New York Forcing Cannabis Farmers to Choose Business Model

New York’s 280 conditionally licensed recreational cannabis farmers received a notice right after Christmas from state regulators, informing them they would be required to choose one of four cultivation plans for the coming year – and that they only had a few weeks to make that decision.

The initial notice gave farmers until Jan. 13 to make a selection between growing entirely outdoors for the 2023 season, growing entirely indoors in a greenhouse, or two possible combination options of both outdoor and indoor, a major policy shift from what growers had previously understood they’d be allowed to do this year, several growers said.

After the Cannabis Association of New York (CANY) and several members who are licensed cultivators complained to the state’s Office of Cannabis Management (OCM) about the deadline, the timeline was extended, but only to Feb. 1.

The situation has many growers feeling boxed into a choice they don’t want to make and without full knowledge of the possible ramifications for their own fledgling businesses. The state still only has two retailers open and operating, and most of the legal farmers have yet to even sell any of their crops from this past fall.

“It appears to be locking us in to uninformed decisions, possibly for the next couple of years, and that’s really what has the growers concerned,” said Tim Moshier, the owner of B30 Farm in Fulton. “We haven’t been able to get our stuff to market yet and find out what sells and what doesn’t.”

Moshier pointed out that early last year, state regulators told industry stakeholders that the plan was to have multiple dispensaries open by the end of 2022, but only one – Housing Works in Manhattan – actually launched. That has nearly all of the licensed farmers still waiting to sell the vast majority of their harvests.

The new letter, Moshier said, is “one more straw on the camel’s back” for a lot of growers.

“A lot of growers thought we’d have product in dispensaries a month or two ago, according to the OCM’s original plan. That didn’t happen. People are getting cash-strapped now,” he said.

It’s also unclear whether farmers will be permanently locked into whatever choice they make, or if regulators will allow them the flexibility to, say, add a greenhouse to an outdoor-only grow down the line at some point or transition into a vertically integrated microbusiness.

Those are both changes that several farmers have been seriously contemplating.

“We all had the idea we’d be in the place where we’re at until 2024, and then we’d be able to at least make an educated decision based on the market conditions and based on a good perspective of what our place can really be here to be successful,” said Brittany Carbone, the CEO of Tricolla Farms in Berkshire and a board member of CANY, which represents about 80 of the state-licensed farmers.

“To make that decision now is just very hasty,” Carbone said. “For a vast majority, it’s a very difficult decision to make at such an uncertain time.”

The Options

The four choices growers were given are:

• Outdoor, which includes up 43,560 square feet of outdoor canopy.
• Greenhouse/mixed light with no more than 20 lights, which includes 25,000 square feet of canopy.
• Outdoor and greenhouse/mixed light with no more than 20 lights, which allows for both indoor and outdoor cultivation, with a cap of 20,000 square feet of greenhouse canopy and 30,000 square feet of total canopy.
• Outdoor and greenhouse/mixed light with no restriction on the number of grow lights, with a cap of 12,000 square feet of outdoor canopy and 6,250 square feet in a greenhouse.

“This form is required to be submitted by all (adult use conditional cultivators) that wish to cultivate in the 2023 season,” the letter from the OCM to growers reads.

The letter also includes a provision that any grower who signs and submits the form recognizes that the “selected and approved cultivation tier on this form will transition with conditional licensees as their approved tier for full licensure,” which suggests that whatever choice the growers all make will become their long-term place in the New York cannabis supply chain.

“The more indoor you’re allowed to have, then the less outdoor. It’s strange, and there’s no guidance for it,” said Tess Interlicchia, CEO and owner of Grateful Valley Farm in Corning.

The Problems

Interlicchia said it feels as though the OCM is putting more restrictions on small distressed farms like hers, instead of giving them ways to be competitive, even though the New York market has been specifically designed to bolster small businesses. The 280 conditional cultivation licenses, for instance, were all given to licensed hemp farmers, with larger multistate operators being forced to largely sit on the sidelines until late 2025.

But once bigger companies can enter the market, Interlicchia said, the choice she and other farmers are being forced to make this coming week could come back to haunt them.

“It feels like we’re being set up to fail, to be honest, because none of us have tens of millions of dollars to throw up a greenhouse right away to be able to compete with the MSO’s,” said Interlicchia, who added she’s still struggling with which of the four options to choose. “It’s nerve wracking. It’s kind of scary.”

OCM spokespeople did not respond to multiple requests for comment on the policy shift, and the reason for the notice remains unclear.

“I would love to know” why the OCM sent out the notice, Interlicchia said. “They have sent out plenty of surveys. They could have just done that, instead of being like, ‘This is firm and you must do this by that date.'”

Carbone said she believes the policy shift is an attempt by the OCM to both get a better handle on overseeing the statewide supply chain and to address a prior CANY complaint that 20 lights for a greenhouse is too few lamps for indoor growers to be truly effective.

“They did provide a pathway for people to utilize more lights, to extend that season and greenhouse production,” Carbone noted. “It’s something that’s needed. But once again, it’s a lack of clarity, and communication not being as dynamic as we’d like it to be. It’s causing a lot of frustration for growers.”

“There are definitely people who are like, ‘F*** yeah, like, I have the greenhouse, I’m filling it out with lights.’ They’re ready to go. And that’s awesome, we need that,” Carbone said, but characterized that as a minority of farmers.

Moshier said he’s still hopeful that regulators will want to work with the farmers instead of being hard-nosed about the situation, but he added that the fundamental issue is a lack of communication.

“I think there’s a 50/50 chance they may extend the (Feb. 1) deadline again, and maybe come back with some more clarification,” Moshier said. “Hopefully they’ll allow us a little more latitude. I don’t know what’s driving the OCM, to need this information this early in the season.”