New York and New Jersey are all about growing legal weeds.
In Orange County, NY, plans to build a large cannabis cultivation and processing facility on the site of a defunct state prison.
About 25 miles south, across the border in New Jersey, an industrial complex that once belonged to pharmaceutical giant Merck is being converted into an even larger marijuana cultivation center.
In Winslow, New Jersey, about 30 miles outside of Philadelphia, a new indoor growing complex was just celebrating its first harvest.
The advent of legalized adult marijuana in New York and New Jersey is an entrepreneur’s dream. Some estimate that the potential market in the densely populated region will grow to over $ 6 billion in five years.
However, the rush to get plants in the ground at factory-style manufacturing facilities underscores another fundamental reality in the New York metropolitan area: there is already a shortage of legal marijuana.
In New Jersey’s decade-old medical marijuana market, the supply of dried cannabis flower, the strongest part of a female plant, has rarely met demand, according to industry lobbyists and state officials. At the beginning of the pandemic, when demand exploded, it became even scarcer, patients and business owners said.
The supply gap has narrowed as the nationwide supply of flowers and products made from a plant’s extracted oils more than doubled between last March and this spring. Still, patients and owners say pharmacies often sell popular varieties.
“There are very few stocks,” said Shaya Brodchandel, executive director of the Harmony Foundation in Secaucus, New Jersey and president of the New Jersey Cannabis Trade Association. “Almost no wholesale business. As we harvest, we bring it straight to retail. “
Harmony bought the former Merck property in Lafayette, New Jersey late last year and is awaiting approval to start construction, Brodchandel said.
Because marijuana is illegal under federal law and cannot be shipped across state lines, marijuana products sold in each state must also be grown and manufactured there.
The Bundesbankengesetz makes it nearly impossible for cannabis companies to get conventional funding, creating a high hurdle for small startups and a built-in advantage for multi-state and international companies with deep pockets.
Oregon, which issued thousands of grow licenses after legalizing marijuana six years ago, has an abundance of cannabis. But many of the other 16 states where non-medical marijuana is now legal have faced similar supply shortages as New York and New Jersey as production slowly increased to meet demand.
“Flowers are always short in a new market,” said Greg Rochlin, general manager of the Northeast Division of TerrAscend, a cannabis company operating in Canada and the United States that opened its 17th medical marijuana dispensary in New Jersey this month.
In New York, where the medical marijuana program is smaller and more restrictive than New Jersey’s, the product menu includes oils, tinctures, and finely ground flowers suitable for vaping. The sale of loose marijuana buds for smoking is banned, however, and only 150,000 of the state’s 13.5 million adults who are 21 years of age or older are registered as patients.
When demand was modest, there was little incentive to increase supply. Until now.
Adult marijuana sales could begin in New Jersey within a year and New York by early 2023, industry experts predict.
“I’d be a fool if I didn’t make the product,” said Ben Kovler, founder and general manager of Green Thumb Industries, a cannabis company with offices in both states.
“There isn’t much inventory,” he said at a moment when a “tidal wave” of demand was looming on the horizon. “It is unlikely that there will be enough supplies,” said Kovler.
His company, he said, is awaiting final New York State approval to begin construction on the site of the former Warwick, NY men’s Mid-Orange Correctional Facility, which closed in 2011.
The competitor Citiva is also building a new production center there. A cannabis test laboratory and a CBD extraction facility, urbanXtracts, are already in place.
“We call it a cannabis cluster,” said Michael Sweeton, Warwick’s city overseer.
“It’s the definition of irony,” he added of the reinvented role of a correctional facility that boomed during the war on drugs, imprisoning 750 men at the same time and providing 450 jobs.
New York officials said the state’s hemp farmers will play an important role in efforts to produce enough cannabis to satisfy what is set to quickly become one of the largest marijuana markets in the country.
With lower overheads and a lower carbon footprint, hemp farmers who grow cannabis for specific purposes could potentially undercut indoor plant prices for at least part of the year, authorities said. Hemp, which contains much less of the intoxicating chemical THC found in cannabis, is used to make CBD oil.
New York law also allows individuals to grow up to six marijuana plants for personal use. New Jersey law does not allow so-called home growth.
In the coming months, both states are expected to enact regulations to regulate the new industry. Everyone has classified legalization as a social justice imperative, spending a large portion of the expected tax revenue on color communities disproportionately harmed by inequalities in criminal justice.
Trying to balance the goal of building markets geared towards social and racial justice against the inherent dominance of multistate corporations with early stakes in the region will be vital, officials in New York and New Jersey said.
“They should have the ability to boost the market,” said Norman Birenbaum, New York’s director of cannabis programs, of the 10 medical marijuana companies that have already been licensed to operate in the state. But it shouldn’t come “at the expense of new entrants,” he said.
Jeff Brown, who heads New Jersey’s cannabis programs, said the market has room – and a critical need – for newcomers.
The current operators of the state, he said, “will not be able to supply the market for personal use.”
The granting of two dozen new drug licenses has been delayed by more than a year due to a legal challenge, and some of the 12 current operators, Brown said, have been slow to fully utilize their expandability.
This has put a limit on the amount of cannabis that can be sold to patients in a single visit. Lines to enter stores tightened by Covid-19 regulations are common.
“You can’t always find the strain that is best for your condition,” said Ken Wolski, a retired nurse who now leads the Medical Marijuana Coalition, a nonprofit advocacy group. “And that’s a very frustrating thing for patients.”
Supply chain challenges have taken on a new urgency in New Jersey, where the state’s medical marijuana dispensaries are expected to be the first places adults can legally purchase cannabis without a doctor’s approval.
First, however, pharmacies must demonstrate that they have adequate patient care and facilities that can adequately accommodate both types of customers.
The New Jersey market has grown since 2019 when Governor Philip D. Murphy, a Democrat, approved a major expansion of a medical marijuana program that failed under his predecessor, Chris Christie, a Republican.
The number of pharmacies has tripled. 500,000 plants are currently being grown across the state, up from 50,000 in 2018, Brown said.
In March, 20,000 pounds of cannabis products were available in New Jersey, up from 8,000 pounds in March, he said.
Still, the price of flowers in New Jersey fluctuates between $ 350 and $ 450 an ounce before discounts. In California, the average price of an ounce of premium marijuana was $ 260, according to priceofweed.com, a frequently quoted price list.
“Popular products are running out and prices are still higher than we’d like to see,” said Brown. “The key to all of this is more competition.”
Last month, Curaleaf, which operates a pharmacy and two grow facilities in New Jersey, lifted the half-ounce limit on flower sales after a strong yield at its new indoor grow facility in Winslow, said Patrik Jonsson, the company’s executive regional president for seven northeastern states.
Workers at a similarly sized cultivation facility in Boonton, New Jersey, operated by TerrAscend, placed hundreds of plants in coconut-coconut bundles in early 2021 to begin a four-month growing and drying process. Tiered platforms are now filled with rows of light green and purple colored plants.
TerrAscend’s new pharmacy in Maplewood, New Jersey, attracted a number of customers within hours of opening earlier this month.
Stuart Zakim, one of the first in line, spoke to a cashier – the “Budtender” – about alternatives to the product he had originally requested but was told it was out of stock.
“You no longer wait in the dark for your dealer,” said Mr. Zakim, a longtime medical marijuana patient. “You are going to a beautiful facility.”
“The supply problem,” he added, “is really the biggest problem.”