The race to grow legal marijuana is on in New York and New Jersey.On the grounds of a defunct state prison in Orange County, New York, there are proposals to develop a major cannabis production and processing facility.An industrial complex once owned by the pharmaceutical giant Merck will be turned into an even bigger marijuana-growing center about 25 miles south, across the border in New Jersey.
A modern indoor cultivation complex in Winslow, N.J., about 30 miles outside of Philadelphia, recently celebrated its first harvest.The legalization of adult-use marijuana in New York and New Jersey is an entrepreneur’s dream, with some forecasting a market worth more than $6 billion in the next five years in the heavily populated area.However, the rush to bring plants into soil in factory-style processing facilities highlights another basic truth in the New York metropolitan area: legal marijuana is still in short supply.
According to industry lobbyists and state officials, the availability of dried cannabis flower, the most potent component of a female plant, has barely exceeded demand in New Jersey’s decade-old medical marijuana sector. Patients and business owners said it became much scarcer at the start of the pandemic as demand increased.
Between March of last year and this spring, the statewide inventory of flower and goods produced from a plant’s extracted oils more than doubled, narrowing the supply gap. Despite this, patients and business owners claim that common strains are often sold out.
“There’s very little stock,” said Shaya Brodchandel, president of the New Jersey Cannabis Trade Association and CEO of Harmony Foundation in Secaucus, N.J. “There isn’t much wholesale. We’re bringing it straight into retail as soon as we finish harvesting.”Mr. Brodchandel said Harmony purchased the former Merck site in Lafayette, New Jersey, late last year and is awaiting permits to begin construction.
Since marijuana is illegal under federal law and cannot be shipped across state lines, marijuana products must be cultivated and processed in each state.Federal banking legislation also makes it difficult for cannabis-related enterprises to access traditional funding, creating a significant barrier for small businesses and a built-in advantage for multistate and multinational corporations with deep pockets.
After legalizing marijuana six years ago, Oregon issued thousands of cultivation licenses, resulting in an overabundance of the drug. However, as production scaled up to meet demand in the other 16 states where nonmedical marijuana is now legal, supply shortages arose, similar to those in New York and New Jersey.“There’s always a scarcity of flower in a new market,” said Greg Rochlin, CEO of TerrAscend’s Northeast division, which operates in Canada and the United States and recently opened New Jersey’s 17th medical marijuana dispensary.
Oils, tinctures, and finely ground flower appropriate for vaping are available in New York, where the medical marijuana program is narrower and more limited than in New Jersey. However, it is illegal to sell loose marijuana buds for smoking, and only 150,000 of the state’s 13.5 million adults aged 21 and up are licensed as patients.There has been little motivation to increase production due to low demand. Until now, that is.Adult-use marijuana sales could begin in New Jersey within a year, and in New York in early 2023, according to industry experts.
