New York’s Adult-Use Cannabis Industry Grapples With Sluggish Rollout

Seth Jacobs moved to upstate New York in 1983 with the hopes of owning and operating a sustainable, organic farm. He co-founded Slack Hollow Farm the same year, and has provided certified organic vegetables through farmers markets, local grocery stores and co-ops ever since.

In 2018, Slack Hollow pivoted to participate in New York’s industrial hemp pilot program. Jacobs partnered with processor Open Minded Organics in 2019 to produce CBD, and Slack Hollow Organics was born.

Last year, Gov. Kathy Hochul signed legislation into law that allowed the state’s licensed hemp farmers to apply for permits to grow cannabis for New York’s adult-use cannabis market, which former Gov. Andrew Cuomo signed into law in 2021. Jacobs jumped at the opportunity.

Now, as adult-use cannabis retailers struggle to open under a “Seeding Opportunity Initiative” that prioritized applicants with past cannabis-related convictions in the licensing process, Jacobs says the state has broken its promise to the hemp growers that stepped up to supply the market.

“They broke the deal that they made with the cultivators,” he says. “The cultivators grew the crop, the [Office of Cannabis Management] was going to get the stores open, and that’s where the crop was going to sell. We kept our side of the bargain at great personal cost.”

That cost includes extra operational and compliance expenses, Jacobs says, as well as service providers severing ties with farms upon learning that they entered the adult-use cannabis market.

“Once you become a cannabis farmer, your life becomes very different in these United States,” he says. “Aside from … all the extra overhead, all your institutions will walk away from you. You will need new banks, new insurance companies, new credit unions, new accountants—the whole thing. Your life will be turned upside down. And that’s what we put ourselves through to do this, and now there aren’t enough stores open to move the product. And there’s not much momentum there.”

Jacobs says regulatory changes are desperately needed to help sell the products that New York’s cannabis farmers produced last year—and are producing again this growing season.

James Ansorge, counsel with Cozen O’Connor, echoes Jacobs concerns that New York’s adult-use market needs some fine-tuning in order to reach its full potential, especially in the wake of challenging economic conditions that have plagued cannabis businesses nationwide.

“We’re seeing challenges across the country,” he says. “New York isn’t alone, but you have a lot of companies, both multistate operators and small, local, minority-owned businesses, that have invested a lot of time and capital in New York, and they’ve now been waiting for a long time for their licenses. And that capital is being burned through. Now, with the excess of biomass that the farmers have, the question is, what’s that going to do to pricing? We’ve seen wholesale prices collapse in other states. I think that it’s a really challenging time to be entering the New York market with no clear timeline for when you can open, where you can open, or even how you can open.”

Source: cannabisbusinesstimes.com

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