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New York Expected To Unveil Plan To Legalize Recreational Cannabis

December 17, 2018

With neighboring states like Massachusetts and New Jersey having already legalized recreational cannabis or moving to do so in the near term, New York governor Andrew Cuomo is expected to introduce a proposal for legalization early in the 2019 legislative session. In August, Cuomo convened a task force to draft legislation aimed at regulating cannabis for adult use. Cuomo could preview his legalization approach as soon as today, when he delivers a speech on 2019 legislative priorities.

According to a study released in May by New York City comptroller Scott Stringer, the state’s cannabis market could be worth $3.1 billion, but numerous tax and regulatory details will need to be worked out before legalization can move forward. Excise taxes similar to those on alcohol and cigarettes would bring in $436 million for the state and $336 million for New York City, according to the study.

How to use that income will surely be a contentious issue. Education has been a frequent recipient of cannabis funds in other states, but in New York a proposal to use the revenue to bolster the ailing MTA transit system has been well received. The actual tax rates are also a matter of debate. In New Jersey, governor Phil Murphy pushed for a 25% rate, but the legislative plan moving through the state congress currently sets the levy at 12%.

As the first state to attempt legalization by means of the legislature rather than by ballot initiative, New Jersey’s approach offers lessons for New York. In the Garden State, the legislation is split into several bills: one lays out provisions and regulations for recreational marijuana, one expands legal medicinal use, and a third covers numerous other considerations. Among those considerations is a provision to provide for cannabis home delivery, which is legal in California. Another would allow retailers to create separate, on-premise consumption areas—a development that could pave the way for the burgeoning drinkable market to push toward traditional bar spaces. The New Jersey plan also has social justice provisions such as items supporting minority-owned businesses and clearing previous convictions for cannabis possession.

Cuomo previously opposed recreational sales in New York, but with the cannabis legalization trend on the march over the past year—including full Canadian legalization and the opening of the first East Coast stores in Massachusetts—he has reversed course. Up until now, western states like California, Colorado, Washington, Oregon, and Nevada have been at the vanguard of the cannabis movement in the U.S. market, but the prospect of legalization in New York could mark a game-changer for the industry in the East.—Danny Sullivan

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