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Eric Blazak, founder and CEO of Canandaigua-based processor Bristol Extracts, said that he and other processors are concerned the Office of Cannabis Management’s regulations are flawed.
Blazak said New York has been regulating cannabis in similar ways to California, where the legal market has been largely unable to compete with the unlicensed market.
“If we’re able to collectively … adjust ourselves, the ship can be righted,” Blazak said during a fact-finding hearing that Sen. Jeremy Cooney called to address the state’s troubled rollout of its legal cannabis industry.
Monday’s hearing comes amid cascading problems within 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, and hundreds of retail licensees unable to open their doors due to a court injunction stemming from a predictable lawsuit.
Blazak was one of six processors who answered questions from state senators about issues that have emerged for legal cannabis processors in New York.
During the panel Mack Hueber, president of licensed cannabis processor Gen V Labs, a Beak & Skiff subsidiary that makes the ayrloom brand of edibles and THC-infused beverages, addressed the issue of New York’s cannabis potency tax.
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.
In addition to the amount the potency tax adds to the price, the way it’s collected is creating serious problems for small business processors.
“The potency tax is creating a cash flow nightmare … we are required to pay the tax at the end of every quarter, yet regulations allow retailers to pay 30 days after receiving a product,” Hueber said. “As a result we are sometimes paying hundreds of thousands in taxes on products we have not been paid for yet.”
Jenny Argie, a licensed Adult-Use Cannabis Processor who owns Stuyvesant-based Jenny’s and co-founded the Association of New York Cannabis Processors, sat on the panel. Argie spoke to lawmakers about supply chain issues facing licensed processors.
Argie said out-of-state brands are flooding New York with cheap products in both the legal and illegal markets, which put licensed processors in a difficult position.
In an exchange with Sen. Liz Krueger, Argie suggested that because New York’s seed-to-sale tracking system isn’t in place, it’s possible that out-of-state weed is being sold on the legal market.
However, there are some good things happening in New York’s legal weed market, said Brian Lane, compliance officer for processor NOWAVE. Lane told senators that the Cannabis Growers Showcase events have been important to growers and processors.
“One of the most unintended benefits … has been the relationship building between license holders,” Lane said. “The stories of this are endless.”