Older cannabis operators see obstacles and opportunities in New York’s burgeoning recreational market

On a recent warm day, a few friends gathered around a table in the Grant Atkins backyard in Rochester.

Atkins, a public school teacher and reggae and hip-hop performance artist known as “Skribe Da God,” recalled being born into pot culture.

“In the late ’70s growing up it was all around you,” he said. “It was called ‘Reefer’ back then.”

From the age of 13, Atkins gained experience in every step of the cannabis supply chain, from cultivation to marketing.

However, he withdrew from what was then an illegal business around 20 years ago after being arrested for possessing marijuana. About a year later he became a father.

“I had all this potential,” he said, “but I couldn’t activate it because (I) wasn’t willing to sacrifice and care for the safety of my family.”

Jeffrey Medford wants to capitalize on New York’s recreational cannabis market, but he and others in the NY Green Coalition are concerned about the federal tax burden and other potential roadblocks.

Atkins is the sort of legacy cannabis operator that heads of state have in mind for New York’s initial business licenses for the adult-use market. The first 100 or more retail licenses will be offered to individuals who either have a history of a marijuana-related offense or have a family member who has.

“You can’t be a black man in America and not be affected by these drug laws,” said Atkins’ friend Jeffrey Medford.

He described his spiritual connection to the cannabis plant and his calling to grow it.

“We want to live free, we want to be able to run our own businesses, be our own bosses and take care of our families like everyone else,” Medford said.

State leaders say they will erase the criminal records of those arrested for petty drug offenses, but Jesse Watson, another friend of Atkins and Medford, knows some people who are still afraid to apply for cannabis licenses.

They are not convinced that these promises are real.

“A lot of people are afraid to come out there because of the potential impact,” Watson said. “Not only that, some people have been standing in the shadows for a while and some people don’t want to show their hand like that.”

Although the laws surrounding cannabis have changed, Atkins cousin Eunice Johnson Day believes there is still a stigma in some areas for people who use and work with it.

For example, some worry about their professional reputation. Johnson Day is a nurse who is willing to speak publicly about her experience of using cannabis because it has helped her cope with difficulties in her own life. She said she first tried medical marijuana about four years ago to help relieve anxiety and depression following her father’s death.

“When I saw the benefits of marijuana and what it was doing for me, I wanted to be in business to help others,” she said.

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Jesse Watson developed a cannabis-infused juice recipe to help his mother ease her cancer symptoms. He wants to use his skills to break into the recreational cannabis market in New York, but says the cost of running a retail store is prohibitive.

Atkins, Medford, Watson and Johnson Day are members of the New York Green Coalition, a nationwide group of cannabis breeders, processors, geneticists, dealers and advocates seeking access to the legal marketplace.

Atkins said the group is “like a small local farmers’ union” trying to find a spot in New York’s legal adult market, which is due to open this year.

In addition to some people’s concerns about their criminal history, they see another barrier that poses a problem for everyone: IRS Tax Code 280E.

The code states that cannabis operators are not allowed to deduct many business expenses from their federal taxes because the federal government still considers cannabis an illegal Schedule 1 controlled substance.

The tax law affects all segments of the cannabis industry, but hits retail businesses hardest, with some accountants estimating an effective tax rate of 60% on a retailer’s net income.

“It’s not designed for us to win,” said Watson. “If I take 60 cents out of every dollar, you can’t afford anything, let alone rent.”

Watson and his friends said the retail space was too expensive. If they don’t have investors or raise capital, they could lose money in their early years, far from the wealth some pro-legalization advocates have envisioned.

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Eunice Johnson Day is a registered nurse and a member of the NY Green Coalition, a group dedicated to helping established cannabis operators find their place in New York’s burgeoning recreational cannabis market.

State Senator Jeremy Cooney is hoping a bill he helped support will help.

It allows cannabis business owners to claim the same expenses from their state taxes that they are not allowed to deduct from their federal tax bill, such as B. Rent, utilities and payroll.

It is modeled after a California law that was enacted after large corporations dominated that state’s market and crowded out many smaller entrepreneurs.

“We don’t want that to happen here in New York,” Cooney said. “We want to learn from some missteps in California.”

The New York Legislature recently took another step to smooth the way for license applicants, establishing a $200 million fund to cover some initial business expenses, including money for furniture and fixtures and rent for retail space.

“These are all things that social justice candidates will have access to free of charge,” Cooney said.

It’s too early to tell if these efforts will make a meaningful difference for world leaders hoping to benefit from the cannabis market.

If New York manages to give away 50% of its cannabis licenses to minority groups and others affected by previous drug laws, it would be an outlier.

According to a study, none of the 15 other states that have established social justice programs have created a just cannabis industry. In Illinois, for example, as of May 2021, a year and a half after the state legalized the drug, there was not a single black-owned cannabis retail store.

The Minority Cannabis Business Association points to limited licensing as a factor keeping minority participation low in some states.

In New York, state officials say market demand will determine how many licenses are issued.

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Jesse Watson, Eunice Johnson Day, Grant “Skribe Da God” Atkins, and Jeffrey Medford are working to make New York State’s cannabis laws easier to enforce and less restrictive for black and brown communities.

Despite the potential pitfalls and obstacles, Atkins has hope.

Ever since New York State legalized cannabis last year, he feels like he’s starting a new life because he’s no longer considered a criminal.

“All my life I’ve been a thing, and then one day, with the stroke of a pen, I’m in the multi-billion-dollar market that’s immediately emerging to do all these wonderful things,” he said. “It’s surreal.”

New York’s first provisional licenses for farmers have been issued, but the application process for other license categories, such as processing, supply and retail, has not yet begun.

That window is expected to start this summer or fall, as world leaders hope to open the first retail pharmacies by the end of 2022.

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