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Updates on Cannabis Legalization in New York

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Updates on Cannabis Legalization in New York

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Effective March 31, 2021, Governor Andrew Cuomo legalized adult-use of cannabis, and provided for the licensure of producers, distributors and retailers of marijuana throughout the Empire State. Under this New York legalization, the legislature has established the New York State Cannabis Control Board under the Marijuana Regulation and Taxation Act, and authorized this Board to regulate the licensure and establishment of New York cannabis retail dispensary licenses and on-site consumption licenses. The newly signed law instructs expungement of previous marijuana-related criminal records in the state, and includes a provision preventing employers from disciplining or discriminating against workers for using the drug during personal time “off of the employer’s premises and without use of the employer’s equipment or property.” This New York marijuana legislation could set the stage for changes across the country.

Possession in New York

Generally speaking, adults aged 21 and over are allowed to possess up to 3 ounces (85 g) of cannabis, or 0.85 ounces (24 g) of concentrated cannabis. Public smoking of cannabis is allowed wherever cigarette smoking is permissible. Home cultivation of up to three mature and three immature cannabis plants per individual will be permitted, with a maximum of twelve plants per household, once regulations for home grow are in place. Medical use of cannabis remains permitted under certain circumstances.

The New York marijuana legalization law has been lauded for its vigorous provisions for minorities, women, war veterans and struggling farmers. “This is really the strongest bill we’ve seen among all the states taking social equity into consideration,” Brandon Kurtzman, of Vicente Sederberg’s Boston law office, said during a recent VS webinar. The state’s adult-use market is projected to reach $2.5 billion in annual sales within five years of operation. In the meantime, experts caution new market entrants must wait to see how New York’s provisions are implemented through regulations and rules, and how the licensing process plays out.

Here are key elements of New York’s Marijuana Regulation and Taxation Act:

  • A stated goal to award 50% of all adult-use licenses to social and economic equity applicants.
  • 40% of the tax revenues generated by adult-use sales to be funneled into communities disadvantaged by the war on drugs.
  • Existing medical marijuana operators to be required to pay a one-time “special licensing fee” to convert three of their MMJ dispensaries to dual medical-recreational stores. That fee, though not specified in the law, would help fund social equity programs.
  • Financial support to be provided to social equity applicants including low- or no-interest loans, fee reductions or waivers and assistance in preparing applications and operating a business.
  • Microbusinesses to be allowed to form vertical operations, helping them achieve economies of scale. Other businesses, except for existing MMJ operators, would be prohibited from vertical integration.
  • Social equity licensees to be prohibited from selling or transferring their licenses within the first three years after issue.

In the new law, social equity applicants are defined as individuals from “communities disproportionately impacted by the enforcement of cannabis prohibition,” as well as minority- and women-owned businesses, disabled veterans and financially distressed farmers. Detailed guidelines are pending.

New York Marijuana Legislation Across the Board

Native American communities in New York are working on their part of the recreational cannabis industry. The Shinnecock Indian Nation intends to construct a grow facility with aims of beginning sales later in 2021. The Saint Regis Mohawk tribe has offered an ordinance to regulate legal adult-use cannabis, and the Oneida Indian Nation is reportedly studying the issue of legalized cannabis use. Not specially addressed in the law, tribal communities apparently have the right under federal law to legally cultivate and sell cannabis on their land.

With broad legalization completed, new legislation has been introduced which would create a New York cannabis recycling program to minimize the amount of plastic pollution generated by the industry. The bill would “require any lawfully permitted recreational marijuana retailer to charge a one-dollar deposit on single-use plastic containers for recreational marijuana products,” the text states. “The retailer would assume responsibility for collecting used packaging and recycling it, as well as reimbursing deposits.” Additionally, the legislation would require marijuana packaging be made from at least 50% recycled materials.

Nidhi Lucky Handa, founder of California-based cannabis grower Leune, expects New York to quickly become the second largest adult use market behind California. “With all eyes on New York, it’s an exciting time to be a cannabis consumer, operator or general enthusiast in the empire state,” said Handa. She predicts the pool of New York-area talent will translate to, “disruptive and creative marketing,” resulting in demand for big California brands as well as launching a flurry of NY-born brands. When sales will begin is to be determined.

Keep up with New York marijuana legalization and other states wading through the legalization process via CannaCon, the nation’s leading business-to-business cannabis conference. Our expert-led trade shows grow the cannabis industry by educating cannabis business owners on all things related to cannabis and CBD.

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