New York’s legal pot market’s slow start leaves farmers holding the bag

ARGYLE, NY (AP) — Seth Jacobs has about 100 bins full of marijuana flowers stored at his upstate New York farm.

And that’s a problem. There aren’t enough places to sell it.

The 700 pounds (318 kilograms) of spiky flowers were harvested last year in New York’s first pot harvest legally grown for recreational purposes. It also has about 220 pounds (100 kilograms) of distillate. Months later, there are only a dozen licensed dispensaries statewide to sell what Jacobs and more than 200 other farmers produced.

Now another growing season is underway and farmers who are still sitting on much of last year’s harvest are in dire financial straits.

“We are really under fire here. We’re all losing money,” Jacobs said recently at his farm on hilly terrain near the Vermont border. “Even the most enterprising and ambitious among us simply cannot move much product in this environment.”

New York pot growers aren’t the only ones struggling with tough economic conditions. Western state marijuana growers have also complained that low prices, fierce black market competition, high state taxes, and federal banking and export restrictions have made it difficult for legal growers to earn money.

But the fate of New York farmers is directly tied to the bumpy launch of the state’s recreational pot market.

Heads of state had always planned to prepare the market in stages, giving a chance for a diverse set of participants to gain a foothold. The state process for licensing new dispensaries, however, has moved at a much slower pace than expected.

Last fall, Governor Kathy Hochul predicted about 20 new stores would open every month to start this year. Instead, one store was open at the start of the year, and 11 more have since opened.

Unlicensed stores have swooped in to fill the void, particularly in New York, but these outlets are not a legal market for farmers in the state. Federal law prohibits New York farmers from transporting their harvest across state lines.

That means limited storage space to sell the 300,000 pounds (136,000 kilograms) of cannabis grown in the state last year, much of the proceeds destined to be made into items like gummies and vapes.

Statewide, there are estimated to be hundreds of millions of dollars in unsold cannabis, about 80% of which is in the form of cannabis oil, according to the Cannabis Association of New York, a trade group. It is feared that the smokable flower will become too old to be sold.

Jacobs stores its tubs of buds at Slack Hollow Organics in secure, temperature-controlled units. Even more valuable is the distillate from various processors he is waiting to sell. Elsewhere in rural New York, Brittany Carbone, co-founder of Tricolla Farms, said the stock they were sitting on included 1,500 packets of pre-rolled joints and about 2,000 packets of edibles.

“What we really need to see is more retailers opening up, and that’s actually going to give us the sustainable solution,” Carbone said.

Lack of sales is a particular problem for small farmers who saved themselves financially to produce last year’s crop and now need capital for their second year.

Jacobs, whose brand is Bud & Boro, said he will not be growing plants for the distillate this year due to the backlog. Carbone said they were planting on less than the acre they were legally allowed to and were withholding infrastructure investments, like hoop houses to help with growth.

In New York, many critics blame missteps by state officials in their well-meaning efforts to open up the market to a wide range of entrepreneurs. This meant reserving the first legal pot harvests for struggling hemp growers. And people with previous marijuana convictions were given the opportunity to open some of the first dispensaries.

Critics say the process has been cumbersome for dispensary applicants. And there have been problems with a planned $200 million fund to help “social equity” dispensary licensees with the costly task of setting up stores.

The fund was to contain up to $150 million of private investment. But state dormitory authority spokesman Jeffrey Gordon declined to say whether private funds had yet been invested, saying only in an email that “work to raise private capital is in progress. course”.

Gordon noted New York’s “complex and unprecedented” effort to create a new statewide venture from the ground up, which included evaluating 10,000 commercial properties for dispensary locations and l arranging banking, training and other services for licensees.

The retail rollout was also hampered by a federal judge’s decision in November that temporarily barred New York from issuing dispensary licenses in parts of the state, including Brooklyn and Buffalo. The injunction was later restricted to the Finger Lakes region before a settlement was reached this week.

The Office of Cannabis Management has recently taken steps to boost demand, including tentatively approving 50 new dispensary licenses last month. And plans are underway to allow grower groups to join retail license holders to sell their cannabis outside of stores, such as at a farmers’ market or festival.

“We know these growers are worried about how to sell last year’s crop as they decide whether or not to plant a cannabis crop in 2023, and we will continue to support them as more dispensaries aimed at adults are opening up to sell their products,” Cannabis Bureau spokesperson Aaron said. Ghitelman said in an email.

On a separate track, Hochul and the legislature approved a new law giving regulators broader power to seize weed from illicit stores in competition with legal stores.

Although frustrated, farmers like Jacobs and Carbone are hanging on. Carbone introduced his farm’s brand, TONIC, to six dispensaries. Jacobs has received intermittent payments and hopes the farmers’ market policy being developed will give him a new avenue to sell his marijuana.

“It’s all going to work out,” Jacobs said. “And I want to be there when it happens.”

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