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This guest column is from the Association of NY Cannabis Processors, which has a mission to “empower, unite, and advocate for the cannabis processors of New York.” The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views or positions of NY Cannabis Insider.
Several lifetimes have passed since one of our founding members, Jenny Argie, published her op-ed, “Don’t Overlook the Supply Chain.” There was a lot of outreach after that piece went live, from folks commiserating and sharing additional information, to those vociferously denying the serious issues raised.
While our concerns around slotting fees and kickbacks remain, last week the Cannabis Control Board undertook the crucial task of voting to adopt the regulatory package that will govern the entirety of the industry.
Along with so many of you, we are thrilled to be able to finally type those words. What happens now, finally, is that New York can take the steps to get every facet of the industry up and running.
That said, the territory we’re entering is far more dangerous than what we’re leaving behind. We’re well aware of concerns about the Registered Organizations (the big multi-state operators that run New York’s medical dispensaries) taking over our nascent industry. To us, the far larger concern is the proliferation of California brands and the destabilizing effect they have for us all.
Attack of the California brands
Make no mistake: California brands are here. They’re here in small ways, like those that have paid New York operators to manufacture their product and secure shelf space in our all-too-few legal dispensaries. Some of those same brands and more are here in much bigger ways: selling to the thousands of illegal sticker shops that litter our state.
Regardless of how they’re doing it, we certainly know why: because they recognize the multi-billion-dollar potential for cannabis in our state. They’re betting on a free-for-all application process, where they’ll be able to secure lucrative licenses and deals.
This cannot come to pass. Those who have been selling to the illicit shops have been sending untested product that they can’t sell in California. They have cut deals with licensed processors and retailers that essentially hold a gun to these individuals’ heads with terms that will damage their long-term viability.
It’s a slap in the face to Gov. Kathy Hochul, to the New York State Legislature, and the countless advocates that spent tens of thousands of hours fighting for an equitable program. Most of all, it’s a slap in the face to every New Yorker.
A bad deal for New Yorkers
It’s a simple enough equation. These California brands have little at risk and everything to gain by invading the New York market.
They don’t rent New York space, or hire New York employees, or buy New York raw materials. They don’t pay New York taxes for schools. They don’t support New York union workers. They only care about dominating the market. They are doing nasty things to secure space in it now, and will only ramp up after applications go live.
California brands are offering extended payment terms (free lines of credit), consignment deals, illegally paying for premium shelf space and displays, and giving incentives in cash, swag, and weed to budtenders. The offerings come in cleverly disguised packages.
When our handful of existing dispensaries are allowed to transition to non-conditional locations, it is a requirement that they pay off any outstanding debts within 30 days. For a California brand, a calculated maneuver would be to dissolve the debt and demand equity, which means taking control. This would swiftly allow California brands to own the legal New York market, too.
Is this going to be another tale of, “If you can’t fight them, join them”?
We shouldn’t allow them to have a Hollywood ending.
Let New York succeed
The Association of New York Cannabis Processors may represent the smallest part of the industry (so far), but our stories and members pull from across New York. We know that the diversity of life experiences is reflected even more in the licensed cultivator and retail spaces, but we all have one thing in common. We rose to the challenge when New York asked us to set up an industry, and if we do not fight to keep it in our hands, we will lose it.
We were discouraged from favoring California products over investing in the innovation of New York brands. It was inferred that we might not even get our licenses if we did.
Once upon a time that seemed provincial. Now it seems prescient.
In most cases, the cultivators and processors were hung out to dry with no access to funds to get established.
The dispensaries were promised access to funds and resources that didn’t arrive on time. Some used this opportunity as a money grab while others used it as a last-ditch effort.
Without any stores to sell to, processors had to raise capital in creative ways. Sensing the disarray in New York’s market-launch, of course California brands filled the breach. Because some took that lucre, we’re all headed for the slaughter. And that’s where the Office of Cannabis Management should come in. They should do their job and stabilize our market before it’s too late.
We have absolutely no doubt that in a showdown, our New York products would dominate anything coming in from California. But that isn’t where our fears stem from. They’ve got the money and the patience to kill us all through attrition, and they’ve been effective already in wearing down some of our licensed colleagues.
While we know that the enforcement actions needed to shut down the illicit market will take some time, the OCM is not sitting idly by. They are in these shops, watching, waiting, and recording. We implore them to use these experiences. The state must keep out the brands that are in these shops, polluting our stores and endangering our citizens.
We are required to submit for approval every new brand and product that we bring to market. Those brands that are on the shelves illegally right now? Deny that approval. Those brands that currently ship untold amounts of product into New York’s gray market will be applying for full licensure? Reject their applications.
Accountability must begin somewhere, and for those brands that have been playing by their own set of rules, we say that accountability begins now. We’re empathetic toward any New York cultivator, operator and retailer that has struggled, we’re in the same boat. To date, the lack of enforcement has allowed for a wicked monster to rear its head. Only by stopping the monster at the gates will we ensure that the goals of the MRTA – a safe, regulated, economically powerful New York cannabis market – can actually be achieved.
And New Yorkers can exercise their power, too. Ask for New York brands in dispensaries. Demand that the time and investment we’ve made here, stays here. Stand up for New York jobs. Support New York innovation. Keep New York profits here in our communities. Stand strong in the face of this California invasion. And be proud that you did.
Please visit https://www.anycp.org for the most current list of brands, manufacturers, and processors that are holding up their end of the deal to deliver New York products from real New Yorkers.