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Sitting before the NY State Senate Subcommittee on Cannabis, Joseph Calderone, chief operating officer at Steuben-based cannabis cultivator Grateful Valley Farm, said New York’s MRTA is a great legalization law, but the state’s legal weed rollout has been disastrous for licensed farmers.
“I come here with a plea for immediate intervention to help our distressed farmers,” Calderone said.
Calderone and four other cannabis growers that hold Adult-Use Conditional Cultivator licenses spoke before legislators during a fact-finding hearing that Sen. Jeremy Cooney called to address the state’s troubled rollout of its legal cannabis industry.
Monday’s bipartisan hearing included Senators Cooney, Liz Krueger, Michelle Hinchey, James Skoufis, George Borrello, Pamela Helming, Nathalia Fernandez, and five others. It comes amid cascading problems in the Empire State’s legal cannabis industry – which have left hundreds of farmers with two harvests’ worth of cannabis but few retail outlets to which they can sell their products, in addition to hundreds of retail licensees unable to open their doors due to a court injunction stemming from a predictable lawsuit.
Growers have arguably suffered the most amid New York’s consistently bungled market rollout, which has seen many AUCCs invest everything they have into their businesses on the state’s promise of a robust retail landscape that has yet to come to fruition.
As a result, farmers are collectively sitting on millions of dollars worth of product they’ve already grown but are unable to sell. Many are in dire financial straits, and mental health among licensed growers and other stakeholders has plummeted.
During a CCB meeting in September, one cultivator who spoke during a public comment session said her mental health had declined to the point of suicidality.
New York State created the AUCC license through legislation in early 2022. The move came after the Cannabis Association of New York – which was called the New York Cannabis Growers and Processors Association at the time – lobbied lawmakers to create conditional licensing for small to mid-sized entrepreneurs so they could get their operations up and running as soon as possible.
In February of that year, Gov. Kathy Hochul signed into law the AUCC license – as well as the Adult-Use Conditional Processor license. Both the growers and processors must have been previously licensed under the state’s hemp program.
The following month, the Cannabis Control Board passed a measure that created the Conditional Adult-Use Retail Dispensary license.
While the CAURD program didn’t go through the same legislative process as the AUCC and AUCP licensing regimes, state officials said these conditional dispensaries would serve as the retail arm of the state’s legal weed rollout.
In an October 2022 interview with Advance Media New York’s editorial board, Hochul said the state’s plan to launch 20 legal dispensaries by the end of that year was “still on track,” and to expect “another 20″ to open every month or so thereafter.
One year later, fewer than 30 legal weed retailers are operating statewide.
“The governor herself told us that there’d be 20 dispensaries open by the end of the year, and 20 per month more after that,” Allan Gandelman, president of the Cannabis Association of New York, said.
At a CCB meeting last month, CANY Executive Director Hal McCabe said AUCCs – who are in the midst of this year’s harvest, despite not being able to sell products they grew last year – are facing ruin.
In addition to lacking retail options, McCabe said the rules CCB approved hamstrings AUCC growers with strict regulations that severely limit indoor growing, while giving larger companies transitioning from the medical market more latitude.
Gandelman told state senators during Monday’s meeting that the prospect of competing with large, vertically integrated companies that are currently medical cannabis Registered Organizations is a huge concern for AUCC growers.
“We have to look at how we allocate canopy” size, Gandalman said. “We’re allowing a small group of large companies to enter the market with 10 times the canopy that the next size license has available to them.”
A rare bright spot for licensed growers has been the introduction of Growers Showcase events, which the CCB approved earlier this summer. These allow growers and processors to team up with CAURD businesses to sell weed at events held at locations other than dispensaries.
At a CCB meeting earlier this month, Office of Cannabis Management Director of Policy John Kagia reported growers, processors and retailers have held 142 CGS events since August, and the OCM has approved an additional 1,250 scheduled by the end of the year. These events have generated $1.5 million in sales, which is about equivalent to the amount of sales revenue he’d expect two dispensaries to collect during that time period.
But the events haven’t been a panacea for growers, and it’s an open secret in the industry that some licensed cultivators are turning to the illegal market to make ends meet.
Kim Tanami, CEO of HPI Canna, said that in addition to the other headwinds cultivators are facing, New York’s potency tax could prove an insurmountable obstacle.
New York’s Marijuana Regulation and Taxation Act taxes distributors:
- Half a cent per milligram of the amount of total THC for flower
- Eight-tenths of one cent per milligram for concentrates
- Three cents per milligram for edibles.
That’s in addition to a 9% sales tax and possible further municipal taxes.
“We find ourselves having to deal with outstanding debt, while expanding (operations) all while paying a potency tax,” Tanami said. “No industry could survive this taxation, especially an emerging one.”
Sen. James Skoufis asked the five-person panel how many believed the OCM had sufficiently communicated with licensees, and how many thought they acted with enough urgency to respond to their problems.
None raised their hands.