Added: (Fri Jan 25 2019)
Pressbox (Press Release) -
Cannabis a valuable ‘New’ Industry for New York
With law makers, and State officials starting to draw up legislation to legalize cannabis in New York. Analysts and Experts from the industry are estimating the market could be worth in excess of $1 billion USD and offer a profitable alternate produce for local famers.
It’s not if but when New York legislation passes, once retail sales begin within the first 12 months we are expecting to see an excess of $1.3 billion in first year sales, this coming from John Kagia, the VP of industry analytics for New Frontier Data.
"We think the potential opportunity that could be represented by legalizing cannabis in New York would be enormously consequential," said John, who further added“by the third year of recreational sales, the market for cannabis in New York could reach $2.9 billion to $3 billion in sales, That is just the value of retail sales to consumers, not the rest of the supply chain. Cultivation, processing ... ancillary services that are required to support the industry,"
New York’s Governor Andrew Cuomo has had the agricultural community at heart through the creation process. Gov. Andrew is looking to give “expanded opportunities” for farmers of New York this could see an increase of farmer’s revenue by upwards of $300 million USD by 2024.
When New York passed the bill for medical cannabis to be sold, Regulations and the extremely high cost of farming licenses made it an unviable option for farmers to make us of. However this time round, with the governors backing the Farm Bureau is pushing hard to assist the agricultural community to have a large part in the process, hoping for less resistance when it comes to legislation involving licensing.
Another major part of the legalization of cannabis, as we have seen in Colorado, Massachusetts and Washington DC, is cannabis tourism. Which as we can expect will contribute even further to the industry’s growth.
Massachusetts First legalized the sale and use of recreational marijuana in November of 2018, and the state has several retail locations open, many of which saw customers waiting many hours to buy cannabis products. In the last 2 months since legalization took place, Massachusetts dispensaries have exceeded 20 million in gross sales, and in the first week of January this has taken off further with retail sales hitting an enormous $3 million USD.
The Benefit for New York not being the first state in the U.S to legalize cannabis is they can develop their plan with the figures and facts from Oregon and Washington DC. What officials want to do is to avoid excessively high taxes that would prohibit consumers from purchasing legal marijuana, and will help to benefit the development of the cannabis industry in its early days. Particularly when the illicit market offers much cheaper prices, according to Kagia.
"When Washington first legalized, the idea of tax revenue was an animating force," Kagia said. "They had a 25 percent tax on producers, 25 percent tax on processors, retailers. It became apparent very quickly consumers were just not willing to assume the burden of that compounded tax rate."
With this in mind, lawmakers are trying to find a regulatory balance, so that they can make the cannabis market accessible for farmers, retailers, and consumers.
Oregon is a prime example of how the industry can see a bumpy start, as the prices for cannabis and cannabis related products have hit new lows, as the supply is far outweighing the demand, this is causing issues for retailers and shops, with prices too low to make profit.
"Oregon offers an example on why one needs to understand what demand will be. All the people who had plot of land rushed in thinking they were going make fortunes," Kagia said. "Because of that misalignment, everyone has overproduced."
The average price for cannabis in Oregon has taken a substantial tumble from the initial $1500-$2000 USD per pound down to lows of $100 USD in some places. Another potential issue for those who wish to get involved with the cannabis industry, is that large banks and financial institutions are un willing to get involved and invest into the ‘federally illegal’ plant.
The same cannot be said for Canadian cannabis cultivators who have been relishing in the success and positive influx of consumers that the legalization has brought their way. Investors are excited to see how far cannabis will go, once the initial stigma wears off, and markets stabilize, there is a very real potential for the de criminalization on a federal level, which will see a huge influx of banks, and businesses, investing into the cannabis industry.
Michael Cole- Midway Management