• Cultivated
  • Posts
  • What does the future hold for New York cannabis?

What does the future hold for New York cannabis?

Plus, Curaleaf wants a TSX listing, too.

Hi everyone,

I know, I know, this is coming a day late. Apologies.

I’ve been a bit busy, and while I’m a man of many skills, time management has never been one of them!

My school tells us that’s a big part of what they teach, so you’ll know if I’ve gotten my money’s worth if the newsletter comes out on time in the future.

There’s too much to fit into one issue, so you’re all going to get another one tomorrow. Buckle up.

So why was I so busy? I went on the Cannabis Capital podcast with Ross O’Brien of Bonaventure Equity, and the episode just dropped.

We dove into the New York market and my story about what some exclusive survey data says about the challenges for medical patients and consumers alike. We also discussed the challenges facing regulators — and why it’s so hard to regulate cannabis in a way that makes everyone happy.

As if one podcast wasn’t enough, I also went on Vangst’s Proud to Work in Cannabis podcast with Vangst CEO Karson Humiston and economist Beau Whitney of Whitney Economics, to discuss the challenges cannabis companies face under the 280E tax law.

We discussed Beau’s analysis of how much this law stifles the industry’s growth as well as my deep dive into history of how it came to be.

If you haven’t had enough of me yet, I want to plug the Twitter Space I’m hosting today with Damian Fagon, the Chief Equity Officer of New York’s Office of Cannabis Management.

That’ll be at 12:30 PM today.

I encourage you to listen in and send me your questions ahead of time — I only have an hour, but I’ll try and get through as much as possible.

And remember, I want this to be respectful discourse. I’m not going to use this space to attack Damian. The goal is, I hope, to elevate good ideas and stimulate a smarter conversation for all sides of the issue.

So, send me your questions!


green plant on persons hand

💡What’s the big deal?

What happened: New York’s cannabis regulators released a slew of announcements at a Cannabis Control Board meeting yesterday.

Here’s what you need to know:

  • The state approved 212 new CAURD or cannabis social equity licenses — more than doubling the number of already-approved licenses to 463.

    • The state estimates it’ll take about six-to-twelve months for these stores to open.

  • The state will establish “Grower’s Showcases” which are essentially farmers’ markets for growers to show off (and sell) their products.

    • On-site consumption won’t immediately be allowed while the rules are still being developed.

    • Eventually, the state hopes these markets can be run in conjunction with outdoor concerts or other events.

Why it matters: It’s been challenging few months for New York cannabis regulators as consumers, patients, and the industry alike complain about the slow rollout.

And I want to be clear: Regulators have a very, very hard job.

But that doesn’t excuse a lot of very reasonable pushback they’re getting from the industry and its investors.

The state needs far more legal cannabis stores if it hopes to make a dent in the robust illicit market.

Adding another 212 licenses is a good thing, if they’re able to get these businesses the capital they need to compete. And on a personal level, I’m excited to check out the farmers’ markets.

🌿 Jer’s take

When the state passed the Marijuana Regulation and Taxation Act (MRTA) — the bill that legalized cannabis in 2021 — everyone was excited.

But over two years later, only a handful of stores are open. I’m reminded of my favorite LCD Soundsystem song.1

Everyone, from grassroots advocates, to growers, to investors and executives at the biggest publicly traded companies, seems to have a different opinion of what went wrong and how to fix it.I've written a lot about what New York is trying to accomplish with legalization.

It seems obvious that the regulators’ primary stakeholders are not publicly traded companies and their investors, but rather minority-owned small businesses, grassroots advocates, and criminal justice reformers.

The underlying principle of what the state is trying to accomplish — to use cannabis legalization as a vehicle to uplift people marginalized by the War on Drugs — is as admirable as it is difficult, especially without any help from the federal government.

But despite those lofty ideals, the rollout has been plagued with lawsuits, missed targets, and contentious community board meetings. And don’t get me started with the vitriol in my Twitter mentions.

Legalization policy is about tradeoffs. Between public health, criminal justice, tax revenue, and economic opportunity.

New York's story gets to elemental questions about cannabis policy: Who is cannabis legalization really for? And how can we properly measure success?

Because without knowing the answer to those questions — everyone will remain upset, and everything will be considered a failure.

I’ll be chatting about all this with the OCM’s Damian Fagon today at 12:30.

I hope to see you all there over your lunch break, and please do send me questions.

🥊 Quick hits

Tobacco giant Philip Morris is acquiring Israeli medical cannabis inhaler firm Syqe Medical for $650 million. Philip Morris, the maker of Marlboro cigarettes, first invested $20 million for a small stake in Syqe in 2016.

Trulieve is suing former partners Harvest of Ohio and Harvest Grows for $23.8 million over what Trulieve says are unpaid loans.

Ghana passed a law that would allow the cultivation of cannabis for industrial and health purposes, after much back-and-forth.

The New York City Economic Development Corporation is launching a loan fund to help licensed cannabis businesses in the city. It will contribute $8 million to seed the fund.

Cannabis analytics firm Headset is keeping track of what consumers in Maryland are buying one week into legalization.

🗣️ Quote of the day

“How do you make sense of it?” said Boris Heifets, anesthesiology professor who studies ketamine at Stanford University. “Some of it just has to be wrong.”

This comes from Olivia Goldhill’s deep dive for Stat News into the promises and pitfalls of psychedelic medicine. I’d encourage you to read it in full.

📈 Market moves

What happened: US cannabis giant Curaleaf also wants to list on the Toronto Stock Exchange.

In a little-noticed filing released Friday night after the market closed, Curaleaf said it’s preparing to list on the TSX.

It’s following competitor TerrAscend’s footsteps.

I’m not sure why they didn’t press release it in an industry that loves potentially stock-moving press releases, but luckily some smart folks on Twitter spotted it.

Zoom out: Sharp-eyed readers will remember my brilliant prediction in last Friday’s Cultivated2 that a bunch of US cannabis companies would follow TerrAscend’s footsteps through a similar deal structure.

It’s all about access to deeper-pocketed investors, more liquidity, and sending a signal that US cannabis is mature enough to land on a major stock exchange like the TSX.

I’m going to guess this trend is going to make a bunch bankers on Bay Street very happy in the coming months.

Why it matters: BNY Mellon’s Pershing unit has removed TerrAscend from its “blocked” list following the company’s listing on the TSX.

If that sounds too wonky to make it into the newsletter, allow me to explain with a twisted metaphor about plumbing.

Pershing is a custodian bank. Think of that like the plumbing that allows the market to function, except Pershing is the pipe, and instead of water, it’s money.

When that pipe is clogged — as it has been for all publicly traded US cannabis companies — capital can’t flow in. It can seep through the cracks, but it’ll never hit the same pressure and velocity as it would for companies in other emerging industries.

Put simply, Pershing allows big investments or trades to happen safely, and helps investor dollars flow to companies that need them.

It’s a critical market function: Big institutional investors won’t invest in stocks that are blocked by custodians like Pershing and its competitors.

If other companies like Curaleaf are able to land on the TSX, well, maybe everything will get unclogged.3

What else?

What happened: You take the good news with the bad: Curaleaf laid off 49 workers at its Winslow, New Jersey cultivation facility on Tuesday.

The layoffs come a few months after Curaleaf shut down another of its New Jersey facilities.

Curaleaf cited slowed growth in New Jersey’s legal cannabis sales as a reason for laying off the 49 employees.

New Jersey’s Cannabis Regulatory Commission (CRC) pushed back in a statement, pointing to quarter-over-quarter sales growth in the state.

Zoom out: Curaleaf and the CRC have not seen eye-to-eye this year.

In a June hearing, regulators denied Curaleaf a license to continue selling cannabis in the state. The decision was reversed days later.

If you enjoyed this newsletter, please share it with your friends, colleagues, boss, sibling, or worst enemy. They’d like to be informed of cannabis news too.

📚 What I’m reading

If you enjoyed this newsletter, consider becoming a paid subscriber.