Cannabis Business Times
by Tony Lange, Andriana Ruscitto and Eric Sandy
31 March 2021
Following quick votes in Senate and Assembly committees Tuesday evening, the New York legislature passed the Marijuana Regulation and Taxation Act and sent it to Gov. Andrew Cuomo—who has pledged to sign it into law and make New York the 17th state to legalize adult-use cannabis. His signature is expected today.
The law will go into effect immediately, as of Cuomo’s signing, but the actual marketplace is expected to take upwards of two years to develop before sales are open to the eligible public.
“For generations, too many New Yorkers have been unfairly penalized for the use and sale of adult-use cannabis, arbitrarily arrested and jailed with harsh mandatory minimum sentences. After years of tireless advocacy and extraordinarily hard work, that time is coming to an end in New York State,” Cuomo said in a public statement.
Since he reelection, when candidate Cynthia Nixon made cannabis a central issue of New York state politics, Cuomo has vocally supported the idea of cannabis legalization. Originally, it was part of the 2021 state budget plan, but lawmakers decided to tackle it as a separate issue.
“Make no mistake about it, New York has made history by ensuring marijuana reform is on track to become the law of the land,” Melissa Moore, New York State Director of the Drug Policy Alliance, said. “Through the hard work of people impacted by prohibition, advocates and champion
lawmakers, like Assembly Majority Leader Crystal Peoples-Stokes and Senator Liz
Krueger, New York has taken bold action to put a nail in the coffin of the war
According to a state press release, the New York law contains the following provisions:
The Office of Cannabis Management would be required to enforce a comprehensive regulatory framework regarding adult-use, medical and cannabinoid hemp, governed by a five-member board, with three members appointed by the governor, one appointed by each house.
It would increase the number of allotted caregivers per patient, allow home cultivation of medical cannabis for patients and permit people with a substantial list of medical conditions to access medical cannabis.
The agreement would establish a two-tier licensing structure that would allow for an extensive range of producers by separating processors and growers from owning licensing stores.
It would establish a social and economic equity plan to assist individuals impacted by cannabis enforcement. It would also create a goal to have 50% of licenses go to a minority or women-owned business enterprise, service-disabled veterans or distressed farmers.
The legislation proposes to establish a new cannabis tax structure. The wholesale excise tax would be moved to the retail level with a 9% state excise tax, the local excise tax would be 4% of the retail price, and counties would receive 25% of the local retail tax revenue with 75% going to the municipality.
The agreement would also permit the sale of hemp flower and smokable hemp forms only when adult-use stores are operating.
The agreement would allow for adults 21 years and older to possess up to 3 ounces of cannabis and 24 grams of cannabis concentrate outside of their home.
The legislation proposes permitting individuals 21 years and older to grow three mature and three immature plants for personal use, with up to six mature and six immature plants per household.
Cannabis taxes will be deposited into the New York State Cannabis Revenue Fund, a new envelope of state money that will be directed across three categories:
40% to education
40% to community grants reinvestment fund
20% to drug treatment and public education fund
“I believe my bill is reasonable and fair, and takes into consideration the opportunities and risks of cannabis,” Assemblywoman Crystal Peoples-Stokes said on the floor Tuesday.
One of the main hang-ups that presented itself in recent debate was the issue of New York residents driving while intoxicated by cannabis—an open question that has previously stalled legislative progress in Vermont and elsewhere. The state of New York will be conducting ongoing studies to manage traffic law enforcement as it relates to legal cannabis, but it’s unclear what that will look like. This is one reason, lawmakers noted, why the law provides an extended time table to implement the measure as a regulated program.
The legislation builds on experience gleaned within the state’s medical cannabis market, which went live in early 2016. Now, 10 licensed medical cannabis businesses serve more than 143,000 patients in that space.
“Almost seven years ago, Assemblyman Dick Gottfried and I made history in New York by bringing medical cannabis to the thousands of New Yorkers who were suffering from chronic conditions,” State Sen. Diane Savino said in a public statement. “Since that time, we have built upon the original program to improve access to patients and remove barriers. Today, we continue those efforts and it will lead to a better program for all. I want to thank Senator Krueger and Assemblywoman Peoples-Stokes for their attention to the needs of our medical cannabis community.”
Those licensed medical cannabis businesses will be able to enter the adult-use market on a limited basis, according to Peoples-Stokes, and their experience will be helpful to prospective entrepreneurs and executives interested in working in the new market environment.
“Etain is excited and optimistic about the potential of fully legalized cannabis for New Yorkers,” said Hillary Peckham, COO of licensed medical cannabis operator Etain Health. “Providing safe access to high quality cannabis products and helping New Yorkers achieve a better quality of life has been our mission since we began 6 years ago. We support and commend the writers of the MRTA and are looking forward to what the future holds. As the first and only women-owned licensee in the State, we are especially excited about the aggressive goals for a diverse and inclusive cannabis industry.”
New York joins the commonwealth of Virginia in passing an adult-use legalization bill through the state legislature in 2021 (although Virginia’s measure will not take effect until 2024). Other U.S. states are quickly advancing their own approaches to a regulated adult-use market, and it appears that New Mexico is prepared to follow suit as soon as this week.