New York growers are figuring out how to keep a glut of weed fresh as the state stalls on retail licenses
By almost all metrics, New York’s cannabis market rollout should be in the final innings. The state began handing out growing licenses to more than 200 farms last spring and farmers have since sowed seeds, tended to rows of plants all summer, and just in the last few weeks, finished harvesting. Now, hundreds of thousands of pounds of weed — worth hundreds of millions of dollars — is ready to be sold at dispensaries.
There’s one hitch: Instead of being shipped to retail stores, the weed is just piling up. Though a rampant gray market is already up and running, not one legal recreational dispensary has yet opened in New York, despite the state regulator’s repeated assurances that cannabis stores would be a fixture by the end of this year.
The languishing stockpiles — estimated to weigh around 300,000 pounds, according to the Office of Cannabis Management — pose a host of problems for farmers, not least of which is that over time, cannabis can deteriorate. Based on an average estimated wholesale value of about $2,500 per pound, according to Cannabis Benchmarks, a research firm that tracks wholesale marijuana prices nationwide, the hoard could be worth as much as $750 million. If farmers don’t get their harvest into stores soon, that near-billion-dollar revenue will eventually start to dwindle. In the meantime, farmers have to figure out how to store it indefinitely, making sure the weed is as fresh as possible while also keeping it safe from theft or potential contamination.
Applicants for one of the initial 150 individual retail licenses and 25 nonprofit licenses expect to hear back from the state any day, but a green light from the OCM is only the beginning of the long process involved in opening a storefront.
“It’s an unclear path to market,” said Melany Dobson, chief executive officer of Hudson Cannabis, a 520-acre farm about two hours north of New York City. “We’ve been told again and again that dispensaries will open before the end of the year. I’ve acted as though that’s our single source of proof, so we’re prepared for that.
Dobson has been running the operations, formerly known as Hudson Hemp, alongside her brother Ben Dobson, and sister Freya Dobson, since 2016. On a bright day in early November, the fields lay bare, with wisps of withering vegetation strewn about. Harvest had wrapped up the previous week and the heaps of cannabis were elsewhere, in a secure location.
Hudson Cannabis has the resources to do this: It’s owned by David Rockefeller’s daughter, Abby Rockefeller, and has been preparing for the transition to growing legal cannabis for years. Until recently, the project had been cultivating hemp — identical to cannabis, just with less than 0.3% of tetrahydrocannabinol — but now is almost solely focused on THC-rich cannabis varieties, with its first season consisting of 14 strains, ranging from “Dosidos” to “Sour Glue.”
Melany’s original financial model showed that revenue would start to stream in around November. “Which is this month,” she said, laughing. “So that’s clearly not the case.”
The OCM, which oversees cannabis licenses from its base in Albany, has set a high bar for its first round of retail proprietors — and given itself a mound of paperwork to wade through in the process. The state has promised the first licenses will go to applicants who were convicted of marijuana-related offenses before recreational pot was legalized, or their relatives, as long as they have experience owning and operating a business in New York. A lot of documentation is required to prove those credentials, along with a non-refundable $2,000 application fee.
Last Thursday, a federal judge in Albany temporarily blocked the OCM from issuing retail licenses in a handful of regions, including Brooklyn, after a lawsuit complained of overly stringent requirements.
“The goal is to open dispensaries by the end of this year,” said Aaron Ghitelman, a spokesperson for OCM. “We’re still gunning to get the first sales on board” by 2023.
The regulator had similar priorities in mind when it handed out cultivation licenses, giving them to smaller operations that had already been growing hemp — often used in legal CBD products — over big corporations with no experience in the state. The permits came with a long list of conditions, including that farms only grow one acre of so-called canopy (equivalent to about two acres of land area) and that the majority of the growing occurs outdoors.
That keeps New York’s farmers on a tight schedule, constrained by the typical Northeast climate. Farmers usually first plant the cannabis seeds in May to allow for it to be sun grown, as opposed to in greenhouses. The busy season is crammed between then and late October when harvest starts. For the rest of the year — or however long it takes for stores to be ready to place orders — the challenge is, literally, keeping the weed green.
Much like wine, cannabis needs to be kept in a temperature and humidity-controlled environment. During the drying process, for instance, the plants need to be kept at a precise temperature. Changes in the crop’s potency and smell are the biggest concerns for farmers over time, but it also changes visually.
“Old cannabis starts to have a brownish glow,” Melany said. If exposed to air, light and warmer temperatures for long enough, THC will eventually break down to another compound known as cannabinol, which is weaker, and ultimately, less valuable.
Hudson Cannabis says it has the facilities to store harvested cannabis in conditions that limit degradation for as long as 12 months — an expensive set-up that not every grower has the resources to replicate. Dozens of stacked black and yellow bins already line the company’s storage facility, with each one holding about five pounds of the plant. Even so, the farmers are adapting their operation to account for delays.
“We’re not packaging or processing flower yet,” Melany said, referring to the raw portion of the plant that can be wielded into products, like dried, smokable cannabis. “We’re trying to retain as much quality as possible. And rushing it into the finished product bags is not the way to do that.”
When the storage facility’s doors are closed, it looks like any other agricultural warehouse. But when they’re opened, the telltale smell of the cannabis plant rushes out, posing yet another problem for the farmers: security.
All of the 261 cultivators granted a conditional license had to submit a security plan along with their application to the state. But there was little guidance as to what it should look like, and the plans were largely left up to the farmers’ discretion.
“We have an all-night in-person security presence,” said Ben Dobson, co-founder of Hudson Cannabis. “As a modern hippie I’m not in love with that. We’re trying to make it look good. We didn’t do the chain-link fence, we did the eight-foot tall deer fence. But it sucks.” So far, they’ve paid around $100,000 for a security system, but are gearing up to spend an additional $250,000 soon.
For Mario Rodriguez, who runs a private security firm based in Buffalo that has pushed into the cannabis industry, it means business has been booming in recent months. Forseti Protection Group, of which he’s president, focuses on the technology side of security, including services like infrared scanners that can be installed on a farm’s perimeter to detect trespassers. He says inquiries from potential clients have increased more than 10-fold in the past three months alone.
“They don’t know how much of their product is actually going to be rolled out,” said Rodriguez. “We’re just operating under the assumption that everything has to be safe and ready.”
Not every farm is like Hudson Cannabis, with its access to deep pockets and a combined decade’s worth of experience between Melany and Ben alone. The company also leases out swaths of land to nearby farmers to graze grass-fed beef and goats. The Dobsons are optimistic that they’ll be able to ride out the rocky period between harvest time and the first ground-breaking for retail dispensaries.
For many of the other farms across New York state, the stakes are higher. A glut of hemp-derived CBD products in recent years triggered a nationwide plummet in wholesale prices, leaving some growers in financial disarray or bankruptcy. Legal THC sales looked like a promising way for such farms to recoup their losses: The market for adult-use cannabis is projected to reach $1.3 billion in sales in New York City alone by next year, according to a statement in August from the mayor’s office.
Until those shops open up, farmers like the Dobsons are in a bind. Selling across state lines isn’t allowed, so growers don’t have the option to offload their crops to dispensaries in Massachusetts, New Jersey or states further afield that already have retail operations up and running. It’s New York or nowhere.
“We’re ready to launch a full suite of products into the New York market,” Ben said. “We’re spending money with no end in sight until the state gets its act together on retail.”
