‘Cart Before The Horse’: How One CEO Bashed New York State’s Fledgling Cannabis Program

The New York State Senate Subcommittee on Cannabis hosted a seven-plus hour hearing on October 30, producing little good news about the Empire State’s much delayed adult-use program:

· Farmer Ryan Andoos of Moriches, NY, testified he had “3,250 pounds of frozen biomass and 1,600 pounds of dry biomass ready to sell” to processors. But because hundreds of would-be retailers still have only provisional licenses, farmers like him are losing money – big time.

· Joseph Calderone, vice president of the Cannabis Farmers Alliance, complained how, “Major medical marijuana companies are rolling out millions of square feet of indoor growing supply capacity while small, independent farms are being crushed by wrongheaded regulations and a failed retail roll out.”

· Yoko Miyashita, CEO of Leafly, an online use and education website, testified that New York State’s Office of Cannabis Management has “consistently raised alarms about the specter of ‘corporate cannabis’ while systematically ignoring the true challenge: the illicit market.”

Also testifying was Larry Levy, founder and CEO of Lucid Green, a New York-based tech company that produces inventory-management software for the cannabis world. Levy testified that with still-unlicensed retailers in the city stuck holding millions of dollars worth of unsold marijuana products, the Big Apple is losing what Levy said was $19.4 million in tax revenues.

In a subsequent interview, Levy took the New York State Office of Cannabis Management (OCM) to task for even more. He struck particularly hard at the agency’s continued delays in implementing the kind of track and trace software system Levy’s own company designs. “Every state has launched theirs,” he complained of the “seed-to-sale” systems the nation’s other two dozen other legal adult-use states have implemented.

“It was fascinating to see at so many levels where things are broken,” Levy said of October’s hearing; he singled out “trust and transparency, the ability to be able to communicate” as being in short supply.

“New York is the only state that has launched an adult use program without a track and trace system.” That’s “putting the cart before the horse,” Levy argued.

Not true, Chris Alexander, executive director of New York’s Office of Cannabis Management (OCM), said in a separate interview about Levy’s cart and horse allegation.

Alexander declined to be quoted directly due to pending litigation challenging exactly who is being awarded licenses to sell recreational cannabis in New York. And indeed the holdup the litigation has caused is jarring: Only 27 retail dispensaries have licenses and are operating; another 463 operators have provisional licenses only, meaning they cannot start up their businesses (some 278 cultivators and 40 processors meanwhile do have licenses; and the OCM on October 4 opened an online portal for future license applicants).

Despite these numbers, Alexander contradicted Levy’s description, explaining that a state tracking system actually is in place, in the form of biweekly reports required of cultivators and processors about products coming in and going out. The problem is that the company BioTrack, which won the state’s contract, is also stymied by litigation from implementing its seed-to-sale process. Operators, meanwhile, are free to choose their own tracking systems as long as their data will eventually sync with Bio Track’s system.

Levy and his cofounders Paul Botto and Dana Spiegel remain focused on their own seed-to-sale tracking technology. While they did not win either New York’s medical (already in place) or recreational tracking contract, Levy says they’re doing just fine: 400 brands and 140 retail operators alrady use their platform; and some 50 million product units have Lucid IDs.

The three started New York-based Lucid Green in 2018 on the premise that technology had to be the priority, “not just getting more stoners to smoke more weed,” as Levy put it.

Tracking overall is crucial in cannabis to protect consumers against product contamination and against bad actors who might slap big-name brand labels on undesirable or even dangerous products.

Achieving the requisite consistency needed involves a UPC platform and inventory-management system, plus regulatory-compliance labels. In Lucid Green’s technology, Levy explained, a manager enters the product’s skew and batch numbers into Lucid’s system, specifying the number of labels to be printed. Out come labels with the company’s ID, or QR code, unique to each item, much “like a serial number on a dollar bill,” Levy said. The manufacturer then adds track and trace information.

The item’s code can be added to digitally as the product moves from one licensee to the next. At the point of purchase, consumers can scan these labels with a smartphone, learning exactly what is in the product, its testing results and who has handled it at each step of the way.

Meanwhile, New York State, unlike some other recreational-legal states, expects licensee applicants to have a location before their licenses become final, and until that happens — along with settling of the multiple lawsuits — shelf space remains in short supply, Alexander said.

This leaves growers stuck, like the Moriches farmer at the hearing with his glut of unsold biomass. Indeed, people are feeling pain along the whole supply chain, Alexander acknowledged. Yet in a state where demand is strong — the Empire State, despite its problems, had recorded $101.4 million in legal cannabis revenues by October 31 — the track and trace system will eventually get under way and inventory management will play an important role.

vc♦ttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttrf mLucid Green in the track and trace business, saying it contracts with 400 brands and 140 retail operators which use the platform. Fifty million units have Lucid IDs, he says. He has 32 employees.

He therefore has plenty of motivation to get things right, not just in his own company but industrywide. The reason he journeyed from the New York suburbs to Albany on October 30, he said, was “to educate the legislators on the art of the possible, for them to know there is a system that exists today that can take care of a lot of the issues they are bumping into with regards to stability, trust and transparency.”

New York State isn’t even barely there, Levy complained. “There are just so many things that have to be fixed that are fundamentals” for track and trace, he said.

“The point I’m trying to make is the fact that we have an opportunity,” nationwide, he said, “to really get this industry right; and part of this is technology, and part is the willingness and readiness to actually adopt and change and look at things in a different way.”