This post was originally published on this site.
Join NY Cannabis Insider for our next full-day conference on Sept. 21 at the Pearl Street Grill & Brewery in Buffalo.
This guest column is from Mack Hueber, the president of ayrloom. The views and opinions expressed in this article are those of the authors, and do not necessarily reflect the views or positions of NY Cannabis Insider.
It’s no secret that the last few months, and certainly the past few weeks, have been nothing short of tumultuous for the New York cannabis industry. With CAURD dispensary openings grinding to a halt, farmers and processors struggling to sell excess product and a booming and overpowering illicit market to compete with, operators all along the supply chain are feeling strained.
The last thing New York’s cannabis entrepreneurs need are more flaming hoops to jump through, like a vape flavor ban that, as proposed, would apply to flavors such as ice cream or gelato, vanilla, cereal, candy, chocolate, dessert, concept flavors, and soda including any strain names that might fall into this category.
Now is not the time to implement a subjective and unclear policy change that would only cause further uncertainty and hardship in an already unstable and fragile fledgling market. Licensed operators are already working at a disadvantage and this could set them back even further.
New York cannabis already has enough confusion
On top of the inherently complicated nature of launching a legal market, New York has seen its own unique set of challenges – as profiled extensively in New York Cannabis Insider.
At this moment, the proposed vape flavor ban would only add to the chaos and bewilderment. The lack of clarity as to which flavors will not be allowed, whether the compliance burden will fall on processors or retailers, and how exactly it will be enforced leaves operators with little to no guidance on next steps and a vaguely painted pathway to maintaining compliance.
The regulation brings up more questions than answers, such as:
- Are product names being banned or the ingredients being used in the vapes (many of which are naturally present in cannabis)?
- Without a label or product approval process, like we have in the alcohol industry, how will processors know if their products are compliant?
- How will retailers evaluate the compliance of vape products?
- What is a “concept flavor”?
Without answers to these questions, much of the supply chain is being held hostage and in a state of limbo. This is already having a chilling effect on the ability for farmers to monetize their biomass.
The main beneficiary would be the illicit market
Every added roadblock for the legal industry only empowers the rampant illicit market. Namely, this ban would drive consumers who prefer vapes to shop at unlicensed storefronts in search of the flavors they have become accustomed to enjoying. And there is no doubt they’ll be able to find what they’re looking for on the illicit market.
Additionally, consumers who purchase a mix of products, will not be inspired to shop for the other things on their lists (like flower, edibles, distillates, etc.) in legal dispensaries if they have to seek out an illicit shop for their vapes. They’ll likely turn to the illicit market for all of their needs.
The aforementioned financial burden that this ban could place on operators all along the supply chain will just add to the long list of disadvantages the legal industry is working with, inadvertently propping up the illicit market and intensifying the core challenges the legal sector is trying to overcome.
This would only exacerbate existing supply chain issues
It is well known that New York’s cultivators and processors are currently sitting on an excess of biomass, and vapes are the most effective way for biomass to get to the consumer.
For example, we would need to sell $400,000 worth of our ayrloom beverages to use a liter of distillate as compared to $35,000 worth of vapes. If regulations were to implement this ban as currently drafted, up to 50 percent of the vapes available in operating dispensaries could suddenly become non-compliant, depending on how the language is interpreted.
This hasty removal of products from the category will put a serious dent in the supply tier and narrow the only feasible and profitable outlet for offloading surplus biomass. It would force already distressed processors who have invested in the production, packaging and marketing of these products to take significant financial losses for the sake of maintaining compliance.
With processors taking losses and discontinuing certain product lines, this would also place unnecessary constraints on products available in legal dispensaries, lowering sales and forcing dispensary owners to reconsider shelf space allocations and product offerings. An overall dip in product diversity in dispensaries, a problem that exists without the ban in place, will only further motivate consumers to patronize illicit shops.
Safe cannabis use cannot happen if the legal market does not thrive
Vapes can be sold on the legal market in a responsible manner, and without the unnecessary harm to operators. The existing packaging, labeling, marketing, and advertising regulations prevent any marketing that would be attractive to youth while each dispensary has a strict requirement to check IDs.
At this delicate and feeble market stage, all revenue dollars count, and this dramatic shift in policy will not only hurt New York businesses, but cool investment from out-of-state brands that provide critical seed capital for launching new products and evolving the market from its infant stages.
Obviously, a goal for everyone involved is to prevent and discourage underage use and concentrate on the overall safety within the industry, but this cannot be possible if the legal market is shackled from being successful and competing with the illicit market – the true supplier of cannabis to underaged individuals.