ALBANY, N.Y. – In 2019 Gov. Andrew Cuomo started a new tradition of including recreational marijuana legalization in his annual budget proposal – which, speaking of traditions, is usually less a budget than a fat, porky stack of pet projects – and it’s faltered, flopped and failed each time. But this year there’s a chance that, just maybe, he’ll break his own losing streak and actually get it passed.
If Montana and South Dakota can do it – along with most neighboring states and its only neighboring country – surely New York can?
Last Tuesday, in his annual State of the State address, Cuomo promised what he has for the last two years: to champion the Cannabis Regulation and Taxation Act (basically his version of creating a regulatory structure, taxation scheme and social equity apparatus for marijuana industries) through Albany’s backrooms and onto his desk so he can sign it into law.
In the new budget address he delivered yesterday, Cuomo got to once again blow some smoke towards the state’s marijuana entrepreneurs — albeit aspirational entrepreneurs, for now.
“We also propose legalizing adult-use cannabis, which would raise about $350 million. $100 million would go to a social equity fund, that would still give us $250 million towards the budget and our needs,” Cuomo said, comprising the entirety of his comments on marijuana during his 50-minute address.
That figure, as Cuomo’s own budget director, Robert Mujica, later explained, is the estimate of potential revenue from New York’s marijuana industry — but only after it’s been established for several years.
“The mature program is in like four years by the time you get it going. We’ll try to expedite that, but that’s based on the experience of other states that have legalized adult-use recreational cannabis,” Mujica told reporters.
Based on the briefing book, this year’s iteration of the legislation appears to make a few changes to the taxation structure for recreational marijuana. Just like last year, Cuomo wants to tax cannabis three times — growers, sellers and the goods themselves. But just as it’s a new year, so too have those individual taxes morphed in 2021.
Under Cuomo’s new proposal, a tax would be imposed on cultivators based on THC content in particular products while the old proposal used categories like ‘flower,’ ‘trim,’ and ‘extract’ for tax purposes. For example, flower or pre-roll products would be taxed at 0.7 cents per milligram of THC and edible products at a rate of 4 cents per milligram. The second newly-revised tax would fall on dispensaries, subjecting them to a 10.25% surcharge on each total sale of adult-use cannabis products. Previously, the second tax had fallen on wholesalers and was levied at 20% invoice cost.
The third tax establishes that any sales of cannabis products are subject to sales taxes and would be distributed back to county and local governments, just like any other purchase. The old proposal was an authentically Cuomonian scheme to issue another 2% tax on the wholesalers and then feed that money back to the county the sale originated from — from a state account though, of course.
While the taxation structure was a point of concern on both previous annual cannabis-related proposals, one of the stickier points of contention has been on how funds are allocated for social and racial justice initiatives — the ones meant to undo decades of inequitable treatment of Black and Brown folks under the old war on ‘drugs’ regime.
Cuomo is still proposing the first $50 million collected in license fees and revenue, according to the abbreviated “briefing book,” be earmarked for justice initiatives when the industry is in full swing. Where exactly that cash goes would be determined by the Office of Cannabis Management, thus giving the governor more control over it because it would be housed inside the executive branch. Legislators, and many social justice oriented groups prefer those funds be more specifically allocated outside of the purview of any governor, including Cuomo, who hit a decade in power when the clock struck midnight on New Years.
Other points of the proposal — like DWI standards, regulatory authority, requirements for license-holders, etc. — will no-doubt lead to additional squabbles as well, but so the tradition goes.