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Members of New York’s largest cannabis industry trade group are furious and threatening to leave the association after its leadership sent a letter urging state officials against issuing too many cannabis licenses – which, they said, could risk flooding the statewide market.
Several Cannabis Association of New York members who spoke with NY Cannabis Insider said CANY leaders didn’t tell members anything about the letter, and many felt blindsided when they first heard about it in a New York Post story published Sunday evening.
“It’s a major statement, and there was absolutely no input from members,” said Christian Talgo, a CANY member who is applying for a microbusiness license for his prospective company Pure Cannabis. “It is so counter to what I would expect CANY would be lobbying for, that I was just confused, and eventually I became irritated.”
Talgo pointed out that the letter was dated the day after an all-member call for CANY members, at which nobody mentioned the coming letter.
That call was led by Damien Cornwell, the owner and operator of CAURD-licensed dispensary Just Breathe in Binghamton, who stepped in as CANY’s new president a few months ago.
Others who spoke with NY Cannabis Insider wondered why Cornwell, at that meeting, mentioned being in contact with Damian Fagon, the Office of Cannabis Management’s Chief Equity Officer who is currently under suspension following allegations of retaliation and selective enforcement on behalf of the state agency.
The OCM has not answered emailed questions regarding CANY’s letter, or Fagon’s alleged contact with the organization’s leadership. We will update this story if we receive answers.
Jesse Campoamor, a consultant and government relations specialist for CANY, told NY Cannabis Insider that the New York Post story mischaracterized CANY’s letter and position regarding licensing. CANY supports expanding New York’s market, Campoamor said, but opposes the idea of a massive influx of possibly thousands of new licenses.
“Unequivocally, the [CANY] board never asked for a full stop of the licensing,” Campoamor said. “CANY supports expanding licensing, especially in collaboration with market participants.”
In addition to angering CANY members, the letter has irked other cannabis trade groups in New York, leading two of them to release open letters criticizing CANY’s position and rhetoric regarding licensing numbers.
The firestorm that has erupted is two-fold: people are deeply unhappy that leadership didn’t seek their approval before sending the letter, and they are criticizing board members for appearing to advocate for a slow-down of the licensing process, when most dues-paying members of CANY are awaiting licenses.
Members and non-members have also pointed out that until now, CANY has been highly critical of the slow pace at which regulators have issued licenses since New York legalized adult-use cannabis in 2021.
In the April 12 letter to Cannabis Control Board Chair Tremaine Wright, Cornwell said a dramatic increase in retail licenses could harm the statewide industry.
“We strongly believe that handing out licenses without a thorough understanding of the market’s capacity will lead to oversaturation, business failures, and unintended public health risks,” Cornwell wrote.
Oversaturation has been an issue in several legal cannabis markets, including New Mexico, Oregon and Colorado. But for about two years, licensed growers in New York have struggled with an undersupply of retail, said Joseph Calderone, CEO of Steuben County processor Grateful Valley Farms and vice president of the Cannabis Farmers Alliance.
Cultivators licensed under the Adult-Use Conditional Cultivator program began planting their first crop in 2022, before the OCM and CCB had approved any retailers. 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.
New York’s retail rollout has been slower than expected, due to a mix of court injunctions preventing new shops from opening for months, and a long rule-making process to establish regulations for the newly legal weed industry. This left most of New York State’s farmers sitting on thousands of pounds of product with nowhere to sell it.
Last month, some licensed weed growers expressed cautious optimism about their business prospects to NY Cannabis Insider, saying business for cultivators was finally starting to pick up – to a degree – because an increasing number of dispensaries were coming online.
With these factors in mind, Calderone said the fact that CANY’s leadership would send such a letter without first engaging with people from multiple sectors of the cannabis industry was “gobsmacking” and “breathtaking.”
“I feel like for such an important decision about the supply chain, you would want to involve as many stakeholders as possible,” Calderone said.
Campoamor of CANY told NY Cannabis Insider that the board members had intended to discuss the letter with members, but the Post story came out before they got a chance. He said board members don’t know how the Post received the letter.
“The reason why leadership is elected to leadership is to be able to respond in real time to issues that are happening,” Campoamor said.
Calderone said he takes issue with several points CANY made in the letter, including the idea that New York’s legal market is at risk of oversupply – considering licensed growers struggle to get their products on shelves alongside the existence of an extensive illicit market in the state.
“Based on our numbers, we don’t see there to be an issue with opening more dispensaries and getting microbusinesses open,” Calderone said. “I think that we need to license as many people as we possibly can … If CANY has data that can convince me otherwise, first I need to see the statistics.”
Campoamor said CANY supports opening more dispensaries, but believes that stakeholders should have a say if regulators intend to approve a massive number of new licenses.
“We’re all on the same side,” Campoamor said. “We all want to see a viable, healthy, equitable cannabis market.”
Calderone also chafed at the fact that CANY’s letter invoked alleged public health risks associated with issuing more retail licenses without specifying what those apparent risks entail.
On behalf of the Cannabis Farmers Alliance, Calderone and a CFA board member released an open letter to Cornwell on Wednesday criticizing CANY’s letter.
Earlier today, the CFA joined three other New York cannabis industry trade groups – the New York Cannabis Retail Association, Association of New York Cannabis Processors and the Black Cannabis Industry Association – in sending a letter to Gov. Kathy Hochul and nine lawmakers and regulators refuting what the letter-writers called, “the recent misguided position taken by [CANY] that New York should move cautiously in the issuance of new retail cannabis licenses.”
“As long as the flow of new licenses remains at a trickle, the illegal industry will keep expanding because consumers don’t have a legal option, and the enormous profits available make breaking the law a risk worth taking,” the letter said.
Days after CANY’s letter came to light, members who spoke with NY Cannabis Insider said they know multiple people who have canceled their memberships, and are considering doing so themselves.
John Averill, CEO of Roaring 420′s lounge in Buffalo – and an applicant for a microbusiness license – said he’s been a CANY member for about a year, but doubts he will renew his membership.
Averill said he and other CANY members are upset that Cornwell and other leaders apparently advocating for cautiously paced licensing are already running licensed businesses, while most members are still waiting for their licenses.
“The self-serving nature of that is what really blew my mind, because all of the people who are telling us that we’re wrong and more licenses aren’t needed are people who are currently holding CAURD licenses,” Averill said.
Averill said he and others who criticized CANY’s letter via Slack have been ignored, or told they’re opposition is misguided. Talgo of Pure Cannabis said he’s also considering leaving CANY, but is first waiting to see if the organization reverses course.
However, the incident has raised larger questions about CANY among members, both Averill and Talgo said. Both said members are now questioning the groups’ organizational structure and governance.
“A few of us, since this started happening, have started asking some questions about the structure of CANY,” Averill said. “We’ve discovered this organization doesn’t seem to have any bylaws, doesn’t seem to have a charter … there are no checks and balances.”