Q&A: Falkowski Says State Is Behind In Creating A Cannabis Industry And Scrambling To Catch Up

David Falkowski

Fall is harvest time, and David Falkowski literally climbed off his tractor to take a moment to provide an update on his crop, and the budding new market for it in New York State

As president of Bridgehampton-based Open Minded Organics, his seasonal crop is cannabis — for the moment, hemp, which is cut, dried, and from which oil is extracted and used in his company’s products. But very soon, his operation could be raising marijuana for both the medical and adult-use recreational market in New York State.

Unlike some cannabis operations, this one is still outdoors and seasonal. “I’m from the Northeast, I’m a New Yorker. I like the seasons,” Mr. Falkowski, 44, says. “I like changing things up.” As for his “organic in the earth, grown in the glory of the full sun” products, he doesn’t mean to besmirch more industrial operations.

“There’s a place for all of it,” he said. “You put it this way: It’s kind of like, hey, I love a fresh, real Christmas tree in my house, and I love covering it with big shiny ornaments.”

In a recent conversation — interrupted only once by the perfume of his crop around him — the cannabis activist and entrepreneur talked about the state’s ongoing preparation for the legal pot market, and the high stakes for local growers when it comes to decisions being made at local town and village halls.

Q: So, I assume you’ve watched the developments very closely in the industry. It seems like we’ve hit sort of a period of stagnation — there hasn’t been a lot of forward motion. I suspect there’s been a lot of movement happening behind the scenes to get the industry set up and rolling.

A little and a lot of both.

So, the stagnation that we were experiencing was largely attributed to Governor [Andrew] Cuomo. We had heard several months ago about the passage of the MRTA, the Marijuana Regulation Taxation Bill. That’s what basically decriminalized, or made legal, marijuana. So we can all … Everybody I know is walking around with 20 ounces of marijuana legally. You can have five pounds at home. You can smoke it everywhere you can smoke a cigarette, except your car, because obviously you would be stoned and driving, and that’s a no-no.

Now, that’s the statute or the law. Within that, they also said that they would have to adopt a cannabis control board — a board of five people who are going to promulgate and write the rules and regulations that would dictate licensing structure, who gets to grow process, cultivate, etc.

Cuomo delayed that for several months — and, fortunately, he stepped out of office. [Kathy] Hochul stepped in, and in less than two weeks’ time, she got key appointments made. And the process has been moving since then.

The cannabis control board had finally met for the first time. They adopted all the board members, a few provisions, some technical stuff. You can actually Google “OCM,” which stands for “Office of Cannabis Management” online. And you can click on “cannabis control board,” and you can see their agendas, their minutes, etc.

… Most notably, what happened in their last — which was their first — meeting, was they immediately, at the time of declaration, made allowance for medical marijuana. They can now have whole marijuana flowers. So, bud, as the average marijuana or cannabis consumer knows it, is now legal to purchase in the medical marijuana swim lane.

And so, that’s a huge change and development, at least in principle.

Q: So it sounds like Governor Hochul’s arrival is sort of moving things along a little more quickly.

Yeah, well, I think she recognized there were some blockages, and she just moved a few key pieces to let things take their due course. Some really important things, at least from the industry side. Norm Birenbaum was formerly of Rhode Island, who was really kind of like Governor Cuomo’s go-to guy, really was not very compassionate to the industry. As I understand it, left up to him, it really would’ve been just like one big multi-state operator that they would just regulate and tax the crud out of.

We’re talking about New York here — we’re talking about the viability farmers. We’re talking about bringing in people from the legacy market, which is polite for the traditional black market. We’re talking about social equity applicants, creating opportunities and multi-generational wealth for people who have been disproportionately affected by the war on drugs.

So we’re in a very unique position here in New York, and things are starting to move. And so, what you’re going to see now is going to be a lot of stop, start, stop, start. But at the same time, there’s a lot of things that are happening, as you said, behind the scenes. And when I say “stop, start,” it’s going to be, like, okay, we’re going to start to get some ideas of exactly which direction, some clarifications on certain things.

Just like, for instance, the smokable flower and the medical marijuana swim lane. Now, remember, there are only 150,000 or so registered patients. So it’s big in principle, but it’s only going to affect, potentially, 150,000 people until more sign up in the program.

Q: But it’s still a step forward, right?

Correct, it is a step forward.

Q: So let me ask you this: Can you make an educated guess as to a timetable for key developments as we move forward? How soon do you think all of this is going to come to pass?

When we use the subjected words like “key developments” or “announcements” or “clarifications,” right, because even if you’re just clarifying, it can have big ramifications, inferring that both need to happen or just one — we’re hoping by the beginning of 2022 that we start to see some sort of regulations submitted.

As the Long Island community chairman for the New York Cannabis Growers and Processors Association, we are adamantly working to ensure that folks have a chance to get seeds in the ground next spring. So, we don’t miss out on a whole ’nother year.

So, in other words, if we don’t get plants in the ground in the springtime, the better part of the industry doesn’t even kick off until, like, into 2023. We’re just harvesting now here in 2021. And so it wouldn’t be for another, say, 30 days until things are dried and cured or manufactured, and that puts things into the fourth quarter.

So we’re hoping we see regulation by the beginning of Quarter 1, like January, February of next year. We hope maybe that some applications can be submitted at that time.

There is an interesting bill passed in the State Legislature that suggests that if the cannabis control board was not sat and that regulations were not released by the beginning of the year, that provisional licenses could be issued to ensure that plants could be in the ground in the spring. And if something like that is followed through on, that could really expedite things to ensure that we actually have a viable and functioning adult use marketplace come this time 2022 — and not 2023.

Q: But you think, best-case scenario, about a year?

The best-case scenario, a solid 12 months. Best-case scenario. And then we start to push out 18, 24 months.

Q: That’s still a fairly short period of time, considering how momentous this change is going to be.

It is. But one thing that’s important to understand: This is just opportunity in the legal marketplace in New York. And so if we’re talking about opportunities for New Yorkers, right. Any other state that has a legal program? These people are crashing forward — building out manufacturing capabilities, brands, innovation, staffing, all of this stuff.

So, it’s almost like every day of delay here is almost like a handicap of months at a time, because we haven’t even begun to start. And what it will do any further delays will make us more subject to … these multiple state operators. And it’ll become more and more difficult to create sovereign New York businesses. We’ll actually be so far behind, because things are moving so fast, that we’ll be forced to partner with them. And that leads to less sovereignty in the New York cannabis program, in my opinion.

Q: Why does that matter? Why is a sovereign New York program important?

I’m a farmer, for instance, right? The easiest way to speak is about myself: I would like to cultivate and manufacture products, the way I have been with hemp and CBD and other cannabinoids here. I deserve the chance in a new marketplace to do that by myself and not to have to bring on huge investors, or to enter into such a marketplace that is so developed already that my only real future is eventually selling out to a big business.

So when we’re talking about creating opportunities for New Yorkers, we want to create true ground-floor opportunities. And those are rapidly disappearing, literally every day. While every other brand cultivator and manufacturer operates in states where this is already legal and happening.

Q: The other states all got a head start, basically.

Correct. And, the time is ticking. We already have some bills for consideration regarding legalization of marijuana on the federal level, which could lead to interstate transport — that has huge implications.

I just read a headline, the governor in Oregon declared a state of emergency. There is so much illegal marijuana, they’re calling for federal aid. So now what happens if you open the floodgates and they allow for legal transport, interstate? All that winds up in New York, floods the market year one. It’s super expensive to enter into a regulated market to begin with. It’s a no-go right out of the gate.

So, there’s a lot of these things, to your point, that what’s going on behind the scenes, we’re making preparations, we’re hoping we don’t cement the road too far in one direction that turns out to be a dead end.

There’s a lot of jockeying, little bit of anxiety, a few more sleepless nights, I think, than a few of us would like. Definitely a sentiment of exhaustion for many. This is truly a marathon. The cannabis industry is not for the faint of heart or people who just don’t have fundamental endurance.

Q: Can you talk a little bit about local developments then, with your company, with partners you’re working with. What’s the future looking like? Is there any news on that front?

Well, if you’ve … This smells really good, sorry. I was just checking out some of today’s harvest. I see sparkly things, and I have to touch them.

Oh, this stuff smells so good: peach mint cush. This is a new varietal that we grew this year.

So, as far as developments, for many people, I’m sure if they read the papers in the last several months, we saw that the MRTA created an opportunity for municipalities — specifically, towns, cities and villages — to have the opportunity to opt out of basically hosting retail sales and onsite consumption sites like lounges. Notable here, this is not an opt in or opt out, because to not take any action, the default is just that it’s going to occur.

So, that’s been going on. A few municipalities have opted out. Some have said they’re not, most notably Riverhead. I think that’s an important point to be made there.

After that, we do see a handful of hemp farms that have popped up on Long Island and throughout New York State. I think through the years there’s been a total of almost a thousand registered cultivators or hemp licenses. I think there are just over 200 that are active this year. And many of them anticipate to move from the hemp space into the adult-use marijuana space.

And we had the Hamptons Cannabis Expo again this year. That was a real interesting event, where it was kind of like the “us” and the “them,” in a way, right? There’s lots of MSOs [multi-state operators], legal folks, serial investors. And then there are a lot of the folks like myself who are in the industry here in New York, or maybe in the legacy market.

So, these things are coming up. We see lots of pop-up markets. Hey, I’ve heard that a lot of stores are openly selling marijuana right now, all the way from Montauk to Manhattan, because it’s basically been decriminalized. And they’re only looking at, like, a $250 offense.

Q: Let me ask you this, David: You talked about the opt out — quite a few of the municipalities on the South Fork have opted out. You mentioned that Riverhead has not, but a lot of the villages …

They have not. See, that’s a misnomer. They have had discussions. And I’ve been saying this from day one: It’s very important for our elected officials to be prudent in making these decisions. But, it doesn’t even have to be approved. Riverhead was the best example.

So, maybe Southampton has had discussions. … As I understand it, they’re actually writing code to allow for medical marijuana zoned in the town. So why would they opt out, if they’re actively moving forward with re-zoning codes?

Q: Southampton Town hasn’t actually voted yet.

Correct. Now, remember, this is just the board. Remember this: So the elected officials of the town get to vote if they’d like to opt out. Again, if they take no action, business as usual, let’s figure out where we’re going to zone this. It changes nothing else.

Remember, people can still … There are delivery companies that can still deliver into the boundaries. Hey, Southampton Village and Shelter Island are the only two municipalities on the East End that I know have officially opted out.

Q: Westhampton Beach as well.

Yeah. So, now, should somebody be interested in having a dispensary within the village boundaries, two things: one, hopefully, they could implore the village to put it to a public referendum, just like they would the purchase of a firetruck or something. Or, as I understand it, you can go around and you have to get the equivalent of 10 percent of the last gubernatorial vote in that district, and that will put it on a public referendum and that will give the voice to the people.

So, again, this is another message I have: The publicly elected officials we have right now, we did not elect to make this decision. This just happened to come in this timing.

I think this issue is so big and transcends so many party lines and opinions, I think the most responsible thing for any municipality who’s considering this, who is going to choose to potentially opt out as a board — give that decision, ultimately, to the residents of that municipality. I think anything less is unfair to the people who live in those towns and villages. Why should five people make a decision when 15,000 people live there?

… So many people are still concerned to come out and say, “Hey, I smoked pot and I want my right to buy it in town.” There’s still stigmas in place. So, it’s almost a form of discrimination.

Q: Are you partnering at all with the Shinnecock Nation, which is planning to be in the retail cannabis market?

Not at all. No. So, I went to school with lots of folks up there. I know folks. Interesting enough, they have their own programs. Obviously, we’ve all heard about their partnership with Tilt Holdings, and that’s for the tribal nation as a whole. … By all means, just being a member of the community on the East End and knowing residents there, we have conversations, and, sure, I’m exploring ways in which, hopefully, we can do business together. But there’s no formal partnerships or anything other than, “Hey, what’s going on, man? Things good?”

Q: No real heavy competition, it sounds like. Sounds like you’re working together more than anything, working collegially.

Here’s the thing: It’s just like everything else. There’s grocery stores in every town. There’s bars in every town. There’s liquor stores in every town. Some towns have several liquor stores. People will gravitate to brands and places that they enjoy.

Just because, say, the Shinnecock have cheaper tobacco available up by the old Southampton College doesn’t mean every cigarette smoker goes there. The cannabis consumers are a very diverse group.

I really think back to the core of this: The largest threats to New York State’s sovereign cannabis program are really large corporations and big multiple state operators that will not truly let just a layman, a New York citizen, really have a chance to have a grand opportunity to possibly be one of the people that gets in at ground level and becomes wealthy. Especially when we’re speaking to this social equity element, which is very heavy and interlaced in the MRTA.

New York City remembers that intrinsically. For now, we have to build our own supply chain within our state’s boundaries. So we have to work together, right? We can’t just buy widgets from out of state and resell them here.

So the climate, if you ask me, that’s been created, the zeitgeist, by the MRTA virtually blocking the majority of vertical integration, etc., the federal prohibition basically on marijuana, says that it’s not legal, encapsulates this industry all inside of New York.

Q: You can’t go out of state, by law, to trade, right? So it forces all of the operations in New York State to work together, basically.

Sure. Don’t get me wrong, one dispensary next to another, they may compete. But right now there are myriad opportunities for cultivators, extractors, manufacturers, distributors, brand owners, dispensaries, delivery services.

And so all of these, they’re pieces of the puzzle, and at least the way I try to steer a lot of the conversations is, let’s put all the puzzle pieces together without jamming them and breaking the edges. Because, there’s plenty of space right now to settle in and build a robust and stable supply chain here in New York that is equitable and fair, first and foremost, for New Yorkers.

Q: If the local municipalities — Sag Harbor, Southampton Town, East Hampton Town — all opt out, what does that do to your operation? Can your operation still be viable in the industry?

“Viable” is a subjective word, my friend.

So, that’s like saying I can have a farm but we’re going to remove and redact the farm stand permit section of the town code. You no longer have a place to sell your product locally. Remember, this is an encapsulated ecosystem of commerce, right?

This whole supply chain that we’re building, you only diminish the resources of locals, because, remember, Southampton Village, they’re just going to drive up the street for the Shinnecock. That’s fantastic, but it’s completely to everybody’s rights to come right back into the village and walk around and smoke pot wherever you can a cigarette. And they’re still going to have to deal with people driving around who are intoxicated. They’re still going to have to deal with all of the issues that, perceivably, that they’re just not comfortable with.

It’s a real head-in-the-sand approach. Again, when they opt out, they basically diminish the resources of folks like myself, who are true community members and have civil conversations. Large corporations with deep pockets, as we see with developers and many projects here on the East End, they send in a lawyer and they keep asking the question in many different ways, many different times, until very often they cave.

And so, if you really want to address the concern locally, you should be giving the opportunity to the locals, because otherwise it’s just going to be the large, out-of-state operators.

Remember, in the beginning of this conversation, the governor did a lot of damage by delaying key appointments for six months. … Opting out, in essence, does the same thing. Because, remember, I’ve said this a few times, how fast things are moving, and everybody else is moving at light speed while we’re still stuck at the starting gate.

And so opting out is just going to be another barrier to entry and specifically not just for locals but especially when we’re talking about social equity applicants and people who have been disproportionately affected by the war on drugs. I think it’s a very shortsighted decision to make by a group of a few.

Q: Anything else we need to know?

I think it’s important to just remind people that it is still not currently legal to buy, sell or cultivate marijuana. This is like a little bit of a [public service announcement], you know what I mean?

Q: So you can’t even cultivate small numbers of plants right now, right?

Correct. No, in the statute, so which is law, right, it’ll say you can have up to six per household. In other words, you can have like three, three clones that are in vegetated state and three that are like flowering. It’s only three flowering, like immature. But, again, we don’t know what that looks like.

People are already not necessarily making great decisions. I’m not going to say what municipality, but it came to our awareness when somebody was growing some marijuana plants literally across the street from the school. When I say across the street, not even like a hundred feet — I’m talking like the 30-foot span of the side of a building. And, as anybody knows, it smells really great this time of the year.

And you know, these regulations, might say, well, you at least got to be a hundred feet. Or, if it’s within a certain area, it needs to be indoors. Or the fact was there was no gate on the hedgerow — there’s security requirements.

At the end of the day, we’re looking to take something that’s illegal and in the shadows, largely, turn it and face it to the sun, regulate it, tax it and do good things with the taxes. And we do not want to create more harm, right? … So, that’s what those regulations are for. That’s what they’re trying to address.

My God, I can’t say this at my ripe old age of 44 — I sound too conservative, or maybe just I’ve got enough situational awareness to say, let’s get this right. An ounce of prevention is cheaper than an ounce of cure.

That was a pun.