New York

WHAT IS NEW YORK'S CURRENT CANNABIS MARKET STATUS?

In the state of New York only medical cannabis is available for legal sale with 10 vertically integrated registered organizations, which are permitted by statute to have up to four dispensing facilities. As of November 2020 there are 38 active medical dispensaries. As of March 2021 there are 141,913 registered patients, and 3,180 registered medical practitioners. As the law currently stands, cannabis consumption is only allowed through vape pens, tinctures, or other sublingually administered products, e.g., capsules, tablets, and lozenges. Topicals, such as transdermal patches, lotions, and ointments are allowed. Smoking and edibles are prohibited.

On January 16, 2021 Governor Cuomo introduced his plan to legalize adult-use cannabis through the Cannabis Regulation and Tax Act (CRTA). Immediately after introduction of this bill, gaps were quickly identified and pointed out by lawmakers and advocacy groups. This spurred legislators to introduce an updated bill from 2020 known as the Marijuana Regulation and Tax Act (MRTA). These competing plans share a common goal; however, they contain stark differences on how to achieve that goal. Cuomo went back to the drawing board and created three amendments, which were included in the revised version of the reform proposal. The three main amendments sent to legislators in late February are:1) Allow marijuana home deliveries; 2) Lower penalties for selling cannabis to underage people, or illegally selling large volumes of marijuana; and 3) Create a new framework for how social equity grants are distributed.

Cuomo and the legislature tried hashing out their competing plans in order to come to a consensus, regarding the goals of social equity, reduction of penalties for sales to minors, and how revenue from legal cannabis sales. Cuomo has urged the legislature to include his measure as part of a budget plan, which has an April 1, 2021 deadline.

On March 15, 2021 a new Senate resolution responded to Cuomo’s executive budget stating that the Chamber’s revised spending legislation “omits the Cannabis Regulation and Taxation Act, but fully supports the MRTA, which will be passed outside of the budget process.” The lawmakers and administration worked through a number of sticking points, including how many plants people may cultivate for personal use and what type of evidence may be used in impaired driving cases.

On March 25, 2021 lawmakers finalized a deal to legalize adult-use cannabis in New York! The state would allow home delivery, consumption sites, and personal cultivation of up to six cannabis plants (three mature, three immature) in the home, indoors or outdoors.

The sale of legal cannabis will be more than a year away as officials must first draft the complex rules, which will regulate the program, including the entire supply chain. Decisions will need to be made on the number of licenses to allocate to dispensaries and cultivators; the creation of a new tax structure; and the institution of a five-member control board to oversee the industry. The deal was crafted with reparations in mind in an attempt to reduce the impact the long standing war on drugs has had on New York communities.

On March 31, 2021 Governor Cuomo signed the Marihuana Regulation and Taxation Act (S. 854-A), which was passed by the legislature the night before.

The law takes effect immediately, but certain portions of the law will not become effective until the Cannabis Control Board is created and promulgates regulations. Sales of legal cannabis will most likely not start until December 2022 based on the information provided above.

The Office of Cannabis Management, which is overseen by the Cannabis Advisory Board, will license adult-use cultivators, processors, cooperatives, distributors, delivery, retail dispensaries, microbusinesses, nurseries and on-site consumption.

Cities, towns, and villages can opt out of allowing adult-use cannabis retail dispensaries, or onsite consumption licenses. by passing a law by December 31, 2021.

According to Marijuana Business Daily, the New York cannabis market has the potential to quickly become one of the largest in the world, projecting $2.3 billion in annual sales by its fourth full year.

Residents of New York will greatly benefit from the legislation, which will create approximately 60,000 jobs; generate $350 million in annual tax revenue for the state; and outline plans to reinvest a portion of the revenue into the communities disproportionately impacted by the prohibition of cannabis.

Governor Cuomo attempted to legalize adult-use cannabis through the state budget in 2019, but failed due to lawmakers not agreeing on certain aspects, such as where the tax revenue would be allocated. Governor Cuomo had intended to achieve adult-use cannabis legalization through the 2020 budget, but the timeline to legalize marijuana was hindered with the COVID-19 pandemic outbreak in New York just when the budget was to be finalized. With the economic impact of COVID-19 severely slashing tax revenue, lawmakers are now more motivated to legalize adult-use cannabis.

WHAT ARE NEW YORK'S CANNABIS LAWS?

In July 2014 Governor Cuomo signed into law the Compassionate Care Act allowing patients with specific qualified conditions the use of medical cannabis to alleviate symptoms. The medical cannabis program regulations only allowed the use of non-smokable cannabis products; prohibited patients from growing at home; and heavily limited the number of dispensaries.

On July 29, 2019 decriminalization and expungement efforts were increased when Governor Cuomo signed A08420/S06579 into law. Under the new law previous cannabis possession, arrests, and convictions for amounts of two ounces and less are automatically expunged, including those that occurred prior to decriminalization. Additionally, fines for possession of one ounce (28 grams), or less was lowered from $100 to $50. Possession of up to two ounces (56 grams) was lowered from a misdemeanor to no more than a $200 fine.

On March 31, 2021 Governor Cuomo signed legislation S.854-A/A.1248-A legalizing adult-use cannabis in the Empire State! The law will establish the office of Cannabis Management to implement a comprehensive regulatory framework that will cover medical, adult-use, and cannabinoid hemp. The law will also expand New York state’s existing medical cannabis program and cannabinoid hemp programs. This legislation establishes the New York State Cannabis Control Board and the Office of Cannabis Management (OCM). The Office of Cannabis Management is a new independent agency operating as part of the New York State Liquor Authority, and is responsible for regulating the adult-use cannabis market as well as the existing medical cannabis, and hemp programs. The OCM will be overseen by a five-member Cannabis Control Board.

WHAT IS NEW YORK'S CANNABIS LICENSING TIMELINE & CANNABIS APPLICATION PROCESS?

Much of the regulatory licensing framework does not yet exist, and there is no established start date. Therefore, New York does not have an open cannabis business licensing application at this time.. Once the five members of the Cannabis Control Board are selected and rules are promulgated, we will have a better understanding of when to expect a new licensing round to open. Stay tuned for more updates!

WHAT IS THE HISTORY OF CANNABIS IN NEW YORK?

Cannabis decriminalization efforts started early in New York with the state decriminalizing possession of 25 grams or less in 1977. If found with under 25 grams of cannabis, the infraction was a small fine of $100. However, possession in public view remained a misdemeanor until the late 90s when police began to exploit the law to obtain more convictions. Between 1997 and 2010, law enforcement arrested 525,000 people for public view possession with more than 80% of those arrestees of black and latino heritage causing outrage for lawmakers and civil rights lawyers.

New York's cannabis legalization journey began in 2014 when Governor Cuomo signed the Compassionate Care Act into law. Under the Act, non-smokable forms of cannabis such as vaping, oils, tinctures, and topicals were approved for use by registered medical cannabis patients. The conditions list to qualify as a medical patient is limited, but most recently Post Traumatic Stress Disorder (PTSD) was added to the list, which has increased the legal patient use of medical cannabis throughout the state.

On March 31, 2021 Governor Cuomo signed the adult-use legalization bill S.854-A, known as the Marihuana Regulation and Taxation Act (MRTA), establishing the legislative foundation upon which a regulatory infrastructure will be built to host a network of licensed operators to cultivate, process, distribute, sell, and host cannabis consumers. In addition to regulating adult use of cannabis, the MRTA also amends the state’s existing medical use law, the New York Compassionate Care Act, and provides, among other things, rules for hemp, CBD, and other cannabis extracts.

DOES NEW YORK HAVE A HEMP PROGRAM?

New York State is emerging as a potentially significant producer of commercial and industrial hemp on the global market. Hemp is already generating nearly $600 million per year in sales nationally, and has the potential to significantly increase in the years to come. The New York Hemp Agricultural Research Pilot Program has currently registered 99 processors, 537 growers, 19 combined growers and processors, and over 25,000 acres of farmland in hemp production. The Department of Agriculture and Markets is now accepting applications from individuals, or businesses interested in conducting research related to the growing of industrial hemp. The Department of Health is now accepting applications for Cannabinoid Hemp Retail Licenses, Distributor Permits, and Processors Licenses.

ARE YOU PREPARING FOR THE NEW YORK CANNABIS MARKET?

With the recent passage of the Marijuana Regulation and Tax Act, now is the time to begin the development process for your potential cannabis business. Contact Point7 today to discuss the crucial steps that can be taken prior to the application release to ensure you are prepared to submit your application once the application is posted.