5 issues to watch as New York lawmakers take up marijuana legalization – Crain’s New York Business

Recreational Cannabis Legalisation

Will 2021 be the year marijuana legalization finally breaks through? 

Recreational pot has had the support of both Gov. Andrew Cuomo and the majority Democratic Party in the Legislature for two years. But a deal has yet to be reached, with talks called off by the pandemic response last year.

Cuomo now says the time is “ripe” for legalization, citing the state’s budget crisis and a vote in New Jersey that will put legal pot a PATH ride away for New Yorkers.

“The fact that other states are passing us by is an incentive for New York to get it done,” said state Sen. Liz Krueger, an Upper East Side lawmaker who has sponsored the Marijuana Regulation and Taxation Act every year since 2013

“But that is not a reason to get it done the wrong way,” Krueger added.

With the legislative session starting Wednesday, there are still pressure points where varying interests need to find common ground. 

Revenues

Last year Cuomo’s budget office projected legal recreational marijuana could eventually deliver $300 million in local and state tax revenues—although it will take several years to reach that level.

The governor’s preference is for that money to be flexible toward however the state needs it. Many Democratic lawmakers want to guarantee the revenue benefits the communities—disproportionately people of color—that have borne the brunt of the war on drugs.

The Senate bill and Assembly equivalent, sponsored by Majority Leader Crystal Peoples-Stokes, would require funds for a small-business incubator and drug treatment programs. Licensing, meanwhile, would prioritize individuals and communities affected by marijuana prohibition.

Licenses

Federal law makes it difficult to obtain small-business loans and other forms of capital to get a business off the ground. That’s why Melissa Moore, the state director for the Drug Policy Alliance, which advocates for legal marijuana, said it is crucial that the state provide not just licensing but financial support for new businesses to launch in cannabis, including the incubator program.

“That’s truly the nut that is left to crack within the cannabis space: providing not just the licensing but the financial backing,” Moore said.  

Medical market

New York has 10 medical marijuana operators in the state, who are licensed to control the cannabis product from seed to sale. Those companies will push to take part in the far more lucrative adult-use market. 

But the firms also want reform for a medical market, where stringent requirements have allowed just 130,000 patients to benefit statewide. 

“You have to continue to bulk up the medical program and make access easier to patients,” said Nick Etten, director of government affairs for Acreage Holdings, one of New York’s licensed medical marijuana companies. 

Tax

The city is already home to one of the largest marijuana markets in the world, noted David Holland, a lawyer and longtime advocate for legalizing cannabis. The sales are just underground. 

“If you have your rate too high, basically everyone will continue to buy from the legacy market,” Holland said. “You have to incentivize the legacy market to come over and be part of the legal market.” 

A group co-founded by Holland, the New York City Cannabis Industry Association, released a report last year recommending New York add an 8% excise tax to cannabis sales rather than the 18% proposed in the state Legislature. 

Opposition

Many Republicans in the Legislature remain skeptical of marijuana. They are joined by the New York State PTA, a group representing school parents. 

The Medical Society of the State of New York, a physicians group, warned in November that the “public health effects of cannabis will likely outweigh any revenues the state secures by legalizing recreational marijuana.” 

About 60% of New Yorkers said they supported marijuana legalization in a Siena Poll released in November, including 63% of Democrats and 48% of Republicans. 

Krueger acknowledged that the idea would never have total support, but she hoped New York could learn from the 16 other states where recreational pot is either legal or soon will be. 

“We certainly can no longer say we are first out of the box,” she said. “But that means we get to see what did and didn’t work, and have a shot at getting it right.”