Duane Morris: January 11, 2021: Governor Cuomo Proposes Cannabis Legalization in New York State

Cuomo said, “As everyone knows, Massachusetts has legalized marijuana. New Jersey is going to legalize marijuana. So, what are we really talking about at this point?”

January 11, 2021

As part of his 2021 State of the State, New York Governor Andrew Cuomo announced on January 6, 2021, his proposal to legalize and regulate cannabis in the state. Cuomo’s proposal would establish a new Office of Cannabis Management to oversee the program. It also intends to create an “equitable structure for the adult-use market… by offering licensing opportunities and assistance to entrepreneurs in communities of color who have been disproportionately impacted by the war on drugs.” Cuomo expects that cannabis legalization will generate more than $300 million in tax revenue for the state once fully implemented.

The announcement follows legislation Cuomo signed in 2019 that decriminalized penalties for unlawful possession of marijuana and established a process for expungement of records for certain marijuana convictions.

Cuomo did not provide much additional detail about the proposal, but he said it would promote responsible use, limit the sale of cannabis products to adults age 21 and over, and establish stringent quality and safety controls. He further noted it would provide the “opportunity to invest in research and direct resources to communities that have been most impacted by cannabis prohibition.” Cuomo’s prior proposals provided more detail, as discussed below.

Given adult-use recreational legalization in nearby states and across the country, Cuomo seemed to acknowledge that this was an inevitability for New York. He said, “As everyone knows, Massachusetts has legalized marijuana. New Jersey is going to legalize marijuana. So, what are we really talking about at this point?”

While this will be Cuomo’s third attempt at legalizing cannabis, many observers predict it will pass this year given budget shortfalls in the state resulting from the coronavirus pandemic, a Democratic supermajority in the state Legislature and national momentum toward adult-use legalization, especially in neighboring New Jersey.

The day before Cuomo’s announcement, Democratic New York state Senator Liz Krueger introduced a separate cannabis legalization bill, the Marihuana Regulation and Taxation Act (MRTA), that was co-sponsored by 18 of her colleagues. The MRTA differs from Cuomo’s proposal from last year, the Cannabis Regulation and Tax Act (CRTA), in some key ways. Notably, the MRTA would levy an effective tax rate of 21 percent, while the CRTA’s effective tax rate was more than 45 percent, which would be the highest in the nation. Under the CRTA, how to spend the revenue generated from those taxes was to be decided through regulations after the law passed, whereas the MRTA includes specific allocations to social equity programs such as a Community Grants Reinvestment Fund. The CRTA would have prohibited New Yorkers from growing marijuana at home, while the MRTA permits home cultivation of up to six mature marijuana plants. Under the CRTA, counties or large cities could opt out of the retail sale of adult-use cannabis while under the MRTA, towns, cities or villages could opt out. Both bills would create a new Office of Cannabis Management to oversee the program. Cuomo has not released all the details for his current proposal, but it is expected to be similar to last year’s CRTA. While it remains to be seen which version of the bill will ultimately be signed into law (or a compromise between the two), the momentum toward legalizing recreational adult-use cannabis in New York state appears stronger than ever.

For More Information

If you have any questions about this Alert, please contact Michael D. SchwammDeanna J. Lucci, any of the attorneys in the Cannabis Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.



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