BINGHAMTON, NY – Gov. Andrew Cuomo’s needed a win, and he found it in marijuana. For the past two years he was the main impediment to cannabis legalization in the Empire State, and he was firm in demanding his approach or none at all. His calculus changed in the last two months, as he was falling from his perch as the state’s largely indomitable political Goliath amid an ever-growing foray of scandals and corruption investigations.
This week, the New York State legislature is set to vote on, and will likely approve, a deal to legalize adult-use recreational marijuana and overhaul related measures on cannabis.
Just after 10 pm Saturday night lawmakers dropped the bill. It’s now scheduled to move through a legislative gauntlet and could land on Cuomo’s desk as soon as Tuesday night.
While the Marihuana Regulation and Taxation Act has been thrown around the statehouse since 2013, the “gold standard” legislation never saw the light of day. The hold up for the proposal in recent years was Cuomo, who penned his own marijuana plan — one he tried sticking in the state’s budget for the last two years, to no avail.
The governor’s proposal was a non-starter for many progressive advocates and their powerful allies in the legislature who opposed many of its provisions, especially in regards to its tax structure and how it dealt with social equity.
With the Hudson boiling around him, Cuomo seems to have found a temporary resting place on a marijuana shaped lilypad.
Regardless of what leads to marijuana legalization in New York, when it comes, the move will be felt far and wide because it will establish a legal market for cannabis in one of the largest economies in the country.
This new proposal also seeks to rebuild primarily African-American and Latinx communities that haven’t seen the same growth as the rest of the state as a direct result of disproportionate policing tied to the ‘war on drugs.’
The News Station read the bill for you, so here’s everything to know about it (and no, we’re not lawyers):
Who can purchase and consume adult-use or “recreational” marijuana products?
Anyone over the age of 21 with proof of identity can purchase adult-use marijuana unless you’re visibly intoxicated or use is barred under probation, bail or parole terms.
Limits on possession:
Three ounces for normal marijuana and 24 grams of concentrate.
Sales to out-of state-residents:
Anyone with a valid driver’s license from any state, a federal issued identification such as a passport or military ID, or a federally issued ID from another country proving a person is over the age of 21 may purchase marijuana in New York under the proposed legislation.
New York’s Cannabis Bureaucracy:
The main players in the state’s government will be the Office of Cannabis Management, the Cannabis Control Board and the State Cannabis Advisory Board.
The Office of Cannabis Management will be independent under the state’s division of alcoholic beverage control. It will carry out a majority of the heavy lifting surrounding licensing and oversight of the cannabis industry in New York. It will also coordinate the reallocation of social equity funding from cannabis tax proceeds.
The OCM will be led by an executive director nominated by the governor and confirmed by the Senate. The office is also required to have a chief equity officer and deputy director for health and safety.
The majority of rule-making and policy decisions appears to sit with the Cannabis Control Board. This body will promulgate any outstanding regulations and will determine license fees. It also would hold subpoena power for investigations under its purview.
The CBC, with recommendation of the OCM, can also limit the amount of cannabis a licensee grows, processes, distributes or sells.
There will be five members of the Cannabis Control Board. The chairperson will be nominated by the governor and confirmed by the senate. The governor will also have two additional appointees. The senate majority leader and the assembly speaker will each get one appointee. These latter four appointees will not need approval from the legislature. All will serve three-year terms. The chairperson will receive a salary set by the legislature, and other appointees will receive per diems.
The legislation puts what looks to be fairly stringent restrictions on conflicts of interest in the members of the control board and its employees. No officers nor their spouses can have any stake in a firm regulated by the board or even own stock in a company invested in cannabis.
The third component is the State Cannabis Advisory Board, which is charged with administering the community grants reinvestment funds generated through cannabis tax revenue. The board will consist of seven members appointed by the governor, three appointed by the senate majority leader and three appointed by the assembly speaker in addition to some ex-officio members from various state agencies. A chair and vice chair would be elected by the members.
There’s a provision in the law that members of the Cannabis Control Board “should, to the extent possible, be geographically and demographically representative of the state and communities historically affected by the war on drugs.” The key word here is “should.”
A more detailed provision exists for the State Cannabis Advisory Board, which states that members “shall” have expertise in a number of fields, including substance use disorder treatment, job training and placement, criminal justice, drug policy, homelessness and housing, and environmental conservation among others. It specifically mentions that the board “shall” include representatives of the farming industry and formerly incarcerated people. Since the members of the board are appointed by three different individuals, it’s unclear how its makeup would realistically be enforced.
Taxes on Adult-Use Cannabis:
|What’s Taxed||How Much?|
|Cannabis products sold from a distributor to a retail dispensary||$0.005 per milligram of THC for flower, $0.008 per milligram of THC for concentrated cannabis, $0.03 per milligram of THC for edible products|
|Cannabis products sold by a retailer||9% of gross sales|
|Cannabis products sold by a retailer (to be redistributed to localities)||4% of gross sales|
Where will the tax revenue go?
The New York State Cannabis Revenue Fund is the newly created account where most proceeds from programs under the Office of Cannabis Management will pass through. While this fund will be used to cover many of the administrative and bureaucratic costs of administering most of the programs and responsibilities under the Office of Cannabis Management and Cannabis Control Board, its more glamorous role will be as the avenue for social equity and community reinvestment funds. Here’s where the text says that funding will go to first:
- Incubator programs for social and economic justice applicants
- Low and zero-interest loans to qualifying applicants
- Data tracking of cannabis industry management, including along race and demographic lines
- Data tracking for convictions under existing marijuana statutes
- Research on the impact and effectiveness of the cannabis law
- State police for drug recognition technologies and training
- Division of Criminal Justice Services for the process of expunging old marijuana convictions
The remaining funds, which will likely be a fairly sizable portion once the industry grows up to scale in a few years, will be allocated to three areas proportionately:
- 40% for the state lottery’s school grant funds
- 20% for substance abuse treatment and public education
- 40% for grants aimed at communities disproportionately impacted by previous drug policies
The seven percent tax on medical cannabis goes into the medical cannabis trust fund, which is allocated as follows:
- 22.5% to counties based on the amount of medical cannabis sales originating from medical cannabis manufactured in that county
- 22.5% to counties based on the amount of medical cannabis dispensed in that county
- 5% to the Office of Addiction Services and Supports for treatment programs
- 5% to the Division of Criminal Justice Services for grants to law enforcement agencies
- 45% to the New York State Cannabis Revenue Fund
Licenses for recreational cannabis growers, manufacturers and dispensaries:
Fees for normal licenses under the adult-use, or recreational, category would be determined by the Cannabis Control Board. They would be primarily based on the amount of cannabis to be cultivated, manufactured or dispensed.
The cannabis law gives the CBC direction on how to assess whether an applicant should receive a license based on the following criteria:
- Social or economic equity applicant
- Ability to control against illegal diversion of cannabis
- Ability to comply with all laws and regulations
- Capable officers of the organization
- Possession or rights to land, buildings and equipment or a sufficient plan to acquire them
- Sets out a plan for benefiting communities disproportionately affected by prohibition
- Labor peace agreements are made with unionized employees
- Is a public interest to grant that specific license
It also sets a public interest as meeting some of the following criteria:
- The number, classes and character of other nearby licenses
- Evidence all other necessary licenses permits have been or will be obtained (this probably refers to zoning variances and items of that nature)
- Effect on pedestrian or vehicular traffic
- Any noise that would be generated
- Climate production
- Availability of cannabis products
- The applicant’s history of violations and compliance with operating a cannabis business
- The applicants history of labor law violations
Separate licenses will be available for cultivators, processors, cooperatives, distributors, dispensaries, microbusinesses, delivery services, nurseries and on-site consumption.
Upon renewal of the license, likely after two years, licensees will have to submit documentation of the racial, ethnic and gender diversity of their employees and execution of any previous plans for addressing disproportionately impacted communities.
Police chiefs, police officers or any of their subordinates are barred from holding any interest in a cultivation, processing, distribution or sales operation of cannabis products.
Here are the various types of licenses available for adult-use recreational cannabis:
Cultivation includes, but isn’t limited to, planting, growing, cloning, harvesting, drying, curing, grading and trimming cannabis. It also slightly extends into reasonable processing without a processor license. Adult-use cultivators are barred from holding an adult-use retail dispensary license.
Processing includes blending, extracting, infusing, packaging, labeling, branding and otherwise preparing cannabis products. Adult-use processor licenses cover acquisition from licensed cultivators and sale to licensed distributors. Processors may also obtain a single adult-use distributors license, but only such that it would be used to distribute their own products.
Licenses are available for adult-use cannabis co-ops. These license-holders would have to meet several provisions about ownership and operation as a co-op. Members of the cooperative would only be able to hold membership in one adult-use co-op.
Licensed co-ops can encompass cultivation, processing, distribution, but not direct retail sales. They are held by the same firewall as other license holders with regards to ownership or investment in retail operations.
Licensed distributors are authorized to acquire from cultivators, processors, co-ops and microbusinesses and sell to retail dispensaries or on-site consumptions sites. Similar to cultivators and processors, they are barred from holding interest in adult-use retail dispensaries.
Adult-use retail dispensary license holders are allowed to sell to the eligible public, including delivery. One person may not hold more than three adult-use retail dispensary licenses or licenses for adult-use cultivation, processing, microbusiness, cooperative or distribution.
Limits on dispensary operations:
- Must be operated in a store, with a principal entrance on street level in a public thoroughfare
- Cannot be within 500 feet of a school or within 200 feet of a house of worship
Microbusiness licensing is for small, but completely vertically integrated operations as defined by the Cannabis Control Board. This means, in small amounts, these businesses can cultivate, process, distribute and dispense their own products.
While adult-use retail dispensaries are allowed to deliver, specific delivery licenses will authorize single purpose services to do so. Only one license may be granted per person. No license holder may employ more than 25 full-time equivalent employees.
Nursery licenses permit production, sale and distribution of clones, immature plants and seeds and other similar cannabis products to other license holders. A cultivator may also hold one nursery license.
This provision had been a key sticking point for many progressives. Under the MRTA, consumption of cannabis products is permitted at sites with the corresponding licenses and does not apply to public health law prohibiting smoking indoors. One person can only hold three licenses for on-site consumption. That person may not hold licenses for cultivation, processing, distribution, cooperative, microbusiness or retail dispensary.
The Cannabis Control Board may also consider an on-site consumption license on any of these grounds:
- The number, classes and character of other nearby licenses
- Possession of other necessary permits and licensing
- Demonstrated need for a cannabis consumption space
- Noise and effect on traffic or public convenience
On-site consumption locations also may not:
- Be within 500 feet of a school or 200 feet of a house of worship
- Allow gambling or use of fireworks
- Permit entry to anyone under the age of 21
Special adult-use licensing for disadvantaged and underrepresented groups
The law would give sole discretion of awarding licenses for growers and distributors to the Cannabis Control Board. It then goes on to set a “goal” of ensuring half of those licenses go toward “social and economic equity applicants” and that the board should avoid large firms with outsized market share and prioritize small businesses.
A section of the law instructs the CCB to develop an economic and social equity plan. While the specifics of that plan are to be developed by the CCB, special economic and social equity licenses are supposed to be issued under its guise. Again, the goal is that this would constitute 50% of licenses awarded.
The proposed law would, however, give the CCB authority to establish special, one-time incubator licenses with a different fee than normal licensures. Additionally, license fees would be waived for social equity applicants.
The law specifically notes that prior charges for possession and some other drug-related offenses should not be a sole reason for denial of a license.
Towns, villages and cities may pass a local law before the end of 2021 requesting the municipality be opted-out of any proposed licensing of an adult-use retail dispensary or on-site consumption venue. This law would then be subject to a referendum in that municipality. They would be able to repeal that “dry town” designation anytime in the future.
Municipalities and counties are also allowed to pass regulations on the nature and hours of operation around licensed retail dispensaries and on-site consumption sites as long as they don’t make the business operations “unreasonably impractical as determined by the” Cannabis Control Board. Municipalities and counties cannot pass regulations on other licensed activities in the adult-use recreational sector or for any licensed activities in the medical or cannabinoid hemp sectors.
Counties and municipalities may pass regulations on home growth of marijuana such that any infraction wouldn’t result in a civil penalty of more than $200 and the regulations don’t “essentially prohibit a person from engaging” in home growth of cannabis.
Additionally, local municipalities are required to be notified before the filing of an application for a license with primary operations in its jurisdiction. The municipality can submit an opinion for or against an application with the Office of Cannabis Management which will be considered in the application process. OCM is required to write back notifying the municipality of its decision over the license.
Home growth for medicinal and recreational purposes is allowed for anyone over the age of 21 and will be described in detail by regulations from the Office of Cannabis Management.
No more than three mature and three immature cannabis can be possessed at any one time. Growth is only allowed within or on the grounds of a private residence. No more than six mature and six immature plants may be possessed in one residence at any time.
Counties and municipalities may also place regulations on home growth, but not such that it would amount to full prohibition.
State penalties on breaking home growth provisions could amount to a civil penalty with a fine of $125 per violation.
Will the smell of marijuana still constitute probable cause for a search by police?
No, the new penal code provisions established by the MRTA explicitly establish that the following circumstances don’t constitute a “finding or determination of reasonable cause to believe a crime has been committed” under most circumstance: cannabis odor, burnt cannabis odor, possession of cannabis, the presence of cash near cannabis, cannabis plants in accordance with the cannabis law.
In a situation where a law enforcement officer makes a DWI stop of a vehicle and smells burnt cannabis, they may search any area of the vehicle “readily accessible to the driver and reasonably likely to contain evidence relevant to the driver’s condition.”
New and criminal penalties related marijuana offenses:
|Underage Possession||Possession of cannabis by anyone under the age of 21||$50 civil penalty paid to the Office of Cannabis Management|
|Violation of Home Growing Regulations||More plants than allowed, other violation of regulations on home growth||$125 violation|
|Unlawful Possession of Cannabis||Possession of more than 3 ounces of cannabis or 25 grams of concentrated cannabis||$125 violation|
|Criminal Possession of Cannabis Third Degree||Possession of more than 16 ounces of cannabis or five ounces of concentrated cannabis||Class A Misdemeanor|
|Criminal Possession of Cannabis Second Degree||Possession of more than five pounds of cannabis or two pounds of concentrated cannabis||Class E Felony|
|Criminal Possession of Cannabis First Degree||Possession of more than 10 pounds of cannabis or four pounds of concentrated cannabis||Class D Felony|
|Unlawful Sale of Cannabis||Unlawful selling of cannabis or cannabis concentrate||$250 fine|
|Criminal Sale of Cannabis – Third Degree||Sale of more than three ounces of cannabis or 24 grams of cannabis concentrate or sale/given to person under 21 years old||Class A Misdemeanor|
|Criminal Sale of Cannabis – Second Degree||Sale of more than 16 ounces of cannabis or five ounces of cannabis concentrate sale/given to person under 21 years old||Class E Felony|
|Criminal Sale of Cannabis – First Degree||Sale of more than five pounds of cannabis or two pounds of cannabis concentrate sale/given to person under 21 years old||Class D Felony|
|Aggravated Criminal Sale of Cannabis||Sale of cannabis or cannabis concentrate weighing more than 100 pounds||Class C Felony|
Prior marijuana conviction expungement and reduction:
The new law directs courts to automatically terminate sentences and expunge all records related to convictions or guilty pleas for offenses of criminal possession or sale of marijuana that would have otherwise not had happened at all under the new provisions.
Eligible offenses include:
- Unlawful possession of marijuana (Violation)
- Fifth degree criminal possession of marijuana (Class B Misdemeanor)
- Fourth degree criminal possession of marijuana (Class A Misdemeanor)
- Third degree criminal possession of marijuana (Class E Felony)
- Fifth degree criminal sale of marijuana (Class B Misdemeanor)
- Fourth degree criminal sale of marijuana (Class A Misdemeanor)
Any sentences resulting from convictions or guilty pleas that would be lessened, but still amount to an offense, under the new law can be reduced upon a petition to the court.
No smoking policies:
All applicable prohibitions on smoking do not change for adult-use recreational marijuana. This includes no-smoking designated public places as well as individual restrictions on buildings and private properties. Landlords may still institute a no-smoking policy. If landlords do not have a no smoking policy in place, tenants may not be penalized or refused a lease solely because they consume recreational marijuana.
Certified medical use of marijuana is allowed in apartments, even in the case where a landlord institutes a no smoking policy.
Schools, colleges and universities cannabis rules
These educational institutions can only take adverse action on a person for cannabis use if it would affect their receipt of funding or benefits under federal law or if they have adopted a code of conduct on the basis of “sincere religious belief.”
Otherwise, students cannot be rejected from enrollment or penalized for marijuana use alone.
Direct to consumer delivery is allowed for adult-use recreational marijuana. Retail dispensaries can deliver their own product or they can contract with standalone delivery services that possess a delivery license. Those services are limited to having no more than 25 full time equivalent employees. Also, deliveries can not be agreed upon and delivered on site at the same time. For example, license holders cannot go door to door selling marijuana like girl scout cookies.
Are marijuana-infused alcoholic beverages allowed?
Nope. “The use or integration of alcoholic beverages or nicotine in cannabis products is strictly prohibited.”
Also, no establishment that sells cannabis is allowed to also sell alcohol.
Approval and regulation of recreational marijuana products:
The Cannabis Control Board will create its own regulations for approved product types, branding restrictions and other provisions along these lines.
The law does specifically require that cannabis products sold in New York do not contain branding geared toward people under the age of 21, similar to what’s in place on certain tobacco products.
In addition, all products containing THC will also need to have labels depicting the total amount of THC in that product. Licensed processors will have to submit lab results supporting the amount of THC in their products.
Does this mean my company’s policy on drug use is irrelevant?
It doesn’t look like the law will supersede any business’s existing policies on drug use. One of the earliest lines in the bill states:
“Nothing in this act is intended to limit the authority of any district, government agency or office or employers to enact and enforce policies pertaining to cannabis in the workplace.”
The way the law is written, certified medical marijuana patients are deemed to have a “disability” under several state statutes. In that same provision, it also notes that “this subdivision shall not bar the enforcement of a policy prohibiting an employee from performing his or her employment duties while impaired by a controlled substance.”
Provisions are added to the New York labor law that clarifies that cannabis use outside the workplace and off working hours are not grounds for an employer to fire or refuse hiring of an employee. It does however specifically state that action taken against an employee that “manifests specific articulable symptoms” of cannabis impairment while working that decrease performance or risk safety are not a violation of the labor law.
As far as drug testing though, many company policies, especially in instances where employees may operate equipment or drive company vehicles, are supported under the federal Omnibus Transportation Employee Testing Act. Since marijuana is still a controlled substance under federal law, nothing has changed in those regards.
Medical Marijuana eligibility:
Under the law, certified medical practitioners may be able to prescribe medical marijuana products. Those prescriptions would have to be renewed yearly except in some cases where a lapse in use may put someone at significant risk of injury or for a terminally ill patient.
A provision also clearly states that anyone under parole, probation or awaiting trial can still use medical marijuana.
Patients would also be restricted to possessing a 60-day supply of any cannabis products prescribed by a practitioner. Caregivers and caregiver facilities would also be able to register with the Office of Cannabis Management to possess and provide prescribed marijuana.
Practitioners may prescribe medical marijuana for the following conditions explicitly under the proposed law: HIV, AIDS, ALS, Parkinson’s Disease, MS, nerve or spinal damage, neuros spacity, epilepsy, inflammatory bowel disease, Huntington’s disease, PTSD, severe pain as an alternative to opioid use, substance use disorder, Alzheimer’s, muscular dystrophy, dystonia, rheumatoid arthritis and autism.
Medical cannabis growth and manufacturing businesses
Under the proposed law, medical cannabis for distribution in New York must be grown, cultivated and manufactured in the state. More specific regulations will be up to the Cannabis Control board, including security requirements for facilities.
There are still steep requirements for organizations wishing to become officially registered to work with medical cannabis. Application for registration must include guarantees that individual possesses the land, facilities and equipment to manufacture or cultivate medical cannabis or a $2 million bond to do so in addition to other stipulations.
That provision does emphasize that applicants located in or geared toward underserved communities or owned by women, service-disabled veterans, or other specific groups should be considered.
Formerly convicted individuals and medical cannabis businesses
Under the MRTA, organizations registered to distribute medical cannabis cannot be managed by or employ anyone with a felony conviction related to business operations and some drug crimes in the last few years unless otherwise approved by the Cannabis Control Board. The law specifically bars employees with felony convictions for money laundering, forgery, or drug crimes involving minors.
It does specifically note that felony convictions for sale or possession are not subject to those provisions and should not bar someone from working for a medical cannabis business.
Bucking “big cannabis”
New York’s legislation will take a stab at trying to prevent existing big players in the cannabis industry from gobbling up large shares of the state’s market.
The laws show a firm commitment to staving of vertical integration of cannabis companies in the state – meaning one firm could not have their own cultivation, processing, dispensing and on-site consumption operations. This is accomplished through licensing restrictions. For example, non-medical adult-use cultivator and processor license holders are barred from holding retail dispensary licenses. They also explicitly bar cultivators and processors from having any direct or indirect interest, stock ownership, management agreement or share a parent company with a retail dispensary license holder.
This is probably most exercisable in a provision that gives CBC at the recommendation of the OCM to limit the amount of cannabis a licensee can grow, distribution, process or sell. If it’s held up upon any administrative appeals or court challenges, that would mean the state could effectively strangle out large established cannabis firms from growing large footprints in the state before other startups have a chance. And again, they could just not do that.
There’s a provision requiring the Cannabis Control Board to review any licenses that may impair goals of social equity or be blocking participation in the market by disadvantaged farmers and small businesses. That review will only happen two years after weed is legalized though.
The State Cannabis Advisory Board will also have the authority to recommend how many licenses the CBC can give out to ensure a competitive market without a single dominant licensee.
For medical cannabis, registered distributors may only have four wholly-owned dispensing sites. However, they can add four more if two of them are located in, as approved by the CCB, underserved geographic areas. This would seem to encourage franchising or a blockage of “big box stores” for medical marijuana.
The MRTA legislation would, also address hemp and CBD uses for cannabis and places oversight of that sector under the Office of Cannabis Management and Cannabis Control Board
Licenses would be available for hemp processing, which includes any preparation of cannabinoid hemp for human consumption. Hemp products not meant for human consumption do not fall under the need for a license. Retail licenses for cannabinoid hemp would also be administered through the OCM.
The CCB is also retaining control, under the law, to issue regulations on packaging and messaging on CBD products. The proposed law specifically bars any packaging that make unproven claims of health benefits from CBD.
The proposed law also contains several prohibitions surrounding CBD, the most stringent of which bars any cannabinoid hemp products from out of state from being sold in New York unless they meet all of the same standards.