Governor Andrew M. Cuomo today signed a law (S.854-A/A.1248-A) that legalizes the use of cannabis and realizes an important part of his State of the State agenda for 2021. Senate Majority Leader Andrea Stuart-Cousins and Assembly Speaker Carl Heastie announced on Sunday, March 28 that they’d reached an agreement on the legislation. The draft law also establishes a cannabis regulatory authority: namely, the Office of Cannabis Management, to implement a comprehensive legal framework that will cover medical, adult-use and cannabinoid hemp. The bill also expands New York’s existing cannabis and medical marijuana programs. The law grants licenses to cannabis producers, distributors, retailers, and other cannabis market participants, and establishes a social and economic justice plan to help people who have been disproportionately ensnared by the aggressive enforcement of prior cannabis possession laws.
In order to predict the economic impact of cannabis on adults, assumptions must be made about the potential size of the market. A recent report by the New York State Department of Health assessed the potential impact of the regulated cannabis market in the State. The department gathered marijuana use and black market price data for the state to find a low estimate of $ 1.7 billion and a high estimate of $ 3.5 billion. The department then used these market sizes to forecast potential tax revenues. For other New York-based news, Cloud Coda uses the same market size assumptions for our analysis.
The development of the adult-use cannabis industry in New York State could create significant economic opportunities for New Yorkers and the State. Taxes on cannabis cultivation programs are expected to reach $350 million per year. In addition, this new industry has the potential to create 30,000 to 60,000 new jobs statewide.
“This is a historic day in New York – one that rights the wrongs of the past by putting an end to harsh prison sentences, embraces an industry that will grow the Empire State’s economy, and prioritizes marginalized communities so those that have suffered the most will be the first to reap the benefits.” said Governor Cuomo . “This was one of my top priorities in this year’s State of the State agenda and I’m proud these comprehensive reforms address and balance the social equity, safety and economic impacts of legal adult-use cannabis. I thank both the Leader and the Speaker, and the tireless advocacy of so many for helping make today’s historic day possible.”Governor Andrew M. Cuomo
Senate Majority Leader Andre Stewart-Cousins said steps were taken to end the ban on adult-use marijuana. “This is an important first step in tackling the racial inequality caused by the drug war that has plagued our country for too long.” she stated. “This work took several years, and we finally achieved what many people thought was impossible-the bill legalized marijuana, uphold social justice, improve education, and protect public safe.”
On this matter, Assembly Speaker Carl Heastie stated: “Passage of this bill will mean not just legalizing marijuana, but also investing in education and our communities, and it brings to an end decades of disproportionately targeting people of color under state and federal drug laws,”
“I’m extremely humbled, proud and honored to have passed the historic Marijuana Regulation and Taxation Act with my partners in government Senator Liz Krueger and Governor Cuomo. This social justice initiative will provide equity to positively transform disenfranchised communities of color for the better,” said Assembly Majority Leader Crystal Peoples-Stokes. “I believe this bill can serve as a blue print for future states seeking inclusive cannabis legalization. I would be remiss not to thank all of my family, colleagues, advocates and supporters over 8 long years.”
The governor has included the legalization of adult marijuana in three recent budget proposals.
The New York State Marijuana/Cannabis Tax and Administration Act contains the following provisions:
Establish the Office of Cannabis Management
The task of the new cannabis regulatory agency will be to implement a comprehensive legal framework for adult medical cannabis-like marijuana. It is led by a five-member council, three of whom are appointed by the governor and one for each court. It is an independent bureau under the New York State Liquor Administration.
The legislation will allow people with a wider range of diseases to use medical marijuana, increase the number of caregivers, and allow the cultivation of medical marijuana for patients at home.
The legislation will create a two-level licensing structure that allows a wide range of manufacturers and distinguishes manufacturers and processors from those that also own retail stores. This regulation creates a license for manufacturers and distributors, which includes ensuring strict quality control, public health, and consumer protection. The Social and Economic Justice Program will help those most affected by marijuana use, including setting a 50% license participation target for businesses belonging to minorities, women or veterans or people with disabilities to promote the development of the industry.
The bill introduces a new cannabis tax structure, replacing weight-based taxes with distribution taxes. The tax rate per milligram of THC varies according to the type of final product. It will enter the retail industry at a special government tax rate of 9%. There is no selling price. The county receives 25% of the local retail tax revenue, and the community receives 75% of the revenue.
The legislation allows the sale of cannabis and permits smokable forms of hemp only when retail stores are open and operational for adult use.
Adult-Use Cannabis Tax Revenue
All taxes collected from the sale of cannabis will be directed to the New York State Cannabis Revenue Fund. Their priority will be to manage the program, assure compliance, and implement the law. The remaining surplus tax revenue will be divided and distributed into three main funds:
- 40 Percent to Education
- 40 Percent to Community Grants Reinvestment Fund
- 20 Percent to Drug Treatment and Public Education Fund
Cities, towns, and villages can also opt-out of permitting adult-use cannabis retail dispensaries by simply passing a local law by December 31, 2021, or 9 months from the initial date of the legislation. They cannot opt out of adult-use legalization.
The New York State Department of Health will work with universities to conduct a controlled research study to evaluate methods and technologies used to detect driving while under the influence of cannabis. Upon completion of the research study, DOH can create and implement rules and regulations to approve and certify a test for the presence of cannabis in drivers. The legislation provides additional funding for drug detection experts and law enforcement agencies to secure roads. Drivers’ use of cannabis will continue to be banned and face the same penalties as currently.
Personal Possession and Growing At Home
The following terms apply to both growing cannabis at home and personal possession of cannabis outside the home:
- Personal possession outside the home: up to 3 ounces of cannabis and 24 grams of cannabis concentrate
- Possession at home: modifies the limits of the allowable amount in your home, which must be stored in a safe place and out of the reach of children
- Self-grown: permitted by the bill and subject to the possession restrictions, within 18 months after the first recreational sales begin for adults and subject to the provisions of the Medical Program issued no earlier than 6 months:
- 3 mature plants and 3 immature plants for adults over the age of 21
- 6 mature plants and a maximum of 6 immature plants per household
Criminal Justice and Record Expungement
The framework for cannabis sanctions is being restructured to avoid the penalty provided for in the ban. Reduced ownership and sale penalties are introduced.
- The bill creates an automatic expungement or a waiver for those with a previous marijuana conviction that would now be legal and provides necessary funding
- The bill adds cannabis to the Clean Indoor Air Act, which establishes a basis for smoking or vaping cannabis and where at.
- Municipalities and local governments can enact laws that are more restrictive than the CIAA. The new bill contains various provisions to ensure that cannabis is treated as a legal substance and to prevent the known practice of discriminatory policy enforcement
Public Health and Education Campaign
OCM will set up robust public health and education campaigns as well as work with neighboring states to coordinate timely measures and strategies that protect regional health and safety.
This legislation builds on years of work to evaluate and decriminalize adult-use cannabis. In 2018 The Ministry of Health, led by Governor Andrew Cuomo, conducted a multi-agency study that found the beneficial effects of legalizing cannabis for use by adults far outweigh the negatives. It was also found that the decades-long cannabis ban failed to meet public health and safety goals.
In 2019, Governor Cuomo signed a law decriminalizing penalties for illegally possessing marijuana and instituted a process to clear records of certain marijuana convictions. The governor chaired a summit meeting in collaboration with several other states to discuss ways to legalize the use of cannabis for adults to ensure public health and safety and coordinate programs at the regional level to reduce the cross-border traffic of cannabis products.