A look at one of the leading nonprofit trade organizations in the Empire State
In the leadup to legalization in New York, dozens of individual activists and organized groups were instrumental in not only getting an adult-use bill through the Legislature, but also shaping the structure of a program that could be one of the most important cannabis markets in the entire country.
The Marijuana Regulation and Tax Act was officially signed into law on March 31, 2021, by then-Governor Andrew Cuomo.
One of the organizations active before and after the passage of the bill is the New York Cannabis Growers and Processors Association, which is taking the lead on advocating for businesses and entrepreneurs as the state starts to develop regulations governing the new industry.
Marijuana Venture spoke with NYCGPA co-founder and vice president Kaelan Castetter, who also co-chairs the organization’s policy committee, about his goals for the upcoming regulations and how the market is shaping up.
Marijuana Venture: How is the New York Cannabis Growers and Processors Association involved in the state’s marijuana and hemp industries?
Kaelan Castetter: We’re the largest trade association in the state of New York representing cannabis businesses and prospective cannabis entrepreneurs. I think we have close to 220 members at this point. We focus on advocacy and education for our members, the general public and also lawmakers and regulators, educating them on the needs of businesses and entrepreneurs.
Our main focus is making sure that the marketplace is diverse and equitable and competitive and that the needs of small businesses, small farms and minority-owned businesses are represented in the regulatory and legislative processes. We also represent hemp and cannabinoid hemp producers. We were instrumental in getting the hemp extract bill passed in New York in 2019. And we helped advocate for the passage of the Marijuana Regulation and Taxation Act, the law that legalized adult-use cannabis in New York, and we’re working through the regulatory process to ensure the regulations meet the needs of the industry.
Our attention is really focused this year on ensuring that the regulatory and licensing process is rolled out in a way that fosters our mission and our mission values and our diverse membership, and that it’s rolled out in a way that reduces barriers to entry.
New York: At a Glance
Projected adult-use cannabis sales
$3.5 billion by 2025
Projected adult-use tax revenue
$350 million by 2025
Licensed medical marijuana companies
Operating medical dispensaries
Certified medical marijuana patients
Registered medical marijuana practitioners
MV: What are some of the NYCGPA’s specific concerns for the state’s adult-use regulations? What are some of your immediate goals?
KC: I think the central theme to our legislative agenda and regulatory agenda is fairness. Specifically, there are 10 registered medical organizations in New York, nine out of 10 of which are out-of-state MSOs, some of the largest cannabis companies in the world. It’s very important for us that the small-time businesses and entrepreneurs throughout the state have a chance to be first to market and not just those 10 companies. That’s a very big deal for us.
Fairness from the starting line is important for us and our legislative and regulatory work. We also have other interests and agendas, such as ensuring that taxes are fair. There is a potentially disastrous tax schema being rolled out in terms of the cultivation tax and excise tax. We want to make sure that the Legislature has a chance to address that and to simplify the tax and collection process and get rid of THC-based methods of collection. I think that’s going to be very important to ensuring a viable marketplace and healthy revenues for the state and the New York State Community Reinvestment Grant Fund.
MV: The 10 companies that are licensed for medical marijuana in New York potentially have a huge advantage, given that they’ve been operating in the state for years and they’re allowed to maintain a vertically integrated structure. What are your thoughts on that?
KC: What we’re looking for is fairness. If a company has a superior product or better operating procedures, then let them demonstrate that through the marketplace and not through a regulatory advantage.
When you zoom out and think of this idea that there’s a cap on vertical integration with two key exceptions, one for micro-businesses and the other for massive vertically integrated companies, that doesn’t really make sense, from a higher level perspective. So we’re interested in how the regulators and the lawmakers are going to deal with that.
I think it feels a little bit outside the spirit of the MRTA to just have 10 operators with a large market share, and they have privileges in the marketplace that other operators don’t have.
MV: Would you like to see the state allow all businesses to be vertically integrated? Or go the other direction and not allow any businesses to be vertical? Or are you still trying to figure out what that might look like?
KC: I think, generally, one or the other should be followed. But I think this idea of not allowing vertical integration could work out really well in New York, by offering more opportunities to businesses and lessening the chance of consolidation that we’ve seen in other states.
Like I said, I think we’re just really looking for the rules to be level across the playing field. But I do think that New York should give the cap on vertical integration a chance and see how it works. This kind of prohibition of vertical integration is somewhat unique in New York, compared to other states that have legalized adult-use cannabis. It works for the alcohol marketplace in New York; we have a very similar cap or restriction on vertical integration with carve-outs for small businesses. So yeah, I think New York should definitely give that a shot, but make sure that we’re going about it in a way that’s fair.
MV: Can you give us an overview of your business interests outside of the NYCGPA?
KC: I’m the managing director at the Castetter Cannabis Group. We are a consulting firm focused on regulatory analysis and government relations, and we work with entrepreneurs in New York to effectively message their needs and develop their voice in Albany, in front of the regulators and lawmakers as they create this new industry. We help them develop a plan for licensure and understand how the regulations and the laws will affect what they can do in their business.
I’ve been involved in many different operations. I was actually the first licensed hemp processor in the state of New York. I rolled out a hemp-infused wine that my dad founded in the 1990s. We started here in New York and have been involved in hemp growing and hemp processing and manufacturing, but my only role right now is managing director for Castetter Cannabis Group.
We’re a small firm, but we have more than a dozen clients now in all different parts of the supply chain. It’s a very diverse client base, and we’re just excited to see them continue to develop their business model and involve themselves in the regulatory processes and public comment period and make their voice heard. That’s my focus for the next year.
This interview has been edited for length and clarity.