so thereafter.
As of July 12, 2023, there were 19 dispensaries open.
This lack of retail outlets has been disastrous for growers, said CANY Cultivation Committee Chair Kudrewicz.
“Even now that there’s not the outlets to sell product … we’re in the next grow season and there’s a lot of upfront costs,” Kudrewicz said. “We need to make money.”
A bright spot appeared at a May CANY meeting when OCM officials announced that they would introduce cannabis growers’ showcases – events that would resemble farmer’s markets, where growers and processors could sell their products at pop-up events.
But that was nearly two months ago, and both Kudrewicz and Morales said they’re losing confidence these events will happen this summer.
“We still have no direction of whether it is or isn’t going to be approved,” said Kudrewicz, who said she’s been in contact with OCM about the growers’ showcases. “At this point in time, we don’t see a pathway forward, and [the showcases] provided a lot of hope for growers.”
Though disappointed in last year’s harvest, lacking retail opportunities and facing continued restrictions on canopy size and growing techniques, Morales has already planted this year’s harvest. He’s hoping for a better yield this time, but also thinks it’d be easier to do if the OCM lifted restrictions on indoor growing.
He also believes the state should make larger companies wait longer to join the legal market and allow AUCCs to do their own retail.
Morales and partners believe a greater number of retailers will open over the next year, which will allow them to finally see some revenue. But Morales said the state also has a role in reconsidering some regulations to give cultivators a better shot at success.
“Help the New York farmers to succeed, and we will,” Morales said. “We’re going to be the best, if we’re allowed to be.”