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

New York’s legal marijuana market has experienced a sluggish start, leaving farmers in a difficult position. Seth Jacobs, a farmer from upstate New York, currently has approximately 100 bins filled with marijuana flower stored on his farm. The problem is that there is a severe shortage of places to sell his product. Despite the 700 pounds (318 kilograms) of high-quality flower and 220 pounds (100 kilograms) of distillate harvested last year as part of the state’s inaugural legal crop for recreational use, there are only a handful of licensed dispensaries across the entire state. As a result, Jacobs and over 200 other farmers are struggling financially, with the previous year’s harvest still sitting unsold.

The challenges faced by New York’s marijuana farmers are not unique, as growers in western states have also encountered economic difficulties. Factors such as low prices, intense competition from the black market, high state taxes, and federal restrictions on banking and exporting have made it tough for legal growers to turn a profit.

However, the predicament faced by New York farmers is directly linked to the rocky launch of the state’s recreational marijuana market. Although state leaders had planned a phased approach to ramping up the market, allowing a diverse range of participants to enter, the process of licensing new dispensaries has been significantly slower than anticipated. Governor Kathy Hochul had envisioned the opening of approximately 20 new shops each month at the beginning of this year. However, by the start of the year, only one store had opened, with an additional 11 opening since then.

Unlicensed shops quickly filled the void, particularly in New York City. Unfortunately, these outlets do not constitute a legal market for the state’s farmers, as federal law prohibits the transportation of their crop across state lines. Consequently, there is limited shelf space available to sell the 300,000 pounds (136,000 kilograms) of cannabis produced in the state last year, much of which was intended for processing into products like gummies and vapes.

According to the Cannabis Association of New York, the state currently holds hundreds of millions of dollars’ worth of unsold cannabis, with approximately 80% of it in the form of cannabis oil. Concerns are growing that the smokable flower may eventually become too old to be sold.

Farmers like Seth Jacobs and Brittany Carbone, co-founder of Tricolla Farms, find themselves in a challenging situation due to the lack of sales. Many small farmers who heavily invested financially in last year’s crop now require capital for their second year of operation. Jacobs, operating under the Bud & Boro brand, has decided against growing plants for distillate this year due to the backlog. Similarly, Carbone’s farm is planting less than the legally allowed acreage and postponing infrastructure investments.

Critics attribute the difficulties in the dispensary application process to missteps by state officials, who aimed to promote a diverse array of entrepreneurs. This involved prioritizing struggling hemp farmers for the first legal pot harvests and granting individuals with past marijuana convictions the opportunity to open some of the initial dispensaries. Critics argue that the application process has been cumbersome, and issues have arisen with a planned $200 million fund intended to assist “social equity” dispensary licensees in the costly task of setting up shops. Although the fund was expected to include up to $150 million in private investment, the status of private capital remains uncertain.

The retail rollout was further hindered by a federal judge’s ruling in November, temporarily prohibiting the issuance of dispensary licenses in certain parts of the state. The injunction was later narrowed down to the Finger Lakes region before a settlement was reached.

Efforts have been made recently by the Office of Cannabis Management to boost demand, including the provisional approval of 50 new dispensary licenses. Additionally, plans are underway to allow groups of growers to collaborate with retail licensees and sell their cannabis at venues other than stores, such as farmers’ markets or festivals.

While farmers like Jacobs and Carbone are frustrated by the situation, they are holding on and making the most of available opportunities. Carbone has managed to get her farm’s brand, TONIC, into six dispensaries, while Jacobs has received sporadic payments and hopes that the development of farmers’ market policies will provide a new avenue for selling his marijuana. Despite the current challenges, they remain optimistic and determined to be part of the eventual resolution.

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More about struggling marijuana market

• New York Times – Slow start to New York’s legal pot market leaves farmers holding the bag
• NBC News – New York farmers struggle as legal marijuana market lags
• Cannabis Business Times – New York’s Legal Cannabis Market Faces Challenges
• Business Insider – Slow rollout of recreational pot in New York leaves farmers struggling