In 2019 New York may join its neighboring states in ending cannabis prohibition. Today, in his State of the State address, New York Governor Andrew M. Cuomo proposed a plan to legalize recreational marijuana. In a change of opinion from 2017, Governor Cuomo now believes the benefits of legalization outweigh the costs.
Governor Cuomo’s proposal would create the new state Office of Cannabis Management (OCM). The OCM would administer all licensing, production and distribution of cannabis products in the adult-use, industrial and medical cannabis markets. OCM would also centralize all enforcement and economic development functions including creation of a program to review and seal past marijuana convictions.
In the State of the State address, Governor Cuomo focused on three key areas of benefits for his proposal: economic, social and criminal justice reform, and regulatory control.
1. Economic opportunities:
- Up to $300 Million in tax revenue. Taxes would be imposed at three different stages:
- First, on the cultivation of cannabis at a rate of $1 per dry-weight gram of cannabis flower and $0.25 per dry-weight gram of cannabis trim;
- Second, on the sale by a wholesaler to a retail dispensary at a rate of 20 percent of the invoice price; and
- Third, on the same sale at a rate of 2 percent of the invoice price, but collected for the county in which the retail dispensary is located.
- A three tiered adult use market that would function similar to the market for alcohol. The OCM would establish separate licensing programs for marijuana growers, distributors and retailers, with a ban on growers also opening retail shops.
- Create union jobs.
2. Social and criminal justice reforms:
- Automatically seal certain cannabis related offenses on a person’s criminal record – which is part of the Governor’s plan to “stop the disproportionate impact on communities of color" created by such offenses.
- As part of Governor Cuomo plan to "create an industry that empowers the poor communities that paid the price and not the rich corporations that come in to make a profit" he suggested directing cannabis related tax revenues to go toward administering a regulated cannabis program; data gathering, monitoring and reporting; a traffic safety committee; small business development and loans; substance abuse, harm-reduction and mental health treatment and prevention; public health education and intervention; research on cannabis uses and applications; and program evaluation and improvements.
3. Regulatory control:
- Restrict access to anyone under 21 years old;
- Protect health and safety by subjecting the products to stringent quality and testing regulations; and
- Counties and large cities would have the option to “opt out” of the industry thereby prohibiting marijuana shops from opening locally.
Cannabis legalization in New York will raise complex legal issues in various markets and industries, taking into consideration that cannabis remains illegal substance under federal law. Bressler, Amery & Ross P.C. will keep a close eye on upcoming legislative changes and amendments as it continues to provide legal guidance in this rapidly developing industry.