New York City is a destination for all types of retailers, but when it comes to cannabis, we have the added cachet of being the metropolis that consumes the most weed on the planet. The state’s cannabis market has been valued at $4.6 billion, between demand from residents and tourists over 21. That’s projected to grow in the next few years now that marijuana is legal here—although analysts note that above-ground businesses will have to work hard to take over sales from the black market.
All that green is enough to make those hoping to get rich (or richer) off marijuana salivate.
“Imagine when Times Square has a weed store,” says Ben Kovler, founder and CEO of Green Thumb Industries, a Chicago-based company that has medical or adult-use cannabis licenses in 12 states and has already gone public in Canada. That’s a common move for U.S. companies, since federal prohibition here means they are barred from trading on the NASDAQ or New York Stock Exchange.
Green Thumb paid $60 million in cash and stock to acquire one of New York’s 10 licensed medical marijuana companies, Fiorello Pharmaceuticals, in 2019. Sales in the state’s medical market are still slow more than five years after the first dispensaries opened, and members of the newly created Cannabis Control Board who will be responsible for hammering out the details around licensing and other industry regulations for the adult-use market haven’t yet been appointed. But Kovler says the early investment may now provide an edge in the Big Apple.
“We think New York is the city,” Kovler said. “This is where it’s at. You can’t underestimate how important it is.”
Several well-funded national and international cannabis companies already have operations in New York state, and big names like the DIY-maven Martha Stewart, the Rockefeller family, and Constellation Brands (the liquor giant that owns Corona and Svedka) will likely have a stake.
Wealthy investors and companies took two main avenues to position their entry into the adult-use market in New York: Hemp and medical marijuana.
Constellation Brands, the makers of Corona beer and Svedka vodka, has invested billions in the Ontario-based cannabis company Canopy Growth.
The state’s limited medical marijuana industry was structured to favor applicants who could raise a lot of capital without worrying about immediate losses. While the 2021 Marijuana Taxation and Regulation Act (MRTA) setting up the adult-use market prohibits most businesses from being vertically integrated—that is, handling every aspect of the supply chain themselves—that was a requirement for companies licensed under the 2014 Compassionate Care Act that set up the medical marijuana program. It gives the 10 companies selling medical marijuana in New York an edge in the adult-use market, since they already grow the plant, produce their own branded products and operate dispensaries around the state. All but two are now publicly traded.
Most of the original license holders have either been acquired by large, multi-state cannabis companies or expanded to create a national brand themselves—generally one that’s less clinical sounding and has broader appeal. New York’s Vireo Health, for instance, is known as Green Goods in other states—and will soon rebrand here as well.
The hemp industry has a much lower barrier to entry but still attracts big-bill companies. Around 700 farmers grow the crop in New York. Hemp, which is a cannabis plant with a very low percentage of the high-inducing THC, can be used for industrial purposes such as weaving or to produce the extract CBD, a popular ingredient in wellness products. Many New York hemp growers now say they are planning to grow marijuana as well—a transition farmers say is easy to make.
Gail Hepworth, right, and Amy Hepworth, sisters and co-owners of Hepworth Farms, pose for a picture on bags full of hemp plants in Milton, N.Y., April 12th, 2021
Social justice advocates are optimistic that there will be room in the cannabis market for all entrepreneurs. The MRTA is due to create a variety of business licenses, and half will be reserved for “social equity” applicants, including people of color and those with past marijuana convictions. The state will make low-interest loans and other resources available to those startups.
That said, the focus on social equity has somewhat obscured that New York’s marijuana market will be highly competitive. Picture glossy celebrity weed brands and Wall Street vets-turned-cannapreneurs.
Here is a sampling of the monied that may be contenders vying to profit off of New York’s cannabis industry, and how they got here:
Canopy Growth and Alcohol Giant Constellation Brands
Canopy Growth is an Ontario-based cannabis company with a presence in Canada, the U.S. and Europe. The company has a cozy relationship with Constellation Brands, a liquor company that owns such bar staples as Corona, Modelo, and Svedka.
Constellation has invested billions in Canopy, gaining a controlling stake in the firm. The cannabis company is now helmed by former Constellation CFO David Klein.
Canopy has put down roots in both hemp and medical marijuana in New York. The company obtained a hemp license in 2019 and has invested in a 300,000 square-foot facility in Kirkwood, NY. It also made a deal to acquire Acreage Holdings, one of the state’s medical marijuana license holders—but that only goes into effect if and when the U.S. ends federal prohibition of the drug.
Because Canopy stock is traded in the U.S., it is wary of working with THC here before Congress passes legislation. Until then, Canopy will license some of its IP to Acreage so the company can produce and distribute its products here.
Curaleaf and Billionaire Boris Jordan
Boris Jordan is the only billionaire identified by Forbes whose fortune is tied to the marijuana industry (at least, as of 2019).
Jordan is executive chairman of the board of Curaleaf, a Massachusetts-based cannabis company with a medical marijuana license in New York and more than 100 dispensaries across the country. Following a recent acquisition, Curaleaf became the largest cannabis company in the world by revenue—and it’s on track to be the first to crack $1 billion in annual sales.
Jordan, worth $1.6 billion, owns about 30% of Curaleaf. He is also the founder of Renaissance Capital Limited, Russia's first independent investment bank, and is the co-founder, president and CEO of Sputnik Group, a private equity and advisory group that has a large presence in Russia.
Jordan told Forbes last year that Curaleaf is focusing on mass-produced, processed marijuana products rather than high-quality raw bud. “We’re making the products much more mainstream for our customer base,” he said. “We’ll be no different than Coca-Cola or Frito-Lay.”
Martha Stewart, Jay-Z and Seth Rogan
Musicians, actors, athletes and celebrity chefs are among the high-net-worth individuals who are well-represented in the cannabis industry. It’s unclear which brands will be available on dispensary shelves in New York, but homegrown rappers like Jay-Z and Method Man have their own brands (Monogram and Tical Official, respectively), as does Biggie’s son, CJ Wallace.
Snoop Dogg’s company Leafs By Snoop (LBS) and Seth Rogan’s new brand, Houseplant, are repped by Canopy in Canada, but it’s up to them whether they sell their strains in New York. Meanwhile, Canopy could bring Martha Stewart’s line of CBD products to the Big Apple.
Hudson Hemp and the Rockefellers
Hudson Hemp grows its namesake, along with other organic crops, on nearly 3,000 acres of land owned by the Rockefellers in Columbia County, NY. It produces CBD products under the brand Treaty. The company is backed by Abby Rockefeller, who originally hired Hudson Hemp CEO Benjamin Dobson-Banks to help manage and restore her family’s farmland.
By all accounts, Dobson-Banks and Abby Rockefeller are extremely committed to sustainable agriculture. But it is hard to ignore that Abby’s uncle is Nelson Rockefeller, the four-term governor of New York who oversaw the development of the Rockefeller Drug Laws. The mandatory minimum sentences enacted in New York in the ‘70s kicked off the modern era of racialized policing of drug use and a national prison boom.
Asked about this legacy, Dobson-Banks said in an email, “Hudson Hemp was founded on the principles of ecological restoration, regenerative organic agriculture and social justice. Both the company and its founders remain committed to these principles above all else. We stand steadfastly against the Rockefeller Drug Laws and regret their legacy.”
