After years of debate, New York is poised to join a growing number of states, including neighboring New Jersey, in legalizing adult-use cannabis.  Over the weekend, Governor Andrew Cuomo and legislative leaders announced an agreement on legislation to legalize adult-use cannabis.

Lawmakers are expected to vote on the bill, the Marijuana Regulation & Taxation Act, as early as today, March 30, 2021.  The bill establishes the Office of Cannabis Management (OCM) which will implement the regulatory framework that will cover medical cannabis, adult-use cannabis, and cannabinoid hemp products. The Governor estimates that legalization could bring the state approximately $350 million annually and could create 30,000 to 60,000 jobs statewide. 

While the legislation would take effect immediately, sales wouldn’t start in New York until the OCM has time to implement the necessary rules for adult-use cannabis.  It is estimated it may take up to two years for retail sales to start.

Here is a look at key elements of the legislation:

Possession and Cultivation Provisions:

• Adults who are 21 or older will be able to purchase products from licensed retailers.

• Adults will be able to possess up to three ounces of cannabis and 24 grams of cannabis concentrate outside of the home.  

• Adults will be permitted to cultivate up to 6 (3 mature and 3 immature) plants for personal use.  A maximum of 12 (6 mature and 6 immature) plants will be set per household. 

• Home growing will not be permitted until regulators set rules for medical and adult recreational use.

• Consumption sites where cannabis, but not alcohol, can be consumed will be permitted.  

Regulatory, Licensing, & Social Equity Provisions:  

• The new Office of Cannabis Management will be created and charged with enforcing the regulatory framework governing the adult-use cannabis market and the existing medical cannabis and cannabinoid hemp programs.  

• The OCM will be an independent agency operating as part of the New York State Liquor Authority.

• The OCM will be governed by a five-member Cannabis Control Board, with three members appointed by the Governor and one appointment made by each house of the legislature.

• A two-tier licensing system will be created for growers, processors, distributors, and retailers with an effort to separate growers and processors from also owning retail stores.

• A social and economic equity program will be established with a goal of having 50 percent of licenses issued to social equity applicants.  

• Automatic expungement or resentencing will occur for anyone with a prior marijuana conviction that would now be legal under the new law.  

Taxation Under the Marijuana Regulation & Taxation Act:

• A state sales tax of 9 percent will be implemented.  Local sales taxes will be 4 percent of the retail price.

• Counties will receive 25 percent of the local tax and 75 percent will go to the municipality.

• An additional tax based on the level of THC at the distributor level with different rates depending on the final product type has also been proposed.  

• After covering the cost of administering the program, 40 percent of tax revenue will support education, 40 percent will go to community reinvestment grants to communities harmed by the criminalization of drugs, and 20 percent to drug treatment and public education programs.

The bill will also offer an expansion of the medical cannabis market, implement workplace safety precautions, and establish prohibitions again discrimination.  After the legislation is passed and the OCM starts their work, the legal questions and regulatory framework will only continue to grow in size and complexity.