Will New York Lawize Recreational Marijuana This Week?

New York is poised to join New Jersey in legalizing recreational cannabis...

New York is poised to join New Jersey in legalizing recreational cannabis. On March 28, 2021, Gov. Andrew Cuomo announced that he has reached a deal with Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie to legalize adult-use cannabis. The compromise legislation, known as the New York State Cannabis/Marijuana Regulation & Taxation Act (S.854-A/A.1248-A) (MRTA), is expected to fast-track through the New York Legislature and could be voted on as early as this week. 

Agreement to Legalize Cannabis in New York

Efforts have been underway for several years to legalize recreational cannabis in New York. Now that New Jersey has approved adult-use, the pressure is on New York to follow suit.

In January, Gov. Cuomo included legislation to legalize adult-use recreational cannabis in his omnibus budget bill. Gov. Cuomo touted legalization, along with the tax revenue it would generate, as essential to rebuilding New York’s economy in the wake of the COVID-19 pandemic. Legalization is projected to create more than 60,000 new jobs, and generate $3.5 billion in economic activity while generating an estimated $350 million in tax revenue once fully implemented. Assembly Majority Leader Peoples-Stoke also proposed her own bill, the Marijuana Regulation and Taxation Act (MRTA), in January. The new compromise legislation reflects elements of both bills and addresses how the state will legalize, tax, and regulate adult-use cannabis, as well as enact criminal justice reform.  

“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,” Governor Cuomo said in a press statement. “Legalizing adult-use cannabis isn’t just about creating a new market that will provide jobs and benefit the economy — it’s also about justice for long-marginalized communities and ensuring those who’ve been unfairly penalized in the past will now get a chance to benefit. I look forward to signing this legislation into law.” 

New York State Cannabis/Marijuana Regulation & Taxation Act

MRTA is a comprehensive bill, encompassing adult-use cannabis, hemp, and medical marijuana. The legislation establishes the Office of Cannabis Management to oversee all three industries and expands New York State’s existing medical marijuana and cannabinoid hemp programs. Below are several key provisions:

• Office of Cannabis Management: The Office of Cannabis Management (OCM) would be charged with enforcing a comprehensive regulatory framework governing medical, adult-use cannabinoid hemp. It would be governed by a five-member board, with three members appointed by the Governor and one appointment by each house. OCM would be an independent office operating as part of the New York State Liquor Authority.
• Medical Cannabis: The bill would allow people with a larger list of medical conditions to access medical marijuana, increase the number of caregivers allowed per patient, and permit home cultivation of medical cannabis for patients. 
• Adult-Use Cannabis: MRTA would establish a two-tier licensing structure that would allow for a large range of producers by separating those growers and processors from also owning retail stores. The legislation creates licenses for producers and distributors, among other entities, and the legislation will implement strict quality control, public health, and consumer protections. It also grants the Office of Cannabis Management powers to evaluate license applicants use a broad range of metrics, including social equity status, commitment to environmentally sound policies, public health, and fair labor practices.
• Social/Economic Equity: The legislation establishes a social and economic equity program to ensure participation by individuals disproportionally impacted by cannabis enforcement, including creating a goal of 50% of licenses to go to a minority or woman-owned business enterprise, or distressed farmers or service-disabled veterans to encourage participation in the industry. 
• Taxation: The legislation establishes a new cannabis tax structure that would replace a weight-based tax with a tax per mg of THC at the distributor level with different rates depending on final product type. The wholesale excise tax would be moved to the retail level with a 9 percent state excise tax. The local excise tax rate would be 4 percent of the retail price. Counties would receive 25% of the local retail tax revenue and 75 percent would go to the municipality. All cannabis taxes would be deposited in the New York state cannabis revenue fund. Revenue covers reasonable costs to administer the program and implement the law. The remaining funding would be split three ways: 40 Percent to education; 40 Percent to Community Grants Reinvestment Fund; and 20 Percent to Drug Treatment and Public Education Fund
• Cannabinoid Hemp: The legislation authorizes the sale of hemp flower in the cannabinoid hemp program, and allow for smokeable forms only when adult-use retail stores are operational.
• Municipal Opt-Out: Cities, towns, and villages may opt-out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses by passing a local law by December 31, 2021, or nine months after the effective date of the legislation. They can’t opt-out of adult-use legalization.
• Traffic Safety: The use of cannabis by drivers will remain prohibited. After completion of mandated a research study, the New York Department of Health (DOH) may create and implement rules and regulations to approve and certify a test for the presence of cannabis in drivers. The legislation includes additional funding for drug recognition experts and law enforcement to ensure safe roadways. 
• Personal Possession: Individuals may possess up to 3 ounces of cannabis and 24 grams of cannabis concentrate.
• Home Grow: MRTA allows limited home grow of three mature and three immature plants per adult for both medical patients and in the adult-use program, with a maximum of six mature and six immature plants per household, subject to regulation by the Office of Cannabis Management.
• Employment: Unlawful discrimination would be prohibited and workplace safety protections would be implemented.
• Expungement: MRTA eliminates the penalties for possession of less than three ounces of cannabis and creates automatic expungement or resentencing for anyone with a previous marijuana conviction that would now be legal under the law.

What’s Next?

Now that MRTA has been introduced, a vote could occur as early as this week. While this is certainly exciting news for the New York cannabis industry, lawmakers have cautioned that it may take more than a year before sales can begin. Once MRTA is signed into law, state officials will need to establish regulations regarding a host of complex issues ranging from licensing to taxation.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• Is It Easy to Become a New Jersey Cannabis Dispensary?
• What’s Legal and Still Illegal Under New Jersey’s New Marijuana Laws?
• Is It Time to Apply for a Recreational Cannabis License in New Jersey?

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.