New York Gov. Andrew Cuomo has officially included marijuana legalization in the state’s budget proposal, prioritizing the effort that dissolved last year after lawmakers failed to come to a consensus regarding revenue allocation.
While Gov. Cuomo was unable to bring legalization to New York in 2019, he did sign legislation to provide expungements for those with prior marijuana convictions and expanded the state’s existing marijuana decriminalization program.
Additionally, in October 2019, Gov. Cuomo and other governors from a group of Northeast states gathered at a summit to discuss marijuana legalization reform in the region. During Gov. Cuomo’s State of the State speech, he stressed that he intended to coordinate New York’s plan with what was discussed during the summit.
The proposal ultimately calls for the legalization of marijuana through the enactment of the Cannabis Regulation and Tax Act.
“Legalize adult use cannabis,” said Gov. Cuomo during his address. “I believe it is best done in the budget. I said that last year. I believe the budget is the opportunity, frankly, to make some tough decisions and work through tough issues that without the budget can often languish, and I suggest that we get it done in the budget.”
The push comes as the state faces a $6 billion budget deficit and as a new poll reveals that voter support for cannabis legalization is presently at its highest point. According to Gov. Cuomo, a legalized marijuana program could eventually bring in as much as $300 million in tax revenue annually, while billions of dollars more would stimulate economic activity once fully employed.
Gov. Cuomo’s proposal states that the revenue brought in by the legalized marijuana program would be allocated to substance abuse treatment, public health education and research on cannabis uses, and they would remain flexible as the industry grows and changes.
The proposal outlines three tax levels including: a 20 percent tax imposed on cannabis sold by any entity to a retailer, a tax on cultivators at $1 per dry weight gram for flower, a tax of $0.25 per dry weigh gram on trim and a tax of $0.14 per gram on wet cannabis. A separate two percent tax would benefit local jurisdictions with a population of at least one million people.
The proposal also calls for creating a three-tier market structure consisting of producers, distributors, and retail dispensaries. The basic structure of the three-tier system would be that producers are only able to sell their products to distributors, who in would in turn sell only to retail dispensaries, and retail dispensaries would then sell the final product to customers. Vertical integration would be prohibited, meaning a company may not act as both a producer and a dispensary or distributer, and vice versa.
A workforce increase at the Division of Alcohol Beverage Control would take place under the proposal to support the new Office of Cannabis Management, or OCM. According to the plan, OCM would be tasked with supervising the comprehensive cannabis regulatory framework that would consolidate all licensing, enforcement and economic development functions into one unit. OCM will then administer all licensing, production and distribution of cannabis products in the adult-use, industrial and medical cannabis markets.
The proposal would also encourage social equity applicant participation and Gov. Cuomo emphasized in his speech that the economic benefits of marijuana legalization could not be justified if it failed to include proper social equity opportunities and restorative justice provisions for those in predominately affected areas.
“For decades, communities of color were disproportionately affected by the unequal enforcement of marijuana laws,” said Gov. Cuomo. “Let’s legalize adult use of marijuana.”
Interested in preparing for marijuana business opportunities in New York? If recreational marijuana is legalized in 2020, the state will need to hold an application process to license recreational marijuana businesses.
To begin preparing, download our Marijuana Business Application Guide and Checklist to learn all that will be involved in the application process. The roughly 50-page guide is designed to provide a detailed summary and checklist of all the action items you will need to complete prior to the submission of application — including financial planning, inventory control, real estate selection, team building activities, local lobbying and community efforts.