Solventless Poised To Be Dominant Concentrate in NYC
You've probably heard this before, but New York is on the verge of legalizing adult-use recreational cannabis－and it looks like it'll happen this time around. After two straight years of coming up short, legislators seem to feel the pressure put on by legalization in nearby states, the pandemic economy and a need for social justice. The combination of these factors and others lead scores of market experts and analysts to predict that the state won't miss its shot this time around. If true, operators in the solventless space and beyond could soon see lucrative gains if set up for success.
New York's market is already doing well despite its less than ideal medical cannabis market. That potential is likely to surge once the Empire State signs off on adult-use recreational cannabis. New York's rich history of cultivation and the city's world famous knack for consuming cannabis leads us to get on the state's bandwagon and proclaim it as a market rich in opportunity for growers, extractors and brands in the space. Be sure to keep an eye on New York in 2021－here's why.
Cannabis Legalization Once Again Gains Steam In New York
Had it not been for the COVID-19 pandemic, there is a good chance that New York would already have passed a legalization bill. Before the pandemic, lawmakers at the capital, Albany, appeared mostly in agreement with Governor Andrew Cuomo that cannabis legalization had to occur for the good of the state's staggering debt and as a restorative justice measure to address some of the wrongs created by the failed drug war. Plans went out the window when the virus arrived－just as many states and countries like Mexico experienced.
The pandemic still looms, but cannabis legalization is back on deck. Governor Cuomo included legalization in his 2021 proposal back in January 2020 and the inclusion comes as no surprise. Cuomo and many lawmakers want to get this win finally, and now the pressure is on like never before.
The 2020 election results included five states passing medical and/or adult-use laws, including neighboring New Jersey. Already dealing with citizens traveling to northern neighbor Massachusetts for legal cannabis, New York could see hundreds of millions more of its dollars flowing into the Garden State. Despite passing the ballot measure in New Jersey, lawmakers remain stuck on some final issues. However, those hurdles should be cleared soon enough, leaving New York and other nearby states needing to act fast or risk losing business when revenue is crucially required.
Pictured: customers lined up to get into NETA dispensary in Brookline, MA after recreational marijuana was passed in 2018 (source)
The situation leads many to prepare for another so-called Green Wave of cannabis legalization in 2021－with New York and the rest of the East Coast in the spotlight. What comes next remains to be seen, but there is a significant probability that New York could join Delaware, Pennsylvania, Connecticut, Rhode Island and New Hampshire in passing legislation this year or on the 2022 ballot.
New York's Potential To Boom As A Legal Cannabis Market
Once legalized, analysts say that New York has the makings of one of the largest markets in the U.S.－providing a boom for operators in desirable sectors. This outcome should come as no surprise when considering the factors in New York, ranging from its current limited market offerings to the immense amount of marijuana consumed in the Big Apple.
Optimistic projections for the state are nothing new. Market reports have pegged New York as a booming opportunity for years now. Grand View Research valued the state's cannabis market at $1.8 billion in 2018, with a compound annual growth rate (CAGR) of 14.7%. An additional report around the same time from Grand View forecasted the state's market worth to top $7 billion by 2025.
Like most, the report incorrectly projected that New York would legalize by early 2020 or sooner. While off a bit, the expected growth projections have not been, though the gains have leveled off to a degree thanks to stalled legislation. Still, by 2021, New York's projected market value topped $2 billion.
Growth despite legalization stagnation isn't surprising in New York, especially when looking at the big city. World famous New York City is known for quite a bit, bringing together all walks of life and viewpoints. One thing commonly agreed upon by New Yorkers is their love for cannabis.
A 2018 study from cannabis brand Seedo found that New York City dwarfed the global competition in total consumption. That year, New York City consumed an estimated 77.44 metric tons of cannabis priced at roughly $10.76 per gram. In second place was Karachi, Pakistan, consuming 41.95 metric tons. To put the city's level of consumption in frame that much more; Los Angeles, which came in fourth on the list, consumed a little over 36 metric tons.
Tons consumed translates to projected revenues for the state and operators. Seedo's projections state that New York had the highest potential tax revenue through legalization, which could rake in $156.4 million each year.
Sky-high optimism is typical in New York when considering the mentioned factors. This should lead to gains for growers, extractors and producers looking to make a name in space rich for growth. While true, the state faces hurdles it must clear to establish such a lucrative market. Looking at the medical sector may generate some concern. Once considered one of the most restrictive medical markets in the country, New York has evolved over the years, improving access through an expanded list of qualifying conditions and licensing five more operators, doubling the state's total so far.
Chart showing New York's sales potential if cannabis is legalized for adult-use. (source)
Marijuana Business Daily stated that New York could become the largest market on the East Coast in its fourth year of legalization, generating an approximate $2.3 billion each year. The publication did express concerns however. The state's main hurdles to address are its ability to transition to an adult use marketplace and lingering concerns over a medical market that prohibits flower sales. While beneficial to licensed extract producers, this type of limited market never pans out. A limited market leaves companies and the state short on revenue while consumers turn to the illicit market towards untested products, similar to the EVALI lung crises of 2019 and 2020.
Despite the limited market offerings, the 2020 MJBiz Factbook projected New York would generate between $60 and $70 million from its medical market that year.
New York's Love For Quality Cannabis Gives Hope For A Promising Craft Cannabis Sector
New York's market potential is not only bolstered by its substantial preference for quality pot. It is also backed by history that may repeat itself once legalization occurs. New York was once home to ample natural cannabis growth, but not so much cultivation. Instead, the plant grew wild, living up to its 'weed' moniker, springing up all over the region. The wild growth of cannabis in New York City isn't some story from a bygone era either.
Pictured: Brooklyn sanitation department cutting down wild cannabis plants (source)
New York's wild cannabis growing days occurred as early as 70 years ago. Up until the early '50s and the Marijuana Tax Act, the city was host to buds growing wild and free all over the place. It could be argued that while the cannabis stopped growing in plain sight, the plant never left the city.
Up until the pandemic lockdowns, underground cannabis events ran wild in New York City, with several operators hosting pop-ups and regular events out of dedicated spaces. At events like these, guests could find a bevy of operators selling products－often top-shelf craft products sought after by recreational and medical consumers alike. This sign should bode well for craft growers aspiring to enter the space as cultivators, producers, or a more extensive brand endeavor.
That said, concerns over the state's bill leave many advocates pushing for further consideration for New York's craft growers, namely small farmers. The hope is that Cuomo and lawmakers will reconsider parameters and create a craft cannabis industry just as it did for breweries.
If the market receives the considerations small brewers have in the past, New York's craft cannabis community could flourish. Cultivators and producers could see tremendous potential and revenue if able to produce high-quality flower and concentrates legally.
New York Makes Push For Legalization Once Again
On Tuesday, January 19, Governor Cuomo unveiled his budget proposal for the 2022 fiscal year. The proposal is highlighted by the Cannabis Regulation and Taxation Act, which could bring in $350 million for the state through three tax levels. Taxes would be determined by THC product concentration, as well as standard state and local taxes. The tax plan includes propositions for an allotment to social equity programs and a state cannabis revenue fund.
The proposal delved into other business parameters, including the allowance of microbusinesses and cooperative licenses. Vertical integration is also banned for the most part, with some exceptions for current medical licensees. On-site consumption was not explicitly addressed, but a caterer's permit does seem to suggest that cannabis would be allowed at events held in gathering places like bars, dining halls, hotels and other popular destinations. The proposal did provide looks into other vital parameters, including local control and collaboration with other states.
Cultivators and producers did receive some answers but are still left in a bit of a grey area, which should become clear as the measure proceeds in the coming months. Despite the somewhat hazy prospect of the 2021 version of the bill, New York appears on its way to legalizing. Suppose it wants to reach the revenue goals that are so often projected. In that case, it must consider the current producers, craft cultivators and those who will eventually have licenses, then grow the market.
While some details will need to be hammered out, most have faith that Governor Cuomo wants to get this deal done. When it does, the floodgates will be open for one of America's most lucrative cannabis markets. It would be wise to start planning now so your business is ready to obtain its license and set up shop.
Knowing where to start with your solventless operation can be daunting. The good news is, PurePressure is here to help with all of your set-up and equipment needs! Contact us today to learn how solventless extraction is a low-cost, high-reward operation for you in New York.