A thick odour of cannabis pervades many New York suburbs, the outcome of cannabis decriminalization in 2019 – yet cannabis farmers in the state are at a stall as regards getting their products to market.
The state began issuing growing permits to over 200 farms last spring. Growers have since sown seeds, cultivated rows of plants throughout summer, and concluded harvesting just a few weeks ago. Hundreds of thousands of pounds of marijuana, worth millions of dollars, is now ready to be sold at dispensaries.
The only problem is that instead of being sent to major retailers, the cannabis is simply stacking up. Despite a thriving grey market and the state regulator’s repeated guarantees that cannabis outlets will be commonplace by the end of this year, no legal recreational dispensary has been launched in New York.
The stockpiles, estimated to weigh over 300,000 pounds by the Office of Cannabis Management, pose a slew of issues for farmers. To say the least, cannabis can deteriorate with time. According to Cannabis Benchmarks, a research company that tracks wholesale marijuana pricing statewide, the stash may be worth up to $750 million based on an average projected wholesale value of around $2,500 per pound.
Farmers’ near-billion-dollar revenue will decrease if their harvest is distributed slowly. Meanwhile, producers must figure out how to store it permanently, ensuring that the weed remains as fresh as possible while protecting it from pilfering or contamination.
Candidates for one of the first 150 individual retail permits and 25 nonprofit permits expect to hear from the state within the next few days, but this positive step by the OCM is merely the beginning of the lengthy process of operating a legal recreational dispensary.
Melany Dobson, CEO of Hudson Cannabis, a 520-acre plantation approximately two hours north of New York City, said: “It’s an unknown path to market.” She says, “We’ve been repeatedly promised that dispensaries will launch before the year runs out.” I’ve acted as if that’s our only form of proof, so we’re ready for it.
Since 2016, Dobson has been leading the business, previously branded Hudson Hemp, with her brother Ben Dobson and sister Freya Dobson. The fields were stark on a bright November day, with wisps of decaying foliage scattered about. Harvest had finished the previous week, and the cannabis was safely stored elsewhere.
The OCM, which monitors cannabis licenses from its headquarters in Albany, has established a high standard for its initial batch of retail operators — and a mountain of paperwork to contend with in the process. The state has guaranteed that the first licenses will go to applicants convicted of marijuana-related charges before the legalization of recreational marijuana, or their relations, as long as they have experience owning and operating a business in New York. A lot of proof is necessary to establish such credentials and a quasi $2,000 application fee.
After a petition complained of unnecessarily stringent regulations, a federal judge in Albany momentarily barred the OCM from awarding retail licenses in several regions, including Brooklyn, last Thursday. “The goal is to have dispensaries operational before the end of the year,” said Aaron Ghitelman, an OCM spokeswoman. “We’re still shooting for the first sales” by 2023.
When it issued cultivation licenses, the regulator prioritized smaller companies that had already been cultivating hemp — typically used in legal CBD products — over large corporations with no history in the state. The licences came with many restrictions, including the requirement that farms grow no more than one acre of the so-called canopy (equal to around two acres of land size) and that most of the cultivation be done outside.
As a result of the typical Northeast environment, New York’s cannabis farmers are forced to work on a tight timetable. Farmers typically plant marijuana seeds in May to enable outdoor growth rather than greenhouse cultivation. The busy season lasts until late October when harvest begins. The challenge for the remainder of 2022 — or however long it takes for legal recreational dispensaries to launch — is keeping the weed green.
Cannabis, like wine, must be stored in a humidity and temperature-controlled condition. For example, the plants must be kept at a specific temperature throughout the drying process. Over time, producers are more concerned about changes in the crop’s potency and odour, though there are also physical changes.
“Old cannabis develops a brownish tint,” Melany explained. When exposed to air, light, and rising temperatures for an extended time, THC degrades into cannabinol, a weaker and ultimately less helpful molecule.
Hudson Cannabis claims to have the capacity to preserve cultivated cannabis in circumstances that restrict degradation for up to 12 months – a costly setup that not every producer can afford. Dozens of stacked yellow and black bins, each holding around five pounds of the plant, already border the company’s storage facility. Nonetheless, the farmers are modifying their operations to account for the delays.
However, not every cannabis farm is similar to Hudson Cannabis, which has substantial funds and a combined decade of experience between Ben Dobson, Hudson Cannabis’ co-founders and Melany. In addition, the company leases large expanses of land to local farmers to pasture grass-fed goats and beef. The Dobsons are confident they will weather the rough patch between harvest and the eventual ground-breaking for retail dispensaries.
The risks are bigger for many other cannabis farms within New York state. In recent years, a surplus of hemp-derived CBD products has resulted in a nationwide drop in wholesale pricing, leaving some farms in financial distress or bankruptcy. Legal THC sales appeared to be a potential solution for such farms to compensate for their losses. According to an August statement from the mayor’s office, the market for recreational cannabis is expected to exceed $1.3 billion in revenue in New York City alone by next year.
Farmers like the Dobsons will remain in a dilemma until legal recreational dispensaries are open. Because cross-state sales are prohibited, growers cannot sell their harvests to outlets in Massachusetts, New Jersey, or other states where retail operations are already in place. It’s either New York or nothing.