In New York and New Jersey, there is a race to legally grow marijuana. In Orange County, New York, there is a plan to build a large cannabis planting and processing plant on the grounds of a disused federal prison.
About 40 miles south of New Jersey, an industrial complex that once belonged to drugmaker Merck will be transformed into an even larger marijuana grow center.
In Winslow, New Jersey, about 30 miles from Philadelphia, a new indoor planting complex has just celebrated its first harvest. The arrival of legal adult-use marijuana in New York and New Jersey is the dream of entrepreneurs – some of whom estimate the potential market in the densely populated region to be over $ 6 billion (BRL 31.8 billion ) in five years.
But the rush to grow crops in industrial-type production facilities underscores another fundamental reality in the New York City area: There is already a shortage of legal marijuana.
In New Jersey’s 10-year-old medical marijuana market, the supply of dried cannabis flower, the most potent part of the plant, rarely meets demand, industry lobbyists and representatives say of State. At the start of the pandemic, when demand soared, it became even rarer, according to patients and business leaders.
The supply gap has narrowed as state stocks of the flower and products made with the oil extracted from the plant more than doubled between March of last year and this spring in the United States. United. But patients and business owners say dispensaries often lack the most sought-after varieties.
“There is very little stock,” said Shaya Brodchandel, president of the Harmony Foundation in Secaucus, NJ, and the New Jersey Cannabis Trade Association. “There is almost no wholesale. As we harvest, we send it straight to retail.”
Harmony bought the old Merck site in Lafayette, NJ late last year and is waiting for permits to begin construction, Brodchandel said. Because marijuana is illegal under federal law and cannot be transported between states, the products must be grown and manufactured in each state. Federal banking law also makes it nearly impossible for cannabis-related businesses to secure conventional funding, creating a major hurdle for small start-ups and an implicit advantage for multi-state and international companies with deep pockets.
The state of Oregon, which issued thousands of cultivation permits after legalizing marijuana six years ago, has a significant surplus of product. But many of the 16 other states where non-medical marijuana has already been legalized faced supply constraints similar to New York and New Jersey, as production slowly increased to meet demand.
“There is always a shortage of flowers in a new market,” said Greg Rochlin, president of the Northeastern United States division of TerrAscend, a cannabis company that operates in Canada and the United States and has opened this month the 17th New Jersey medical marijuana dispensary.
In New York City, where the medical cannabis program is smaller and more restrictive than New Jersey’s, the product menu includes oils, dyes, and finely ground flowers suitable for e-cigarettes. But the sale of bulk smoking marijuana is banned, and only 150,000 of the state’s 13.5 million adults aged 21 and older are registered as patients.
With modest demand, there was little incentive to increase supply. Until now.
Sales of adult-use marijuana could start within a year in New Jersey and early 2023 in New York, industry experts predict. “I would be stupid not to make the product,” said Ben Kovler, president of Green Thumb Industries, a cannabis company that operates in both states.
“There isn’t a lot of stock out there,” he said, at a time when a “giant wave” of demand is looming on the horizon. “The supply is unlikely to be enough,” Kovler said. His company, he said, is awaiting final approval from New York State to begin construction on the grounds of the Mid-Orange Correctional Center, a former men’s prison that closed in 2011.
Citiva, a competitor, is also building a new production center there. A cannabis analysis laboratory and cannabidiol extraction facility, urbanXtracts, are already in operation. “We call the place a cannabis hub,” said Michael Sweeton, Supervisor of Warwick City.
“This is the definition of irony,” he added of the reimagined function of a prison that was packed during the war on drugs, with 750 inmates at a time and offering 450 jobs. .
New York law also allows individuals to grow up to six marijuana plants for their personal use; New Jersey law does not allow so-called home planting. Over the next few months, both states are expected to issue regulations for the new industry. Each defined legalization as a social justice imperative and devoted a large portion of expected tax revenues to non-white communities disproportionately affected by inequalities in the criminal justice system.
Trying to balance the goal of building markets focused on social and racial equality with the inherent dominance of interstate corporations that acted first in the region will be crucial, according to officials in New York and New Jersey. “They should have that ability to help launch the market,” said Norman Birenbaum, director of New York City cannabis programs, of the ten medical marijuana companies already licensed to operate in the state. But that shouldn’t be “at the expense of newcomers,” he says.
Jeff Brown, who heads the New Jersey cannabis programs, says the market has room for newbies – and a critical need for them. The current operators of the State, according to him, “will not be able to assure alone the whole market of the personal uses”.
Supply chain challenges have taken on new urgency in New Jersey, where medical marijuana dispensaries are slated to be the first places adults can legally purchase marijuana without a prescription. First, however, clinics will need to demonstrate that they have sufficient stock for patients and facilities capable of adequately accommodating both types of consumers.
The New Jersey market has been booming since 2019, when state governor Democrat Phil Murphy authorized a major expansion of a medical marijuana program that had dragged on under his predecessor, Republican Chris Christie. The number of dispensaries has tripled. There are 500,000 plants grown statewide, up from 50,000 in 2018, Brown said.
As of March, 9,000 kilograms of cannabis products were available in New Jersey, up from 3,600 kilograms in March 2020, he said. But the price of the flower in New Jersey is between $ 350 and $ 450 per ounce (between $ 12,200 and $ 15,680 per pound, or R $ 64,660 and R $ 83,104), before discounts.
In California, the average price for an ounce (28.7g) of premium marijuana was around $ 260 (R $ 1,378), according to the oft-cited pricing directory priceofweed.com. “The most popular products run out quickly and the prices are always higher than we would like,” Brown said. “The solution to all of this is more competition.”