Members of the Cannabis Farmers Alliance, a grassroots ad-hoc organization comprised of licensed Adult Use Conditional Cultivators across New York State, have come together to express their concerns regarding the rollout of New York’s adult recreational use market.

The argument against allowing ROs to enter early in violation of Proposed Regulations Section 123.18(b)[A ROD shall not: #9] and Resulting negative impacts to the Farmers, Small Growers, and Microbusinesses (and industry as a whole). ROs are misleading the OCM with their market supply projections. They claim that they could never fill their shelves without the extra supply coming from AUCCs to share their shelves. In reality, the economics are very much in their favor and would eliminate competition by saturating the adult recreational market while collapsing prices. This is a strategic decision by the ROs. Because of their access to capital markets, they can wait out the resulting economic downturn longer than their smaller, less-funded competition. Total estimated demand for all cannabis use in New York State requires approximately 7 million square feet of canopy. If you take 11 ROs and give them 100,000 square feet each you will be at 1.1 million square feet. Turning that canopy over 5 times a year equals 5.5 million square feet of the 7 million. If New York consumers purchase legal cannabis, ROs will control 80% of the entire cannabis market. This does not account for black market share of the market. Therefore, the amount of ROs’ indoor canopy can easily saturate the market with cannabis supply and New York State is allowing the ROs to do so right out of the gate in violation of Proposed Regulations Section 123.18(b)[A ROD Shall Not: #9].
It is this section in the Proposed Regulations that gave assurances and expressed OCM’s intention in writing establishing a timeline by which RO’s would have to wait to enter the market until the social equity portion of the program had a chance to establish itself and AUCCs were also well established. AUCCs used this timeline (Prop. Reg.Sec.123.18(b) ROD Shall Not #9) from the Proposed Regulations to invest in their business infrastructure and execute detailed operating plans in accordance with OCM guidelines. Millions of dollars in planning and operations were sunk into strategic decisions with the understanding that AUCCs would not have to compete with ROs for years. This may have not been such an existential issue if the OCM had fulfilled its promise to have enough dispensaries open to sell the 300,000 lbs of supply to New York State cannabis consumers. The understanding is that AUCCs would not have to compete with the RO’s millions of square feet of indoor canopy. Over the course of those three years billions of dollars in the cannabis economy that would have been distributed to independent operators and rural communities across the state. Instead, those billions will be concentrated in the coffers of 11 existing organizations with 20 more on the horizon. Given the negative management performance of these ROs in other states with legal cannabis it’s clear the current model New York’s OCM proposes is not sustainable for the industry as a whole.

There is really no reason why ROs can’t wait for the social equity participants, including distressed farmers, to be operational prior to ROs transitioning from medical adult use to adult recreational unless it is to thwart a legal threat from ROs and their respective lobbying groups - which is not a valid reason to jeopardize the original intent of the MRTA and how it will negatively impact the economics of the cannabis industry in New York.

ROs being Rolled Out Early is Illegal and Should not be Allowed to Enter 3 Years Early: Putting energy and effort into letting ROs jump the line without giving original licensees/social equity a chance codifies an illegal action. This action does not follow through on the original intent of the MRTA.

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