Good morning. We hope you and your colleagues made it back from MJBIz Con in Las Vegas. The Cultivated team here is back at it this week and we’ll be sharing both the insights and the interviews from Planet 13 last week.
We were busy! And we’ll be sharing highlights over the next few weeks. Let’s get to it.
Beyond that, our Editor-in-Chief attended the annual New York Grower’s Cup in Brooklyn on Friday hosted by All Caps’ (and friend-of-the-newsletter) Ben Gilbert. We got a firsthand look at some of the finest buds in the state. It was a good night.
Edited by Jeremy Berke and Jay Rosenthal
💡What’s the big deal?
EMPIRE STATE UPDATE
NY Supreme Court’s cannabis thumbs up
Recent news: Last week, the New York State Cannabis Control Board voted to settle two lawsuits that had been blocking the opening of adult-use dispensaries in New York.
The suits were related to the Conditional Adult Use Retail Dispensary (CAURD) program, which was designed to give preferential access to New York’s potentially lucrative cannabis market to communities impacted by the War on Drugs.
And now: The New York State Supreme Court made it official late last week by lifting the injunction on issuing new licenses, allowing more stores to start opening.
On the platform formerly known as Twitter on Friday, the New York Office of Cannabis Management celebrated the news.
What’s next: The approval will presumably end the three-month delay in the opening of dispensaries statewide, allowing a large number of retail licensees — potentially hundreds — to commence operations in the next few months.
This move is expected to catalyze the growth of the legal cannabis market in New York. The upcoming period will be critical for all industry stakeholders, including dispensary owners, consumers, regulators, and investors.
Still, the state will be barred from issuing new CAURD licenses until at least April in an effort to clear the backlog of in-process applications held up by the injunction. But the important point is, much-needed stores will be open soon.
Our take: We fully support the mission of the CAURD program, and the goal of using cannabis legalization to uplift communities impacted by decades of racialized policing and economic policies, as we’ve written in the past.
But it’s time to get the market moving. It’s been well over two years since the MRTA — the law legalizing cannabis in New York — was signed into law by former Gov. Andrew Cuomo.
And there still aren’t any legal dispensaries open in Cultivated Editor-in-Chief Jeremy Berke’s home borough of Brooklyn, and only a handful across Manhattan and Queens.
As New Yorkers and consumers, we’re frankly just excited for more stores to open and for more opportunities to build an equitable, and profitable, cannabis industry for everyone.
CUP RUNNETH OVER
Oh my, Oregon oversupply
Driving the news: Oregon's cannabis industry is facing a significant challenge due to oversupply… again. This issue has led to a cascade of financial problems within the industry, including unpaid bills, liens for unpaid taxes, and companies contemplating exit.
The root cause is the oversupply of cannabis, leading to plummeting prices and financial losses for producers, processors, and retailers. Willamette Week has the details.
Why it matters: The oversupply of cannabis in Oregon is not just an industry problem but has broader implications too:
The excessive supply of cannabis has destabilized the market, causing prices to drop. This has affected the entire supply chain, leading to financial difficulties for businesses involved.
Cannabis tax revenues, crucial for funding drug treatment services under Measure 110, have been negatively impacted. With tax delinquencies rising and collections falling short, there's a significant threat to the funding of these essential services.
The situation poses a question about the sustainability of the cannabis industry in its current form. Without intervention or market adjustments, the industry might continue to face these cyclical problems of oversupply and financial instability.
What's next: Looking ahead, several actions and considerations could shape the future of Oregon's cannabis industry:
The state could consider measures like reducing the number of licenses or their capacity to stabilize the market, as seen in Colorado. However, this requires careful consideration to balance market forces and regulatory interventions.
The oversupply issue highlights the broader challenges facing states with legal cannabis in the absence of federal legalization. Given the lack of an interstate cannabis market, Oregon, like other states, faces limitations in expanding its market beyond state borders, for now.
The ongoing situation underscores the need for a sustainable approach to cannabis cultivation and sales. This includes considering market demand, production capacity, and the impact of external factors like federal policies.
Why it matters: The future of Oregon's cannabis industry hinges on how these issues are addressed, balancing economic, regulatory, and social considerations to ensure a stable and thriving market.
But it’s also a lesson for cultivators and the entire supply chain in other, newer markets. Even mature markets take their lumps and bumps. And these problems are likely to persist without interstate commerce or federal intervention.
Chinese investments and operations in US
Driving the news: From New Mexico to Maine, Chinese networks are increasingly involved in cannabis cultivation and distribution, according to a bombshell investigation from the Wall Street Journal.
The WSJ’s reporting builds on a November story from the Maine Wire.
Why it matters: The involvement of Chinese networks is concerning for several reasons:
States like Maine have seen over 270 locations suspected of being used for Chinese illegal cannabis growing. Law enforcement officials note that even in cases where Chinese-run farms have a license, activities such as money laundering, human trafficking, and cross-state trafficking of cannabis are prevalent.
Many of these operations rely heavily on illegal Chinese immigrants working in conditions akin to forced labor. A worker described inhumane treatment, including being rarely fed, sleeping on hard boards, and not being allowed to leave the farm.
These operations often cause local disruptions, such as power supply issues leading to blackouts, and create a sense of insecurity in rural communities.
What's next: The surge in Chinese-funded unlicensed operations raises several questions and future challenges.
There’s still a lot to uncover about the extent of Chinese involvement in the US cannabis industry. Questions remain about the connections of these operations to the Chinese Communist Party and Chinese organized crime syndicates.
Policymakers and law enforcement are increasingly focusing on this issue. There are calls for more oversight and regulation to prevent the flourishing of such illicit operations.
The situation highlights the complex relationship between legalization, regulation, and illegal activities in the cannabis industry. It underscores the need for a balanced approach that considers the legal market's viability, public safety, and human rights concerns.
Our take: Given the complexity and international nature of these operations, a comprehensive approach involving various stakeholders, including law enforcement, policymakers, and community leaders, will be essential to address this issue effectively.
🥊 Quick hits
The Cannabist Company, formerly Columbia Care, is partnering with popular brand Old Pal in Maryland and Virginia dispensaries.
Grassdoor, a California-based cannabis delivery firm, began insolvency proceedings last week, reports WeedWeek. It’s the latest big California cannabis firm to fail, following Herbl.
Cannabis ‘legalization is inevitable,’ says Cowen’s Jaret Seiberg — here’s what you need to know before you invest (CNBC).
The Department of Health and Human Services owes Congress a report on the medical potential of cannabis and barriers to research. The deadline was Saturday, and we still haven’t seen the report.