A New York Prison Locked Men Up For Drugs. Now the Site Will Grow Marijuana

Local officials have recruited seven cannabis-related businesses to the Hudson Valley site, still marked by reddish brick buildings that at one point incarcerated nearly 1,000 men. In March the town provided tax incentives for Chicago-based Green Thumb Industries to buy 38 acres for a large cultivation and manufacturing facility.

Boosters say the new ventures will bring tax revenues and hundreds of good jobs. But some parents say making the town a marijuana production center could send children a message condoning drug use. Small growers statewide worry large companies, such as Green Thumb, will squeeze them out of the market. And even some fans of the project see risks ahead.

“It seems like everybody and his brother and sister want to get on the cannabis bandwagon,” said

Richard Hull,

a historian in Warwick. “There will be a lot of competition, but it’s certainly worth the risk.”

In March, New York became the 15th state to legalize recreational marijuana.

Gov. Andrew Cuomo,

a Democrat, signed legislation allowing possession of up to 3 ounces for people 21 and over.

Warwick, a town of about 32,000 residents, has quaint village streets and bucolic farms that draw families for apple picking in the fall. Its leaders haven’t yet decided whether to permit cannabis retail shops or lounges with on-site consumption. The new state law says cities and towns can opt out of allowing such dispensaries by Dec. 31.

Laura Ford,

a resident with children aged 15 and 19, called the new hub for growing cannabis a “mixed bag.” She sees benefits for the local economy but worries about increasing the supply of a substance that for some users might be a gateway to more drugs. Then again, she noted, the town has long had stores for liquor, which can lead to alcohol abuse. “It’s not a cut-and-dried issue,” she said. “But I have teenagers and don’t like to think about them smoking pot.”

In the 1930s, the prison site served as a state reform school that tried to rehabilitate wayward New York City boys with chores tending vegetables, cows and chickens. In the late 1970s the state turned it into the Mid-Orange Correctional Facility for the surge of people being incarcerated during the national crackdown on drug offenses. It was shut in 2011, after the number of men there dwindled.

Town officials set up the not-for-profit Warwick Valley Local Development Corporation and paid the state $3.75 million for about 150 acres of prison property in 2013.

Michael Sweeton,

the town supervisor, said Warwick bought the site to avoid having it turned into condos or something undesirable. “We want to control our own destiny,” he said.

The idea of creating a hub for hemp emerged in 2018, he said, when the federal government took the plant off the list of controlled substances. The town worked with the Orange County Industrial Development Agency, which offered incentives to attract businesses. Now the former prison has seven ventures tied to a substance that was once banned, as well as a brewery and sports complex.

UrbanXtracts makes cannabidiol (CBD) oil, tinctures and other products. Phyto-Farma Labs LLC tests cannabis. Citiva Medical LLC has a license to grow medical marijuana. And three small manufacturers use CBD or hemp: Honey Buz and Farmbody for skin-care products, and Scripted Fragrance for candles.

“That’s the irony: There were prisoners in here for what we’re doing,” said

Eran Sherin,

founder of urbanXtracts. He said he aims to hire workers from disadvantaged backgrounds to promote social justice.

The big newcomer is Green Thumb, which pledged to invest $155 million and create at least 179 jobs within three years, with benefits and salaries starting at about $50,000. Mr. Sweeton said that when Green Thumb’s roughly $3 million purchase of property is completed, as is expected this summer, the Warwick not-for-profit will have recouped its costs for buying and fixing up the prison site.

In a deal approved by the county’s industrial development agency in March, Green Thumb got incentives worth about $30 million over 15 years, including a sales-tax exemption and property-tax reduction. The agency estimated benefits to the regional economy of $285 million during that period.

A 20-minute public hearing on the tax breaks drew comment from only one resident. According to a transcript, the man said citizens should have had more opportunity for input and scrutiny of the agency’s cost-benefit analysis, and more evidence that incentives were necessary to attract Green Thumb. The resident couldn’t be reached for comment.

Ben Kovler,

chief executive of Green Thumb, said Warwick’s welcoming attitude was a key factor in picking the site. The company, which plans to build a large facility for growing indoors, is licensed to make medical marijuana and wants to add recreational products when possible. “Going to a place where they don’t want you is a recipe for disaster,” Mr. Kovler said.

Small New York growers worry they will be unfairly squeezed out by Green Thumb and other multistate companies, said

Allan Gandelman,

a Cortland County hemp grower who heads the New York Cannabis Growers and Processors Association.

Mr. Gandelman said growers need licenses in time to plant a 2022 crop, but the governor and state lawmakers haven’t yet appointed a control board to spell out licensing rules for making recreational marijuana. Cuomo administration officials said they expect the board to be picked by the end of the legislative session in June, with regulations in effect at the start of 2022, followed by the granting of licenses and retail sales in the fall.

Mr. Gandelman said that unlike big corporations, his small growers can’t afford to scale up their infrastructure now in hopes of getting licensed. Large companies “are going to have a super-duper head start,” he said.

The new marijuana law gives priority to applicants disproportionately hurt by past enforcement of prohibitions, according to the governor’s office. The law also aims to grant half of the licenses to businesses owned by minorities and women, as well as distressed farmers and disabled veterans.

“We will see an open playing field where the smaller operators are really able to not just compete, but thrive,” said

Norman Birenbaum,

New York’s director of cannabis programs.

“The market is big enough for everybody,” Mr. Kovler, of Green Thumb, said. “There is enough demand for many entrepreneurs to do well.”

Write to Leslie Brody at leslie.brody@wsj.com