Canopy Growth Cancels New York Hemp

As part of its announced organizational overhaul, Canopy Growth said it will cease its farming operations in SpringfieldNew York, due to an abundance of hemp produced in the 2019 growing season.  The company said it will continue using this supply to produce hemp-derived CBD products for the US market.

Just one year ago Canopy announced a key milestone in establishing its Hemp Industrial Park in the Southern Tier region of New York State. It has secured a 308,000 sq. ft. facility on a 48-acre property in Kirkwood, NY. That was back when Bruce Linton was the CEO.

The company said that design development would begin immediately with construction expected to start this summer. Canopy said in a statement that its vision for the property is to build the infrastructure necessary to support hemp-derived cannabinoid extraction and related manufacturing together with providing an opportunity for participation by other businesses in the hemp industry.

In a boost to the New York cannabis industry Canopy said it would begin hiring senior leadership in late 2019 and recruit the full workforce in mid-2020. Canopy Growth also noted that it had also begun securing farm capacity to supply enough hemp for its own future extraction and formulation activities within the park. The company intended to prioritize farms within New York State for the supply of hemp at this site.

New York State granted a hemp license to Canopy Growth in January of 2019, allowing Canopy to establish operations in the state and build a facility for hemp-derived cannabinoid extraction and processing for various applications. The new hemp facility will be capable of producing tons of hemp extract on an annual basis.

Tax Break

In November, Canopy was told it would receive a standard 15-year payment-in-lieu-of-taxes deal, qualifying for a 39% reduction in property taxes for the first five years of the agreement. When all is said and done, their tax break will equate to $1.7 million.

According to the Binghamton Press, starting in 2020 and until 2024, Canopy was expected to pay $192,000 in property tax payments versus a full tax bill of $312,000. From 2025 through 2029, the payments will be $252,000. Beginning in 2030 through 2034, the company will pay $282,000.

Go Farm Hemp filed a $1.9 million lawsuit last month against Canopy Growth with regards to the New York farm. Canopy paid the deposit for the agreement and two installments but failed to pay the third installment that was due August 15, 2019. Canopy was accused interfering with Go Farm’s performance by “threatening seizure of Go Farm’s crops and property without any right or authority” according to the lawsuit.

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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