At his upstate New York farm, Seth Jacobs faces a dilemma as approximately 100 bins brimming with marijuana flower await distribution. The issue? Insufficient outlets to sell the product.

Last year, Jacobs harvested 700 pounds (318 kilograms) of potent marijuana flower in New York's inaugural legal crop for recreational use, along with around 220 pounds (100 kilograms) of distillate. Despite over 200 farmers producing marijuana, there are merely a dozen licensed dispensaries across the state, leading to a financial strain for farmers as another growing season begins.

"We are really under the gun here. We're all losing money," Jacobs stated, emphasizing the difficulty in moving products within the current market. Marijuana growers in western states also face economic challenges due to low prices, black market competition, high state taxes, and federal banking and export restrictions.

In New York, however, the farmers' predicament is linked to the state's turbulent recreational pot market debut. The state had originally planned a gradual market rollout, allowing a diverse range of participants to enter. Yet, the licensing process for new dispensaries has lagged behind expectations.

Governor Kathy Hochul had anticipated 20 new stores opening monthly from the beginning of the year, but only one opened by January, followed by 11 more since then. Unlicensed shops have emerged to fill the gap, particularly in New York City, but they do not offer a legal market for the state's farmers. Moreover, federal law prevents New York farmers from transporting their crops across state lines.

This bottleneck has left an estimated hundreds of millions of dollars' worth of unsold cannabis – approximately 80% in the form of cannabis oil – according to the Cannabis Association of New York. There are concerns that the smokable flower may eventually become too old to sell.

Jacobs stores his buds at Slack Hollow Organics in secure, temperature-controlled units, while he waits to sell the more valuable distillate at various processors. In rural New York, Brittany Carbone, co-founder of Tricolla Farms, revealed that their unsold inventory includes 1,500 packs of pre-rolled joints and around 2,000 packs of edibles.

"What we really need to see is more retailers get open, and that's going to actually give us the sustainable solution," Carbone said.

The sales deficit has hit small farmers hard, especially those who invested heavily in last year's crop and need capital for their second year. Jacobs, whose brand is Bud & Boro, has decided not to grow plants for distillate this year due to the backlog. Carbone mentioned that they are planting on less than the acre they're legally allowed and postponing infrastructure investments such as hoop houses for growing.

Many New York critics attribute the situation to state officials' missteps in their effort to create a diverse market. This involved reserving the first legal pot harvests for struggling hemp farmers and allowing individuals with past marijuana convictions to open some of the initial dispensaries. Critics argue that the process has been cumbersome for dispensary applicants and that issues have arisen with a planned $200 million fund to assist "social equity" dispensary licensees in setting up shops.

The funding was intended to comprise up to $150 million in private investment. However, state Dormitory Authority spokesperson Jeffrey Gordon did not confirm if any private funds had been invested yet, only stating in an email that "efforts to secure private capital are ongoing."

Gordon highlighted New York's "intricate and unparalleled" endeavor to establish a new statewide enterprise from the ground up, involving the assessment of 10,000 commercial properties for potential dispensary sites and organizing banking, training, and other services for license holders.

The retail launch faced setbacks when a federal judge ruled in November to temporarily prevent New York from granting dispensary licenses in some areas, including Brooklyn and Buffalo. The injunction was later limited to the Finger Lakes region before a settlement was reached this week.

The Office of Cannabis Management has recently taken measures to increase demand, such as provisionally approving 50 new dispensary licenses last month. Additionally, plans are being developed to enable groups of growers to collaborate with retail license holders to sell their cannabis at alternative venues, like farmers' markets or festivals.

"We understand that these growers are concerned about selling last year's harvest while deciding whether to plant a cannabis crop in 2023, and we will continue to support them as more adult-use dispensaries become available to sell their products," said cannabis office spokesperson Aaron Ghitelman in an email.

Separately, Hochul and the Legislature passed a new law granting regulators more authority to confiscate marijuana from illegal shops competing with legal establishments.

Despite their frustrations, farmers like Jacobs and Carbone remain hopeful. Carbone has successfully introduced her farm's brand, TONIC, to six dispensaries. Jacobs has received sporadic payments and is optimistic that the upcoming farmers market policy will provide a new sales channel for his marijuana.

"All of this will be resolved," said Jacobs. "And I want to be there when it does."