Glimmers of hope: New York cannabis operators cautiously optimistic about 2024

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David Falkowski fretted over the possibility that many of New York’s licensed cannabis growers may collapse about a half-year ago, when fewer than 30 legal dispensaries existed in the state and a judge had issued an injunction preventing more from opening.

Now, with more than 70 licensed retailers open and more to come, the situation hasn’t become drastically better, said Falkowski, a licensed grower, processor and founder of Long Island-based processing company OMO Labs, LLC. But the future does look a lot brighter than before.

“A year ago … it was rough, it was truly a buyer’s market, we were starting to see compression of prices and crowded shelves,” Falkowski said. “We’re starting to see some relief – we’re not there yet, it’s just that we’re now opening a new window of potential opportunities.”

Last year may have marked a nadir for New York’s licensed cultivators – a group that endured possibly the most significant hardships of the state’s bungled legal cannabis rollout.

After receiving licenses in 2022, hundreds of farmers collectively invested millions of dollars to stand up growing operations and have products ready for sale when the first stores began opening at the tail-end of that year.

A slower than promised retail rollout in 2023 left most of those farmers sitting on thousands of pounds of product with nowhere to sell it. Only about 20 Conditional Adult-Use Retail Dispensary stores were open in August, when a judge issued the ruling that would prevent most new CAURDs from opening until legal challenges were resolved.

But with the injunction lifted, and regulators beginning to issue general cannabis business licenses, more retailers are opening – and plenty more are on the horizon. And struggling growers are cautiously – extremely cautiously – optimistic that the headwinds they’ve battled for years are beginning to abate.

“A year ago, my word for 2023 might not be suitable for print … This year, my word is ‘hopeful,’” said Joann Kudrewicz, CEO of cultivation company Ravens View Genetics and chair of the Cannabis Association of New York’s Cultivation Committee.

“Having more dispensaries is certainly helpful; it changes the power dynamic and shifts the paradigm so that there’s more opportunity across the board,” Kudrewicz said.

That doesn’t mean things are perfect for cultivators by any means, said Kudrewicz. Growers are still largely unable to get rid of the weed they grew in 2022, and much of that product has grown old and unsellable, Kudrewicz said.

Farmers, who were licensed under the Adult-Use Conditional Cultivator program, went into last year’s growing season without revenue they’d been expecting for the previous year’s crop, and they still haven’t been able to catch up, Kudrewicz said.

Still, the situation has improved drastically from last year.

“It was a buyer’s market, of course, when there were 10 dispensaries, 12 dispensaries; we had very little power,” said Kudrewicz, whose company at one point was considering selling biomass for $50 per pound out of desperation. “Having more dispensaries gives us more chance, and options.”

Jason Klimek, an attorney and co-leader of the cannabis team at law firm Barclay Damon, said he thinks an increasing number of dispensaries coming online will help alleviate some long-running problems with New York’s legal cannabis industry while allowing the market to achieve some of the goals set by lawmakers who passed the Marijuana Regulation and Taxation Act.

For example, Klimek said he thinks more legal dispensaries opening will take business away from unlicensed shops that currently dominate the market. The ripple effects would benefit multiple stakeholders.

“It helps kind of stamp out the illicit market. When you have more legal options it generates more tax revenue for the municipalities, and it generates jobs,” Klimek said. “I think all signs point to this being a very positive move for the market, and continuing positive momentum.”

Patrick Weinert, an owner of AUCC cultivator Jane’s Garden, said his business is starting to see glimmers of hope after years of strife. His family operated a dairy farm just outside Oneonta until they transitioned to a hemp business and then to a marijuana cultivation company. The original business plan was to sell the 2022 crop for biomass, and use that money to build their flower brand, Weinert said.

“That was going to be kind of the stimulus to get us going to put up more greenhouses, and to build a brand around flower,” Weinert said.

Jane’s Garden has been selling flower – including pre-rolls – and business has picked up, Weinert said. Last year, the company partnered with Brooklyn-based weed brand FLAMER, which is currently on shelves in 19 New York State dispensaries.

While the market is certainly better than a year ago, it still hasn’t improved enough for Jane’s Garden to grow much, Weinert said.

“Since there were no dispensaries in the beginning, that original money from the biomass sales hasn’t come in,” he said. “We’re starting to see a little bit trickle in here and there, but it’s not enough to really do anything substantial. It’s just enough to keep us going.”

Kudrewicz’s company is in a similar position: improving, but far from enough to declare victory.

“I’m not saying I can see the light at the end of the tunnel yet,” she said. “I would say that there is more hope, and we’re getting closer to the end of that tunnel.”