Cannabis showcases are ‘a lifeline’ for New York farmers grappling with glut

November 1, 2023 · MJ Biz Daily

New York state’s unique Cannabis Growers Showcase program (CGS) has helped ease the burden of unsold marijuana worth hundreds of millions of dollars amid a dearth of adult-use retailers, according to local growers.

Cultivators and brand representatives want the showcases to be allowed to continue after the Jan. 1, 2024, expiration date, particularly with forthcoming competition from the state’s large medical cannabis companies.

The showcases, which range from farmers market-like setups to more conventional retail experiences, were designed to help marijuana cultivators sell off a glut of inventory left over from last year.

Events can last for a single weekend or for multiple days, and they can be hosted at licensed retail outlets, cultivation and processing facilities or other temporary locations such as the New York State Fair.

While cultivators and brand reps are often on-site to educate consumers about their products, licensed retailers through the Conditional Adult-Use Retail Dispensary (CAURD) program must process transactions.

“I really hope that they extend it,” Wyatt Harms, the co-founder and CEO of Brooklyn-based pre-roll brand Flamer, told MJBizDaily in an interview.

“It’s a lifeline for them.”

As of Oct. 31, there were only 26 licensed adult-use cannabis stores in the state, well below market expectations set by Gov. Kathy Hochul and regulators who projected opening 20 stores per month after launching recreational sales.

Harms said that there’s a misconception that the state’s progress on increasing retail, such as the recent opening of five stores, means there isn’t a need to allow the showcase program to continue into the new year.

In September, New York’s Cannabis Control Board voted to allow non-social equity applicants, including existing medical marijuana companies, to apply for licenses to sell, cultivate and manufacture cannabis.

The medical companies are primarily large multistate operators, including New York-based Acreage Holdings and Chicago-headquartered Cresco Labs and Green Thumb Industries.

Current conditional licensees, who’ve been stuck in a holding pattern because of a delayed rollout and ongoing litigation from veterans who say the program is unconstitutional, will also be applying for permanent licenses.

“There’s not enough distribution for small farmers,” Harms said, adding that many of them have invested their life savings into legal marijuana.

“I don’t know why you would stop a program that is providing at least some relief to the farmers.”

The state Office of Cannabis Management (OCM) hasn’t decided if the showcases will continue in the new year, according to a spokesperson.

The decision could be impacted by other factors, such as if more stores are able to open in the next few weeks, which would reduce the need for growers showcases, the spokesperson said.

New York’s adult-use cannabis program launched in late 2022. Total recreational sales from the beginning of 2023 through Sept. 29 were $83.9 million, according to preliminary data from the OCM.

The CGS program sold $1.5 million in cannabis products from August to Oct. 1 – $290,000 in August and $1.2 million in September.

The OCM did not share how much unsold cannabis inventory cultivators have stockpiled this year.

The agency told Bloomberg there was an unsold glut in 2022 of 300,000 pounds, which the business news website estimated to be worth about $750 million.

After this year’s sales so far, that leaves the equivalent of more than $660 million worth of products, based on 2022 wholesale prices.

Wholesale cannabis prices have dropped from $2,500 per pound to $1,063, according to the U.S. Cannabis Spot Index by Connecticut-based data firm Cannabis Benchmarks, which still means New York cultivators have stockpiled product worth hundreds of millions of dollars.

Moreover, that amount doesn’t take into account this year’s harvest, which cultivators are currently processing.

An imperfect solution

Tessa Williams, owner of Empire Farm, which grows diverse crops including cannabis in the Hudson Valley, said her farm’s unsold inventory from last year is worth approximately $200,000.

Empire hasn’t secured distribution in any legal retail channels yet, and so the company is relying entirely on CGS events.

Williams said she wants CGS events to continue in 2024 but said they can also be costly and onerous for cultivators to participate in.

“It’s not the same as launching a farm stand at your farmers market,” Williams said.

Farmers are managing showcases in some instances, which means partnering with a retailer to process transactions, carding shoppers at the door and staffing their brand tables to educate consumers, Williams said in an interview with MJBizDaily.

Each CGS event must have at least three flower cultivators, and at least one must not have any existing retail distribution.

One processor, which manufactures products such as edibles, is allowed at each CGS event but cannot provide more than 35% of the inventory at the event.

Retailers typically mark up flower from last year’s harvest by 50% while other products, including edibles or vape products, are marked up by 100%, Williams said.

Organizers charge each participating company $300-$500 per week, Williams said.

That’s all in addition to their responsibilities as cultivators, which is particularly grueling in the fall when outdoor cannabis is harvested.

“So now you’re a farmer standing at a farmers market all weekend in addition to trying to run your farm,” Williams said.

Farmers markets and retail setups

Sarah Stenuf, the founder of Fulton-based Ananda Farms, has products on store shelves. But Stenuf noted she is selling far more at CGS events.

Stenuf said farmers market-style events are a rare opportunity to meet directly with consumers, share the story of the brand and why it’s unique as well as the thinking behind the growing process.

And having a presence on-site can boost sales numbers, she added.

It’s a networking opportunity for cultivators, too, who learn from each other and collaborate.

Stenuf has even pitched to potential investors at CGS events.

But retail-style events, where a store’s budtenders are responsible for helping consumers navigate products, are less onerous and costly to participate in.

The best CGS event Stenuf is involved in is organized by Finger Lakes-based cultivator A Walk in the Pines at the Herbal IQ dispensary in Rochester.

“We make wonderful sales,” Stenuf said.

It’s indoor, which helps draw more customers as the weather cools, and Stenuf said participants work together to help each other sell products, rather than having someone from each brand physically attend every day – which is helpful, particularly through the crucial harvest season.

“It’s a great community of people to work with, diversified catalog of products so there’s not too much competition amongst ourselves.”

Stenuf also said she hopes CGS continues past the Jan. 1 expiration date.

“There’s so many reasons – showcasing, visibility, more recognition – why growers showcases need to stay well past December.” (Full Story)

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