Cannabis Farmers Sue New York State Over Market Inequities

Onondaga County, NY — A group of cannabis farmers has filed a lawsuit in Onondaga County Court against the New York Office of Cannabis Management (OCM) and the Cannabis Control Board, alleging the state’s actions have created an unbalanced cannabis market that puts small-scale farmers at a severe disadvantage.

The lawsuit, filed by the Cannabis Farmers Alliance (CFA), accuses the state of violating its own statutes, failing to stabilize the cannabis market for small growers, and inadequately addressing the issue of illegal cannabis sales. These allegations shed light on the challenges facing New York’s burgeoning legal cannabis industry.

A Financial Cliff for Small Farmers

The Cannabis Farmers Alliance represents approximately 120 cannabis farmers across New York State, including 25 in Western New York. Most of these farmers, bound by restrictive licensing and operational limitations, report operating at a loss.

Key Challenges

Licensing Restrictions: Small farmers are limited in the amount of cannabis they can grow, capping their potential revenue.

Competition from Illegal Operators: Unregulated cannabis products flood the market, undercutting legal farmers who adhere to strict rules.

Limited Retail Opportunities: The slow rollout of licensed dispensaries has left many farmers without adequate outlets to sell their products.

According to CFA, 97% of small cannabis farmers in New York are currently operating at a financial deficit.

Market Inequities Highlighted in the Lawsuit

Dean DiPilato, a partner at Centolella Law and representative for the plaintiffs, emphasized the imbalance in New York’s cannabis market.

“New York has created two classes of operators,” DiPilato said. “An unlawful one that’s taking advantage of the market and the people who are trying to follow the law but are getting left behind.”

The lawsuit contends that the state’s actions violate statutes intended to prioritize small growers and maintain a stable market for them.

Specific Allegations

Failure to Consider Small Growers: The state is accused of ignoring the law’s mandate to assess how decisions impact small farmers.

Ineffective Enforcement: Insufficient action has been taken to curb illegal cannabis sales, which undermine the legal market.

Unfair Market Dynamics: Large-scale operations and unregulated sellers dominate, leaving small farmers struggling to compete.

Cannabis Sales and the Growing Divide

Despite the challenges faced by small farmers, New York’s cannabis market has generated impressive revenues. The state’s Cannabis Control Board recently reported $800 million in sales since the market’s launch in 2022.

However, these figures do not reflect the struggles of small-scale farmers, many of whom have seen little to no financial return.

A Broken Promise

While the state has continued to open new retail stores to increase demand, the lawsuit claims it has failed to ensure equitable opportunities for small farmers. According to the plaintiffs, the OCM and Cannabis Control Board have prioritized market expansion without addressing the structural issues that disadvantage small operators.

“It’s fine to keep opening up retail stores to create demand,” DiPilato said. “But the law says you need to look at the impact on the small player… and they’re not doing that.”

Illegal Cannabis Sales: A Persistent Problem

One of the most pressing issues highlighted in the lawsuit is the prevalence of illegal cannabis sales in New York. These unregulated products are widely available and often sold at lower prices than legal cannabis, drawing consumers away from licensed operators.

Impact on Small Farmers

Price Undercutting: Illegal products are often significantly cheaper, making it difficult for legal growers to compete.

Lost Revenue: The widespread availability of illicit cannabis reduces demand for legal products, leaving small farmers with unsold inventory.

The plaintiffs argue that the state has failed to take sufficient action to crack down on these unregulated sales, further destabilizing the legal market.

Seeking Justice Through the Courts

The lawsuit aims to hold the state accountable for its alleged failure to support small cannabis farmers. Specifically, the plaintiffs are seeking a declaratory judgment from the court to compel the state to adhere to its own laws and prioritize the needs of small-scale operators.

What Is a Declaratory Judgment?

A declaratory judgment is a court-issued ruling that defines the legal rights and obligations of the parties involved. If granted, it could require the state to:

Reassess its licensing policies.

Implement measures to stabilize the market for small growers.

Take stronger action against illegal cannabis operations.

Broader Implications for New York’s Cannabis Industry

The lawsuit underscores the growing pains of New York’s legal cannabis market. While legalization promised opportunities for small farmers, many feel they have been left behind in favor of larger players and rapid market expansion.

Potential Outcomes

Increased Scrutiny on State Policies: The lawsuit could prompt a reevaluation of how the state regulates and supports small cannabis growers.

Market Adjustments: A ruling in favor of the plaintiffs might lead to new measures aimed at leveling the playing field for small operators.

Impact on Other States: As more states legalize cannabis, the case could serve as a cautionary tale for balancing market growth with equitable support for small businesses.

Conclusion: A Fight for Fairness

The lawsuit filed by the Cannabis Farmers Alliance represents a critical moment for New York’s cannabis industry. Small farmers, once seen as the backbone of the state’s legal market, now find themselves on the brink of financial ruin.

The outcome of this legal battle could determine the future of small-scale cannabis farming in New York and set a precedent for how other states navigate the complexities of legalization.

For now, the farmers of the Emerald Triangle wait, hopeful that the courts will recognize their plight and compel the state to honor its commitment to creating a fair and stable cannabis market.

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