Jason Ambrosino, a disabled Army veteran and founder of Veterans Holdings, entered the New York market in 2019 under the state’s hemp program with the goal of cultivating and manufacturing cannabis. But despite holding a 5,000-square-foot indoor cultivation license, he decided not to build out his facility. The reason, he says, is simple: “The registered organizations (ROs) in New York State own the flower industry. They own it. You’re not going to break in.”

Ambrosino explained that the state’s vertically integrated ROs, many of which started as medical operators, dominate the adult-use flower market with massive 100,000-square-foot indoor canopies and the ability to negotiate favorable energy rates. “The number one driver of indoor flower price anywhere is electricity cost,” he said. “Where I am in New York State, it’s 23 cents a kilowatt hour. The ROs can negotiate directly for 7, 8, or 9 cents per kilowatt-hour because of their size. There will never be a day when I can operate in the market alongside them, because it costs me twice as much to grow as it does them.” He said that disparity makes small-scale cultivation unviable for most new entrants.

Ambrosino estimates that it could cost him roughly $600 per pound to grow cannabis, while the ROs can do it for about half that. “You don’t really think about it until you end up paying for a license, only to find out the utility prices are so high that you can’t make it work,” he said.

He believes the state’s adult-use rollout created an illusion of opportunity for small hemp farmers and microbusinesses. “They used the illusion of inclusion to gain public support,” he said. “They built protections that were meant to keep ROs out for three years to create a level playing field, but these protections were stripped away after enough lobbying dollars were spent.”

According to Ambrosino, large operators pressured lawmakers by withholding financial commitments to social equity programs until they received favorable terms. “They held them hostage,” he said. “They told lawmakers, ‘We’re not going to pay you any of that money until you give us a more favorable law.’ So, they changed it.”

The result, he says, is a market where ROs hold most of the canopy, while smaller cultivators face high costs, limited access, and few realistic paths to profitability. “Right now, microbusinesses are structured for failure,” Ambrosino said. “They’re trying to sell flower at $60 when dispensaries can get indoor-grown product from ROs for $30 or $35. You can’t compete with that.”

Mismatched Policy, Manipulated Data, and a Market Set to Run Dry

Ambrosino says the Office of Cannabis Management (OCM) has failed to recognize the growing imbalance between large registered organizations and small cultivators. “The data OCM puts out is very manipulated and questionable,” he said. “They conflict with what they report from one day to the next. One day, there’s not enough canopy, the next day, there’s too much. It’s all over the place. They’ll show you all the potential canopy of adult-use license holders, but the reality is 80% of them aren’t growing, or they’re only using part of their allotted space. Meanwhile, the ROs are operating at a massive scale.”

He believes this disconnect has led policymakers to think there’s an oversupply problem when in reality there’s a shortage of affordable biomass. “OCM looks at flower canopy, not biomass canopy,” Ambrosino said. “We don’t have enough biomass to produce distillate, and distillate is what sets the price for everything.”

Ambrosino, who sits on the board of the Association of New York Cannabis Processors, says the solution starts with expanding outdoor cultivation. “We’ve been lobbying the state to raise the outdoor cap from one acre to five,” he explained. “They keep saying there’s enough canopy, but that’s not true if you want a functioning processing and manufacturing sector.”

He also believes OCM steered small farmers in the wrong direction. “They convinced these guys to grow indoors when they had no capital to begin with,” he said. “Outdoor grows are cheaper, more sustainable, and can produce terpene-rich material that’s perfect for extraction. Giving up those outdoor licenses was the worst thing they could have done.”

Ambrosino sees the industry’s structural problems fueling a deeper issue: product inversion. “Inversion is like a cancer tumor,” he said. “Everyone — dispensaries, processors, cultivators — is supporting it. If OCM just cuts it out overnight, the market will bleed to death. We have to shrink the tumor first. The only way to do that is to expand cultivation enough that it doesn’t make sense to invert.”

Licensing Gridlock and Market Whiplash

Dispensary operators say New York’s market isn’t just constrained by bureaucracy, it’s tangled in its own rules. Jon Paul Pezzo, owner of NYC Buds dispensary, believes the state’s proximity restrictions have unintentionally frozen the licensing process. “You have a lot of people that are holding proximities because they’re in the December queue or they just have a proximity,” he explained. “Some may have abandoned their license or run out of money, but those spots are still locked up. That means someone with an actual license can’t move forward.” Pezzo said that while rolling out the market slowly may have helped at first, the process has caused problems on all sides.

Now that the agency is considering waiving its 1,000-foot proximity rule to allow more dispensaries to open, Pezzo worries it’s too soon for such sweeping changes. “The industry isn’t even five years old,” he said. “Let it play out before you start rewriting the rules. If we had known these laws would change this quickly, maybe we would have invested differently.”

He added that while OCM claims to solicit feedback from operators, the process feels one-sided. “I’ve been to many OCM meetings where everyone’s frustrated, and the regulators just sit there getting yelled at,” he said. “At some point, they just shut down. I don’t think they’re really listening to logic.”

The Data Gap: METRC, Testing, and a Lack of Standards

Ambrosino believes New York’s lack of standardized testing and tracking has left the industry vulnerable to chaos. “If you want a juicy nugget, I’ll tell you where to look,” he said. “It’s in the testing, and it’s in the labs. If you dig deep enough, you’ll find that all of our labs are invalid because they were supposed to be updated by Wadsworth Labs, the state police lab that never got the equipment. Because of that, every lab is operating under its own standard. There’s no standardization between labs, and nobody knows.”

That lack of consistency, he warns, could have far-reaching financial consequences. When potency-based taxes were imposed, each lab’s different results meant the state effectively collected taxes on unverified data. “Don’t be surprised if people start demanding money back for what they overpaid in potency taxes,” Ambrosino said.

A long-promised track-and-trace system could have helped prevent some of this disarray, but the rollout has been repeatedly delayed. After three years, the agency now says METRC will finally be implemented in January.

Jon Paul Pezzo says the delay has left retailers struggling with manual systems that are prone to human error. “In a perfect world, this should work like a supermarket—product comes in, product goes out, and it’s all scanned into one universal system,” he explained. “Instead, we’re manually entering everything, and that leads to mislabeled products and bad data. For something that’s a controlled substance, that’s unacceptable.”

He believes a fully integrated METRC system could finally bring order to the process. “You’d have cultivators logging shipments, dispensaries scanning them in, and all the details automatically syncing,” Pezzo said. “It would make everyone’s life easier and protect the business as a whole. I just don’t understand why it’s taken this long.”

The Hemp Loophole is Undermining New York’s Legal Market

“The entire industry is using the hemp loophole,” Ambrosino said, describing a troubling double standard: OCM forced him to remove hemp-derived products from his website even though the regulations permitted out-of-state sales for products under the .3% threshold, while companies like Sluggers continue to sell high-potency “THCA hemp” products directly to New Yorkers online.

“This stuff they’re calling hemp, it’s not hemp, it’s marijuana,” he said. “We have to be smarter. It’s deceptive, and it’s hurting the legal operators who are trying to play by the rules.”

Ambrosino says that without proper lab oversight and product tracking, hemp-derived cannabinoids like THCA are slipping through regulatory cracks, further undermining the licensed market.

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