Aug 24
2022
Subsidies for South Buffalo pot farm
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Updated: 1:46 p.m.
A pot growing operation in South Buffalo has received two major subsidies from economic development agencies.
The first, in January, came from the New York Power Authority, which approved an allocation of 2.9 megawatts of discounted hydropower. That equates to $3.5 million in savings over 10 years, based on 2021 energy prices, a NYPA spokesman told Investigative Post.
The second subsidy came Wednesday from the Erie County Industrial Development Agency, which approved tax breaks worth $3.1 million over 15 years.
It’s the first subsidy the IDA has awarded to a marijuana producer and the second largest tax-break package it has approved for any business this year. The largest was a $3.7 million subsidy package for a hotel and apartments in the former Trico building in downtown.
Wednesday’s vote was unanimous, without any debate.
The cannabis production project may qualify for state subsidies as well, as it sits on a brownfield site.
The $27.8 million project will create 20 full-time and 34 part-time jobs, according to the applicant, Laborers Way 1 LLC. The full-time jobs will pay between $45,000 and $150,000 annually, according to the applicant, while the part-time jobs will pay $30,000 to $40,000 a year.
Using a full-time-equivalent calculation for the jobs, the IDA subsidies work out to $83,440 per job.
The subsidies break down like this:
- A 15-year payment-in-lieu-of-taxes deal worth $1.9 million will cut the company’s property tax bill from $3.3 million to $1.4 million.
- The developer will pay 20 percent of its property tax bill for two years, 30 percent for two years, 40 percent for five years and 50 percent of its bill for six years.
- A $1.1 million sales tax exemption on construction materials and equipment.
- A $120,000 exemption on its mortgage recording tax.
John Cappellino, IDA president and CEO, maintained in an email to Investigative Post that the size of the subsidy makes sense, in part because the company will pay $85 million in salaries over 15 years.
“That is money spent locally on food, housing, gas, and other goods and services,” he wrote.
Cappellino also noted that the cannabis industry is “showing significant economic growth possibilities due to changes in State legislation.”
The full-time jobs will be in positions including cultivation laborer, product development specialists, technicians, marketing and administration. The subsidy deal requires the company to fill all 54 jobs within two years of completing the building.
The company noted in its application that at least some of jobs will go to “members of disadvantaged communities” and that “reinvestment will be focused on communities that have been significantly impacted by cannabis-related convictions.”
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The power subsidies are also pegged to jobs.
NYPA provides discounted hydropower — generated in Lewiston — to select companies within 30 miles of the generation plant. The electricity is sold at below-market rates, and, depending on energy prices, can save recipients a significant amount of money.
The authority in January approved 2.9 megawatts for the project. In its application, the company said it would create 75 jobs, more than the 54 promised in its IDA application.
Paul DeMichele, a NYPA spokesperson, said the authority can reduce its allocation if the company doesn’t meet its jobs goal.
How the project came together
The project is the brainchild of California-based developer Brad Termini, son of well-known Buffalo developer Rocco Termini, and located in the business park along the former Union Ship Canal, near Gallagher Beach. Termini’s development company — Zephyr — will build a football-field-sized cannabis production facility and office space that the medical marijuana company Etain will occupy.
Etain already has a presence in New York, including medical dispensaries in Manhattan, Yonkers, Kingston and Syracuse, as well as a greenhouse growing facility in Chestertown. The company, owned by Amy, Hillary and Keeley Peckham, said in its application to the IDA that it expects to receive a license to grow and sell cannabis for recreational use as the state issues them.
The facility will sit on five acres and consist of a 68,000-square-foot production facility and 7,000 square feet of office space. Zephyr will build the facility and lease it to Toronto-based RIV Capital, which will then sublease the facility to Etain to grow and produce marijuana products.
It’s not yet clear if Etain will open a dispensary in the Buffalo region, but all of the company’s sales will take place in New York State.
In the application for subsidies, Termini made it clear that the Etain production facility was just the first of several growing operations planned for the site. The goal, according to the application, “is to create an approximately 211,000 square foot campus comprised of three buildings supporting cultivation and manufacturing operations.”
The land is owned by the Buffalo Urban Development Corp. in the Buffalo Lakeside Commerce Park and Termini is under contract to acquire the property.
The property is designated as a brownfield site, meaning it was formerly home to industry and must be remediated before being developed. The state Department of Environment Conservation offers tax credits to clean up brownfield sites, though it’s not clear if the project qualifies. A DEC spokesperson did not respond to a request for comment.
Brad Termini did not respond to a request for comment for this story.
Samantha Qualls, a representative from Etain, refused to comment.
Termini has political connections
Brad Termini has been cultivating elected officials since he unveiled plans for the project — which he described then as occupying 1.25 million square feet and employing 500 to 1,000 people — in February 2019.
He gave $4,700 in October 2019 to the campaign committee of Assembly Majority Leader Crystal Peoples-Stokes, a principal architect of the state’s legalization of adult-use marijuana. His father, Rocco, chipped in $2,500 to Peoples-Stokes the same month.
In February 2020, Brad Termini gave $5,000 to Grassroots, the political club with which Peoples-Stokes and Mayor Byron Brown are affiliated.
Last October, Rocco Termini gave Peoples-Stokes another $4,700.
Cappellino of the IDA noted that Peoples-Stokes’ office “did not offer any comment that we know of on this project.”
Zephyr, Brad Termini’s development company, gave $2,500 to Brown’s mayoral campaign last June, the day before the Democratic primary — part of an influx of cash to Brown from big-money donors in the two weeks before Brown’s primary loss. Rocco Termini, meanwhile, was one of a group of real-estate developers who put money behind Brown’s general election write-in campaign.
On Wednesday, Brown, who serves on the IDA’s board of directors, spoke in favor of the subsidy deal. He also wrote a letter to the IDA on July 28 supporting the project.
“We believe that this project will be a catalyst for the economic development within the City by diversifying Buffalo’s local economy and adding new employment opportunities for Buffalo residents,” the mayor wrote.
“The new construction of Zephyr’s cannabis manufacturing facility is a welcome addition to the impressive revitalization efforts that continue to propel our local economy forward.”
Geoff Kelly contributed to this story.
