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New York Governor Calls for Cannabis Legalization in State Budget

by Sarah Cawthon February 04, 2021

New York Governor Andrew Cuomo recently released the full text of his cannabis legalization proposal as part of his budget request for 2021. If New York legalizes cannabis, the state could become one of the biggest markets in the U.S. over the next few years. The Cannabis Regulation and Taxation Act would legalize and establish a regulated system for the production and sale of cannabis to adult consumers 21 years and older.

According to advocates, there will be significant efforts to make amendments focused on social equity, but the proposal will serve as a starting point for negotiations with legislators as it goes through a series of votes, amendments and approvals.

Gov. Cuomo has also recognized the economic impact legalization would have on the state of New York and could help alleviate the economic difficulties left by the coronavirus pandemic. Additionally, because New Jersey recently legalized cannabis, the state is feeling the pressure to legalize its own market. 

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With legalization, the state could bring in $350 million annually in cannabis tax revenue. Eventually, $50 million a year could be allocated to social equity grants to encourage participation in the industry among disadvantaged people. The bill would create a wholesale THC-based tax at various rates according to the THC content, or potency level, per product categories.

The proposal also outlines the following adult-use licenses: cultivator licenses, processor licenses, cooperative licenses, distributor licenses and retail dispensary licenses. Delivery and on-site consumption licenses were left out for now, but the bill does allow regulators to create additional license types after it is passed into law.

The bill would also create a new Office of Cannabis Management (OMC) within the Division of Alcoholic Beverage Control. The OCM would ultimately determine details such as the types of products allowed in each program, advertising and marketing rules, product labeling rules, the number of licenses, the process for licensure and the implementation of a social equity program. 

For new applicants to the adult-use cannabis program, the OCM would administer a competitive process to cannabis business licenses. Applicants would be able to seek licenses for both cultivation and processing, or for distribution, or for retail, but are not permitted to be vertically integrated. Additionally, entities with retail licenses may not have direct or indirect ownership in more than three retail locations.

Cuomo had included cannabis legalization in his state budget proposals for both 2019 and 2020 but the bill was ultimately removed from the final proposals after lawmakers failed to come to an agreement on some of the bill’s provisions. The final approval of the 2021 state budget, which includes cannabis legalization for now, will most likely take place in March or April.  

Download our New York Application Guide & Checklist to learn more details on the proposal and how to begin preparing for business opportunities.