Legislation (S.854-A/A.1248-A) Establishes the Office of Cannabis Management; Expands New York’s Existing Medical Marijuana Program; Establishes a Licensing System; and Creates a Social and Economic Equity Program Encouraging Individuals Disproportionately Impacted by Cannabis Enforcement to Participate in Industry
Tax Collection Projected to Reach $350 Million Annually and Potentially Create 30,000 to 60,000 Jobs
NEW YORK: Governor Andrew M. Cuomo today signed legislation (S.854-A/A.1248-A) legalizing adult-use cannabis, fulfilling a key component of his 2021 State of the State agenda. The bill signing comes after the Governor, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie announced this past Sunday, March 28, that an agreement had been reached on the legislation. The bill establishes the Office of Cannabis Management to implement a comprehensive regulatory framework that covers medical, adult-use and cannabinoid hemp. The bill also expands New York State’s existing medical marijuana and cannabinoid hemp programs. The legislation provides licensing for marijuana producers, distributors, retailers, and other actors in the cannabis market, and creates a social and economic equity program to assist individuals disproportionately impacted by cannabis enforcement that want to participate in the industry.
The development of an adult-use cannabis industry in New York State under this legislation has the potential to create significant economic opportunities for New Yorkers and the State. Tax collections from the adult-use cannabis program are projected to reach $350 million annually. Additionally, there is the potential for this new industry to create 30,000 to 60,000 new jobs across the State.
“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.” Governor Cuomo said. “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.”
“Today, New York stepped up and took transformative action to end the prohibition of adult-use marijuana,” said Senate Majority Leader Andrea Stewart-Cousins. “This legislation is a momentous first step in addressing the racial disparities caused by the war on drugs that has plagued our state for too long. This effort was years in the making and we have finally achieved what many thought was impossible, a bill that legalizes marijuana while standing up for social equity, enhancing education and protecting public safety. I applaud Senator Liz Krueger and Assembly Majority Leader Crystal Peoples-Stokes for their commitment and leadership on this issue.”
“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,” said Assembly Speaker Carl Heastie. “I thank Majority Leader Crystal Peoples-Stokes for her years of advocacy and efforts to make this bill a reality. My colleagues and I knew it was important to do this the right way – in a way that would include those targeted and frequently excluded from the process. Now, this legal industry will create jobs across our state, including for those who have had their lives upended by years of unjust 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 legalizing adult-use cannabis in his last three budget proposals.
The New York State Cannabis/Marijuana Regulation & Taxation Act contains the following provisions:
Establish the Office of Cannabis Management
The Office of Cannabis Management will be charged with enforcing a comprehensive regulatory framework governing medical, adult-use cannabinoid hemp. It will be governed by a five-member board, with three members appointed by the Governor and one appointment by each house. OCM will be an independent office operating as part of the New York State Liquor Authority.
The legislation will 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.
The legislation will create a two-tier licensing structure that will 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. A social and economic equity program will facilitate 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.
The Bill implements a new cannabis tax structure that will 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 will be moved to the retail level with a 9 percent state excise tax. The local excise tax rate will be 4 percent of the retail price. Counties will receive 25% of the local retail tax revenue and 75 percent will go to the municipality.
The legislation permits the sale of hemp flower in the cannabinoid hemp program, and allows for smokeable forms only when adult use retail stores are operational.
Adult-Use Cannabis Tax Revenue
All cannabis taxes will 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 will be split three ways:
- 40 Percent to Education
- 40 Percent to Community Grants Reinvestment Fund
- 20 Percent to Drug Treatment and Public Education Fund
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 cannot opt-out of adult-use legalization.
The New York State Department of Health will work with institutions of higher education to conduct a controlled research study designed to evaluate methodologies and technologies for the detection of cannabis-impaired driving. After completion of the research study, 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.
The use of cannabis by drivers will remain prohibited and will carry the same penalties as it does currently.
Personal Possession and Home Cultivation
The following conditions apply to growing cannabis at home and personal possession of cannabis outside the home:
- Personal possession outside of the home: up to 3 ounces cannabis and 24 grams of cannabis concentrate
- Home possession: amends limits of what is permitted in the home, which must be kept in a secure location away from children
- Home grow: permitted under the bill subject to possession limits in 18 months after first adult-use sales begin for adult recreational use and subject to regulations of the Medical Program being promulgated no sooner than 6 months:
- 3 mature plants and 3 immature plants for adults over 21
- 6 mature plants and 6 immature plants maximum per household
- 3 mature plants and 3 immature plants for adults over 21
Criminal Justice and Record Expungement
The cannabis penalty framework will be restructured to avoid the criminalization seen in prohibition. Reduced penalties will be implemented for possession and sale.
- Creates automatic expungement or resentencing for anyone with a previous marijuana conviction that would now be legal under the law and provides necessary funding
- Adds cannabis to the clean indoor air act which establishes a baseline on where cannabis can be smoked or vaped
- Municipalities and local governments are permitted to make laws that are more restrictive than the CIAA. Contains various provisions to ensure that cannabis is treated as a lawful substance and to prevent discriminatory enforcement
Protections for the Use of Cannabis and Workplace Safety
Unlawful discrimination will be prohibited and workplace safety protections will be implemented.
Public Health and Education Campaign
OCM will establish a robust public health and education campaign and work with neighboring states and associations to coordinate actions and policies to protect regional health and safety.
This legislation builds on years of work to understand and decriminalize cannabis for adult use. In 2018, the Department of Health, under Governor Cuomo’s direction, conducted a multi-agency study, which concluded that the positive impacts of legalizing adult-use cannabis far outweighed the negatives. It also found that decades of cannabis prohibition have failed to achieve public health and safety goals and have led to unjust arrests and convictions particularly in communities of color.
In 2019, Governor Cuomo signed legislation to decriminalize the penalties for unlawful possession of marijuana. The legislation also put forth a process to expunge records for certain marijuana convictions. Later that year, the Governor spearheaded a multi-state summit to discuss paths towards legalization of adult-use cannabis that would ensure public health and safety and coordinate programs regionally to minimize the cross-border movement of cannabis products.