Cannabis: a complex and regulated industry in NYS
He kinda hates to admit it, but the fate of COVID for most companies has actually been a boon for Empire Hemp Company, says Chris Van Dusen.
“At the time, we had hired employees and we were affected by COVID. So we did a walk-in window for COVID. And it took off. So we decided, in order to survive here, to open a store,” said Van Dusen, founder and CEO of the company. “So we had to let the guys go. And that’s how we opened the store. So the store really took off…it was just the two of us doing everything.
His other half, wife Shelly Wolanske, has been as fully immersed in the business as he is, first with a site on Swan Street in 2019, and a downtown store in April 2020. Van Dusen recently heard talk about a convenience store about to open with plans to sell cannabis products, and he wanted to clarify how one becomes a legal entity in the ever-growing field of cannabis establishments.
It’s not as simple as hanging a sign, he says.
First, there is an official Cannabis Management Office that operates through the New York State Department of Labor. It regulates everything. That means applications, certifications, inspections and lots of administrative hurdles to jump through to be honest, he and Shelly said.
According cannabis.ny.gov, the Office of Cannabis Management (OCM) is responsible for licensing companies to participate in New York’s adult, medical, and cannabinoid hemp industries. The CMO is developing regulations that will specify how a person or business can apply for and receive a license in the new adult-use cannabis industry.
The CMO will promote social and economic equity for applicants who have been harmed by the cannabis ban for adult use licenses, setting a target of awarding 50% of licenses to social equity applicants and economical, says the site.
Due to the nature of cannabis – more loosely known as marijuana, pot, weed – it has been difficult to deal with these hoops, especially with banks and credit card companies who do not want to be part of it. of the company, Van Dusen said. This made it difficult to obtain loans and return to a cash-only sales operation, they said. And on the other hand, there are the certified producers.
“We are currently working with about twenty producers. So we need that. They’ve been calling us every day since we’ve had the conditional license process, we’ve been on the list,” he said. “There are people who know what they are doing. There are people who don’t know what they are doing. We therefore need to secure our supply in the supply chain to ensure that we can get the products to the dispensaries when they are ready to open at the end of the year.
What? Empire Hemp is not a dispensary? No. He’s the high level guy who does all these applications so he can buy, process and then distribute products. The store offers CBD products, made by extracting oil from cannabis plants. As for pure cannabis, it will be shipped to a certified dispensary for retail sale.
This extract was priced at $4,500 per kilo in September 2019 and fell to $500 per kilo in November of the same year, he said.
“So our whole business model disappeared and then the price dropped because the supply got so huge because the whole country was doing it,” he said.
“COVID has actually been a blessing for us. We would be out of business because it allowed us to get these PPP loans to fill that gap because that’s when we said we were going to go out of business or we had to open a store because we had need money, we need you get it; our online sales have dropped dramatically,” he said. “We were doing very well. But because of the cancellation of credit card processing… our whole ranking on Google plummeted and we were never able to recover.
They built the store at 204 East Main St., Batavia, on a “low budget”, and said it has been well received so far. There are at least 50 different types of CBD oils, lotions, balms and scrubs that have attracted loyal customers with praise for the pain-relieving properties, Wolankse said.
So anyone can sell these products? No.
“We have a CBD retail license and we have a manufacturing processing license so we can sell them. There are a lot of people selling CBD products and they don’t have a retail license. I don’t even know if they know they need a retail license,” Wolanske said.
Merchants who sell cannabis products without the proper license are not registered with the state and are therefore most likely circumventing sales tax payments. The state will crack down on these entities to ensure only law-abiding — and tax-paying — businesses operate, he said.
What type of license do you have?
“Okay, the first one we got was a retail license for CBD, but this one is for cannabis for adult use. We got the license to process and manufacture cannabis for adult use, and then there is the cultivation license for adult use,” he said. said. “So now we’re a recreational marijuana grower as well as a processor so we can grow, process, manufacture and distribute,” Van Dusen said.
Everyone from growers to Empire Hemp facilities must be inspected for documentation, cleanliness, packaging and sanitation practices, he said. Empire Hemp’s wholesale license allows them to sell products to “dispensaries when they open legal dispensaries,” he said.
He expects more than 800 dispensary applicants to be vetted and chosen by the state for the first legal dispensary license. Once selected, these candidates will have the choice between a few locations to settle. They will not be able to dictate where their dispensary will be, he said.
For example, a candidate from Erie County may have the choice of being in Batavia or Brockport, but not necessarily in their hometown. The upside is that the designated site will be a turnkey operation, ready to open for business, Van Dusen said.
Work the steps
The state has taken steps to license growers first, then processors and manufacturers, and now the last retail outlet – dispensaries. He, his wife and his sponsor cannot transform their store into a dispensary since they are the processor, the manufacturer and the distributor. But they can bring someone else in and, as a legally chosen dispensary, sell cannabis products in the future, he said.
But what about all those little shops selling cannabis, usually under the pretense of selling a sticker or a t-shirt containing up to 1/8 ounce of marijuana?
They are not legal, Van Dusen said. They have not gone through the stages of applications, certifications and inspections of the product and the sales site. Moreover, the state has not even selected and announced which ones are legal yet.
His frustration is not just sour grapes that others open faster and cheaper, he said, but also taking the proper steps to sell a safe, quality product like Empire Hemp has. been doing for the past three years.
“And consistent products, you know you’re getting the same product every time, you’re getting a safe product,” he said. “And growers, before we even have their cannabis, they have to go through a series of tests. You want to make sure their cannabis is safe. We can’t even receive it until it’s passed.
“It’s like when I see it’s really upsetting because we played by the rules, we do everything we’re supposed to do to be complicit and comply with the law, and then these guys come in and open the stores like they’re going to make tons of money,” Van Dusen said. “I think it’s had an impact on our retail store.
“So people are trying to do it the right way, they’re trying to follow what New York State has planned. And then you have this whole other group of people who are just doing like this wild Wild West, and they just do what they want…I mean, the milligrams in some of these products. I’m surprised these people aren’t in the hospital,” he said.
State cannabis law requires individual packages to contain a maximum amount of product, such as 100 milligrams per package. Some stores are selling 500-milligram packages because they are not inspected, he said.
“These are people who bother, like people don’t know what they’re getting into,” he said.
Another issue is packaging, he said. There are transparent wrappers, which allow UV rays to enter and can alter the product, compared to Empire Hemp’s opaque wrapper with nitrogen injected inside to keep the product fresh – for longer a year, he said.
When it comes to smokehouses on the nearby reservation, these business owners are not legally required to follow the same protocols as other New York State owners, such as for the sale of tobacco and oil products. essence.
Van Dusen said selling cannabis is not much different from alcohol. Both are legal in the state, however, you cannot just open a store to sell alcohol. Same with cannabis. And he wants the public to know about illegal operations. He visited a store in Batavia and bought a pack of cannabis quite easily, he said. However, he does not know where the product was grown and how it was processed, packaged and distributed. It only contained 1/8 ounce.
“The products you buy from these illicit tobacco shops that sell what they think is ‘legal cannabis’ are not,” he said. “Legal dispensaries will open by the end of the year, and keep an eye out for Empire Hemp products.”
Top photo: Chris Van Dusen and his wife Shelly Wolanske, owners of Empire Hemp Company in Batavia, talk about the legal requirements to be officially involved in the cannabis industry; Chris shows off a package of products he purchased locally from what he believes to be an illegal dispensary, since the state has yet to announce the chosen candidates. Photos by Joanne Beck.