New York legalizes with a social equity-focused new law
After long last, cannabis is legal in New York.
Governor Andrew Cuomo on March 31 signed legislation immediately legalizing the recreational use of cannabis and creating the state’s new regulated market, estimated to bring in more than $2.3 billion in annual sales by 2026, according to BDSA.
“This is a historic day in New York — one that rights the wrongs of the past,” Cuomo said in a press release.
Long considered the prize market on the East Coast, the Empire State’s move to legalization comes less than six months after voters in neighboring New Jersey did the same in their state. New York becomes the 16th state in the nation to legalize recreational cannabis, but only the third to do so through the Legislature.
The state’s legislation prioritizes social equity, automatically expunging convictions for anything now considered legal and requiring 40% of the estimated $350 million in annual tax revenue to go to communities most impacted by the War on Drugs. It also allows for people with past convictions to participate and includes a goal of 50% of licenses going to minority- or women-owned businesses.
“This social justice initiative will provide equity to positively transform disenfranchised communities of color for the better,” Assembly Majority Leader Crystal Peoples-Stokes said in a press release. “I believe this bill can serve as a blueprint for future states seeking inclusive cannabis legalization.”
Lauren Rudick, a partner at Hiller PC in New York and Marijuana Venture contributor agreed.
“It’s long overdue but better late than never,” she said. “And I’m proud that it incorporates some of the most progressive provisions in terms of social equity, of any adult-use measure in the country.”
And instead of simply mimicking one of the markets that came before it, the new law seems to cherry-pick pieces of other legal markets to create something unique. New York’s law prohibits vertical integration, for example, and limits the number of licenses any one entity may own.
Also, the state’s 10 currently licensed medical marijuana companies will also be given a head start in the new recreational market and will be allowed to remain vertically integrated.
Social consumption lounges will be allowed, as will home-growing, and the state’s tax structure includes a unique milligrams-of-THC-based structure with different rates depending on final product type.
National Cannabis Industry Association spokesman Morgan Fox said while his group applauds New York’s efforts, it is generally opposed to license caps, which he said create competition in the licensing process instead of the market.
Though overshadowed by the much larger and more prominent markets on the East Coast, New Mexico Governor Michelle Lujan Grisham on April 12 officially signed the law making hers the 17th state to create an adult-use marketplace and the fifth through its Legislature, which passed the measure the same night as New York’s.
A longtime advocate of legalization, Grisham has often discussed recreational cannabis as a potential driver of the state’s economy, particularly after the pandemic. Grisham’s office predicts the industry could have revenues around $318 million in the first year alone, creating 11,000 jobs and adding $20 million to state coffers through taxes.
“As we look to rebound from the economic downturn caused by the pandemic, entrepreneurs will benefit from this great opportunity to create lucrative new enterprises, the state and local governments will benefit from the added revenue and, importantly, workers will benefit from the chance to land new types of jobs and build careers,” Grisham said in a press release.
The law also authorizes the expungement old low-level cannabis convictions and makes possible the release of low-level convicted cannabis offenders who are currently incarcerated.
“I couldn’t be prouder or more optimistic,” said Ben Lewinger, executive director of the New Mexico Cannabis Chamber of commerce.
Lewinger said the Legislature considered five legalization bills last session and this one includes the “best parts of each bill.”
Lewinger highlighted the micro-licensing provisions, which create a microproducer license to cultivate up to 200 plants at a license fee of just $1,000, and the integrated microbusiness license, allowing for some manufacturing and a retail outlet as well.
The law imposes an excise tax of 12% on retail sales of marijuana products, on top of local and state sales taxes with the excise tax increasing over time to 18%. Municipalities may not opt out.
Cultivation licenses will begin to be issued September 1 and recreational sales will begin by April 1, 2022. New Mexico has had a medical program since 2007 with sales nearing $200 million per year.
— Brian Beckley
Though overshadowed by the much larger and more prominent markets on the East Coast, New Mexico Governor Michelle Lujan Grisham on April 12 officially signed the law making hers the 17th state to create an adult-use marketplace and the fifth through its Legislature, which passed the measure the same night as New York’s.
A longtime advocate of legalization, Grisham has often discussed recreational cannabis as a potential driver of the state’s economy, particularly after the pandemic. Grisham’s office predicts the industry could have revenues around $318 million in the first year alone, creating 11,000 jobs and adding $20 million to state coffers through taxes.
“As we look to rebound from the economic downturn caused by the pandemic, entrepreneurs will benefit from this great opportunity to create lucrative new enterprises, the state and local governments will benefit from the added revenue and, importantly, workers will benefit from the chance to land new types of jobs and build careers,” Grisham said in a press release.
The law also authorizes the expungement old low-level cannabis convictions and makes possible the release of low-level convicted cannabis offenders who are currently incarcerated.
“I couldn’t be prouder or more optimistic,” said Ben Lewinger, executive director of the New Mexico Cannabis Chamber of commerce.
Lewinger said the Legislature considered five legalization bills last session and this one includes the “best parts of each bill.”
Lewinger highlighted the micro-licensing provisions, which create a microproducer license to cultivate up to 200 plants at a license fee of just $1,000, and the integrated microbusiness license, allowing for some manufacturing and a retail outlet as well.
The law imposes an excise tax of 12% on retail sales of marijuana products, on top of local and state sales taxes with the excise tax increasing over time to 18%. Municipalities may not opt out.
Cultivation licenses will begin to be issued September 1 and recreational sales will begin by April 1, 2022. New Mexico has had a medical program since 2007 with sales nearing $200 million per year.
— Brian Beckley
He also says the THC tax is “problematic” and could create an incentive for people to use unregulated products.
Jason Ackerman, former CEO of TerrAscend, a company licensed in neighboring New Jersey, said New York “seems like it will be a good program,” particularly with its embrace of delivery, which is a “way of life” in New York City. Ackerman, who has been lobbying for the New York law for three years, said he has been eyeing New York for a return to the industry, though he is unsure yet as to which license he will apply for.
“We compete mostly with the illicit market which is plentiful and cheap in New York,” Ackerman said. “It will be critical to ensure that there will be enough grow licenses awarded to avoid supply shortages and high prices that have affected many new markets.”
The move by New York has already spurred legislatures in neighboring states to begin discussing their own markets, but Fox said because New York is a center of culture, economics and tourism, the implications could be even bigger.
“This is going to have ripples globally,” Fox said. “We could start to see impacts in other countries, not just the U.S.”
— Brian Beckley