Hemp is grown in many states in the U.S. It has dozens of applications with long histories, such as rope, textiles, shoes, paper, and insulation. It is cheap to grow and very durable in finished goods.
Hemp is a form of cannabis, but it must contain less than 3 percent THC. It cannot be easily converted to a potent form of marijuana. This is why the decision by the Governor of New York to allow hemp farmers to get an early opportunity to grow recreational marijuana as New York implements a law that allows quality recreational cannabis to be grown in the state is momentous. The law will launch later this year or in early 2023.
The state has issued 52 “conditional adult-use cultivator” licenses, and several have been awarded to hemp growers – New York is the first state to license hemp growers to grow adult-use marijuana.
The permits will accelerate the cultivation and processing of recreational cannabis with the hope of avoiding lengthy delays and product shortages.
Why would hemp growers be so anxious to get into the adult-use marijuana market? A pound of hemp fetches $39.60 per pound for hemp flower. Adult-use cannabis is worth $3,000 per pound.
Growers in even newly regulated markets like New York may be able to sell cannabis for a multiple of the $3,000 price per pound. In the market, potency is king, and cannabis that comes in at under 20 % potency can be sold, but only at a discounted price. manufacturers will often use those flowers for the extraction of THC for edibles and tinctures.
Seeds and the Climate
The issue for growers is where to get high-quality seeds that will become potent flowers. While New York does not officially allow growers to sell or buy seeds, growers do source seeds from the legacy market, including plants that have proven to respond well to New York’s challenging climate. Growers have said that, so far, New York regulators have not been asking them where they got their seeds.
For centuries, New York was one of the country’s most successful and diverse agricultural states. But there have always been challenges. The state always has at least adequate rainfall to grow most everything, but sometimes that can turn into too much rain for some crops. Cannabis farmers have learned not to obtain seeds for areas with modest amounts of rain. These seeds are vulnerable to mildew, etcetera.
But the biggest challenge is, of course, the weather. Cannabis is a hardy plant, but there are about two seasons of growing weather and two of harsh, freezing weather per year.
One of the benefits of New York State’s decision to allow hemp farmers to obtain licenses for adult-use cannabis cultivation is that experienced hemp growers can experiment to find the most efficient way to grow high-quality crops under an efficient timetable. For example, some hemp growers are looking at autoflower strains to shorten their time to harvest. Another weather challenge for the far-north state is that good sunlight can be a rarity sometimes – days can get short as the year wears on, and cloud cover can be daunting at any season. Autoflower varieties work through the growth cycle no matter the variations in sunlight. Some growers are planting autoflower plants outdoors as they build greenhouses.
Some of the license winners will grow full-strength cannabis adjacent to hemp fields. Some people will insist that this will not work because the hemp flowers will pollinate the adult-use flowers, greatly decreasing their potency. The most potent marijuana is female only, and it is called sinsemilla. However, growers are not concerned about this because the hemp and the marijuana plants are both only females and therefore cannot pollinate each other.
No one would accuse the State of New York of being reluctant to regulate. A case in point is the use of outdoor lights to grow cannabis. The rules are that every grower can plant an acre of marijuana outdoors and use up to 20 lights per grower. Each grower can plant 25,000 indoors in a greenhouse. Some growers are finding that 20 lights are unnecessarily limiting. Some growers are concerned that they may not be able to meet consumer demand for cannabis with this and other regulations. However, regulators are concerned that growers will “race to the bottom” and grow only cannabis that is low priced, which has happened in more mature cannabis markets.
But growers believe regulators have learned from their mistakes and will not allow unlimited licensing, which drives down price and quality. Growers believe there will be a huge demand in the third most populous state in the U.S. Plus, in a matter of only a few years, adult-use marijuana will become an important part of the picture for state taxes, which means every faction in the state: growers, consumers, and the government will want a vibrant and lucrative cannabis market.
Already we are seeing the consumer demand for illicit cannabis sold on the streets of New York. In places like Washington Square Park, illicit growers are openly selling cannabis. Since adult-use cannabis will soon be available, law enforcement doesn’t see the need to arrest these illicit sellers. But the legal market will not be open for almost a year at best, and there is a market need for the product that these growers are working to fill.
The problem is straightforward: illicit cannabis does not have to be grown to regulations and pays no taxes to the state. In effect, this cannabis will build an expectation of a lower price when the legal adult-use product is available. What seems likely to happen is that, as the legal adult-use market approaches, law enforcement may become more forceful in regulating the illegal market to help create a more realistic expectation from marijuana customers.
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