Apr 2, 2021

New York Legalizes Adult-Use Cannabis

Governor Andrew M. Cuomo signed legislation on March 31 legalizing adult-use cannabis. The bill components regarding medical cannabis, smokable hemp, municipal opt-out, and criminal justice and record expungement.

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 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.

Medical Cannabis

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.

Adult-Use Cannabis

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% state excise tax. The local excise tax rate will be 4% of the retail price. Counties will receive 25% of the local retail tax revenue and 75% will go to the municipality.

Cannabinoid Hemp

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% to Education
• 40% to Community Grants Reinvestment Fund
• 20% to Drug Treatment and Public Education Fund

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 Dec. 31, 2021 or nine months after the effective date of the legislation. They cannot opt-out of adult-use legalization.

Traffic Safety

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

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.

Cannabis is now legal in some form in 47 states. Recreational cannabis is legal in 16 states as well as the District of Columbia and the territories of CNMI and Guam. Medical cannabis laws exist in 36 states, as well as several territories.

Industry Group Reactions

New York Cannabis Growers and Processors Association: “This is a historic moment for the state of New York, and one that will bring with it good jobs, investment, and cutting-edge entrepreneurial opportunity through the creation of an entirely new sustainable and equitable industry,” said President Allan Gandelman.

National Cannabis Industry Association: “We commend Empire State lawmakers for aligning state law with the will of the vast majority of voters who support legal and regulated cannabis markets as an alternative to failed prohibition,” said Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association (NCIA). “We are rapidly approaching a point where a majority of Americans will be living in states that have passed laws to regulate cannabis for adults, and we’re counting on Congress and the White House to finally harmonize federal law with these successful state programs.”

NORML: “This signals an end to the racially discriminatory policies that have long made the Empire State the marijuana arrest capital of the United States, if not the world,” said Executive Director Erik Altieri. “This stops police from annually arresting tens-of-thousands of New Yorkers for low-level marijuana offenses, the majority of whom are overwhelmingly young, poor, and people of color.”

National Association of Cannabis Businesses: “While this legislation is a milestone for the people of New York and for cannabis legalization as a whole, we suspect there is still a lot of work to be done fleshing out the details by state regulators and other policymakers,” said Gina Kranwinkel, CEO of NACB. “Our team stands ready to assist in any way that would be beneficial. The association has worked with our members to develop standards for responsible cannabis business and best practice guidelines for regulators in a dozen critical subject areas.”