Tonawanda cannabis company alleges retaliation by state agency

Earlier this month, Canterra owner Matt Krupp wrote a guest column for a cannabis publication that showed the state’s Office of Cannabis Management in an unfavorable light.

“I was critical and by no means friendly,” Krupp wrote on LinkedIn about the article that appeared on Cannabis Insider.

The Cannabis Insider piece suggested the OCM is disorganized, and outlined the agency’s lack of communication with Canterra, which Krupp said will soon be forced to go out of business if it cannot get an extension on its Temporary Delivery Only license.

“I knew the risks of upsetting the OCM and what it could mean for me, my team, and our license,” Krupp wrote. “As is par for the course with OCM, the retaliation came swiftly.”

Less than a week after the article was published July 4, the OCM’s compliance team showed up at Canterra on Thursday for a surprise, four-hour inspection – demanding to see everything from tracking reports to its bathroom cleaning schedule.

“Luckily we had four months of bathroom cleaning calendars saved,” Krupp said.

Krupp has been getting increasingly desperate as the license for his company’s temporary delivery business nears expiration July 27. He said attempts to communicate with the OCM have failed, and that an extension on its license has been denied without explanation.

An OCM spokesperson said the agency makes it clear that temporary delivery licenses, like the one granted to Canterra, only last for a year from the date they are issued. After that temporary period ends, those businesses must transition to a retail location, and they can continue to offer delivery services from there.

The agency also said its inspections are pre-planned based on a set criteria and that the OCM follows consistent standards in scheduling them. Most inspections take several hours to a full day, and sometimes inspectors have to return a second time.

“Inspections, quarantines, and recalls are part of the Office of Cannabis Management’s everyday work to ensure New York’s cannabis industry is producing safer, tested products,” said Jessica Woolford, an agency spokesperson. “In this instance, OCM conducted the scheduled inspection because of and in accordance with its established procedures.”

“Despite operating compliantly for the last 345 days with no communication from the OCM, just [days] after publishing the article, the compliance team showed up for a four-hour inspection, going through our facility with a fine-tooth comb,” Krupp wrote.

Canterra has been operating its cannabis delivery service as it works to open a dispensary in November at 451 Elmwood Ave., part of the Elmwood Crossing project – a change from its original plan to open at 200 Perry St. With the temporary license expiring later this month, Canterra is potentially facing a gap of about four months before it can open the brick-and-mortar store that would be required for its delivery business to continue.

The state awarded temporary licenses as a way to speed up the development of the legal cannabis market at a time when it was taking much longer than expected for brick-and-mortar stores to gain approval and open. That, in turn, dampened legal cannabis sales statewide and squeezed growers, who were unable to find buyers for all of the pot they had grown in anticipation of a much faster ramp-up. The state initially indicated that the temporary licenses could be extended.

“It’s unfair, to say the least, for a company that has created dozens jobs over the past year, contributed millions to local economies through taxes and farm revenue, and delivered legal, safe cannabis to more than ten thousand customers across the region, to be denied the opportunity to continue making meaningful contributions to the program and local and state tax revenue,” said Kate Measer, a spokesperson for Canterra, of the agency’s denial of the license extension.

Krupp, in the LinkedIn post, called the experience “incredibly frustrating.”

“Instead of fostering a supportive environment for the industry, the OCM’s actions have been obstructive and retaliatory,” Krupp wrote. “This is not an isolated incident; many others who have been vocal in their criticism of the OCM have faced similar sudden inspections. We need a regulatory body that works with us, not against us.”

Krupp was previously in the restaurant business, but closed it down to focus on the cannabis business. He was operating Cantina 62, a Mexican restaurant on Seneca Street in South Buffalo, until February, when he decided to focus on Canterra full time.

The inspection is reminiscent of another incident from December, where a Hudson Valley pot processor became the subject of the state’s only product recall after owner Jenny Argie leaked audio from a conversation between herself and OCM chief equity officer Damion Fagan. Fagon has been on administrative leave over that incident since March.

It also speaks to the hesitation several Western New York cannabis sources have shown in publicly speaking out against the OCM during interviews with The Buffalo News.

In December, Hudson Valley cannabis processor Jenny’s Baked at Home had its products recalled when one of its gummies tested 1 milligram lower in potency than what was listed on its container.

The recall came after Argie testified about problems with the OCM at the state Senate Subcommittee on Cannabis hearing in October, and after OCM chief equity officer Fagon cursed her out by name for leaking audio of a conversation between them, according to an investigation by Syracuse.com.

Fagon has been on administrative leave over the incident since March.