What Keeps New York Hemp Farmers Up at Night
A candid conversation with Allan Gandelman, president of the New York Cannabis Growers and Processors Association
Fear is looming over the cannabis industry as many try to maneuver their way into the nascent New York market. There is deep concern that social equity participants and small business owners won't have a level playing field to compete against large corporations or interstate trade.
One New York hemp farmer has been working hard behind the scenes to make sure craft farmers in his state are ready when legalization rolls out. He is Allan Gandelman, president of the New York Cannabis Growers and Processors Association, a longtime farmer, and activist.
Here, he talks about preparing for New York's cannabis debut and his biggest worry—federal legalization and interstate commerce.
California craft cannabis farmers are having a tough time right now because there is an over-supply of crops, low demand, and it's causing prices to bottom out. Some say the borders need to open for the farmers to sell down their over-supply, do you agree?
My opinion on federal legalization and interstate commerce is that we don't want it.
Interstate Commerce is the worst thing that can happen to small farmers and social equity businesses. It would benefit California and Oregon to alleviate their oversupply. But, it's a disaster for newly legalized states to play catch-up with an established supply chain infrastructure as robust as California or Oregon. Building greenhouses and outdoor operations take years to build.
And in those two states, specifically, people are selling their cannabis at a low cost of production, which does nothing but drive the market prices to the bottom. The only people who will survive in that system are overcapitalized giant corporations that can scale up and have the financial resources to take a loss for a few years.
I am totally against interstate commerce for at least five years until all the states are at the same starting line. And MSO's should not be allowed to operate for the same reasons until the farmers have the infrastructure in place and the ability to scale.
You would think we would have learned from the mistakes we've made in other agricultural industries.
Many people haven't thought about the adverse effects of interstate commerce because they don't have experience in agricultural commodities. Still, our government should be acting NOW to implement laws to safeguard against the threats to the small business owner.
Look what happened to hemp and CBD. Many lost money because it's legal to ship interstate. Everyone overgrew because it was cheap to do, and investors backed them. And then, to recoup the losses, they're selling their hemp CBD for pennies on the dollar, leaving a glut in the market.
The same scenario will hold true if interstate commerce is allowed for marijuana. The government takes their tax money, and then a few large companies will control the supply chain like in every other industry; corn, soy, dairy, and vegetables.
How about the inevitable threat of international trade? That will seal the coffin.
It's only a matter of time before we import from Columbia, which grows cannabis for $1 a pound. And then what have we done? The publicly traded companies in Canada are already setting up shop in Colombia. I hope Senator Schumer realizes this because I don't think he and Cory Booker fully understand how this works from an agricultural commodity perspective.
Are the New York farmers positioned for legalization?
We're pushing New York to give licenses to the existing hemp farmers who already have experience growing cannabis for the last three or four years. The current farmers are ready to kick off the industry in New York because we have greenhouses and extraction facilities up and running because of our hemp and CBD production.
But, our hemp farmers will need help transitioning and scaling up to compete against the production capabilities of large corporations because it's very challenging to do.
You are also very active in supporting social equity programs in the state. Can you tell me about that?
There is already a lot of activity around supporting social equity initiatives throughout the state. We're working with a few different cannabis business incubators. Even though we don't know the social equity rules yet, we're moving ahead to set up numerous training and educational programs.
For example, we work with The Hope Program in the Bronx, a job training program for formerly incarcerated people. They learn budtender skills, dispensary operations, delivery service, and cultivation.
There are also multiple universities starting cannabis degree programs, and I'm working with Syracuse University on a cannabis minor degree.
The state has also promised funds to help social equity applicants pay for their education and job training to give them a leg up in the industry.
How is the non-profit you founded, The New York Cannabis Growers and Processors Association, getting involved in the preparedness of legalization?
There is a lot of activity going on around the state as everyone prepares for legalization. People are positioning themselves and their businesses. It's a little early, but it's forming. My association is primarily involved in putting on educational events, connecting people, and staying vocal to make sure the small voice gets heard.
It seems like farmers need other revenue streams aside from farming to survive because the profit margins are so slim, and the risk of crop loss is high. What do you think of licensing or partnering with CPG brands to manufacture their product since they can't ship across their state line? I see a lot more of these partnerships popping up, and it makes sense.
We have our own CBD brand called Head & Heal- NY Hemp oil. We also manufacture about two dozen other brands out of our facility. Yes, I do think that's a viable business model.
And again, if the borders open, businesses will look for the cheapest manufacturer in the country, Mexico or Columbia. If this happens, we may share the same demise as other industries that lost to cheaper production.
But, yes, I welcome conversations with CPG brands who want to manufacture in NY. We get a number of calls with these requests because we are one of twelve hemp farms in the state with extraction and distribution facilities.
How do you feel about growing cannabis seeds from other states like the Emerald Triangle or countries like the Netherlands as a way to diversify or set your business apart?
It's legal and something that's of interest to us. I've been looking at different genetics and seeds all over the country to see what will grow well in New York, and I am absolutely interested in growing other people's seeds. It's an exciting time in New York for the cannabis industry and the opportunities it brings.