State Spotlight is a series curated by regional regulatory teams at Fyllo, providing a snapshot of recent cannabis regulatory activity in key markets across the country. This spotlight was prepared by Rudy Schreier, Fyllo’s Northeast Regional Lead.
New York Overview
After three years in the making, New York has legalized adult-use cannabis. Governor Cuomo included cannabis legalization in the last three budget proposals. However, the two prior times failed due to disagreements on certain provisions, mainly those concerned with social equity.
New York becomes the fourth state to legalize adult-use cannabis via the legislative process and the 16th state to legalize in the U.S. With a population of over 19 million, New York is set to be the second-largest cannabis market in the country. Analysts project cannabis revenue to hit $2.5 billion by 2026, with a whopping $350 million annually in taxes and an expected 30,000 – 60,000 new jobs to come from the industry.
There is a lot coming for cannabis in the Empire State. Here’s what you need to know as of April 2021.
Population: 19.45 Million
Medical Cannabis: Legalized in 2014
Adult-Use Cannabis: Legalized March 2021. New adult-use licenses expected to be issued and operational sometime in 2022.
The Office of Cannabis Management (OCM) will be established as an independent office as part of the New York State Liquor Authority to issue licenses and enforce a comprehensive regulatory framework governing medical and adult-use cannabis. The OCM will be governed by a five-member board, with three members appointed by the Governor and one appointed by each house.
Cities, towns and villages may opt-out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses by passing a local law by December 31, 2021. Localities cannot opt-out of adult-use legalization.
Social equity will play a huge role in New York’s adult-use legalization program. 50% of all adult-use licenses will be dedicated to social equity applicants. In addition, a social equity program will be created to provide grants, low-interest loans and incubator programs to help social equity applicants get their business off the ground.
Licensing and Applications
New York will offer the following license types:
Microbusinesses (Vertical integration is prohibited for all other licensees other than microbusinesses)
The following criteria will be considered in the licensing application process. Note that criteria will vary across localities:
Whether the applicant possesses or has leased sufficient land, buildings and equipment to carry on the activities described in the application.
The applicant’s ability to maintain effective security and control to prevent diversion, abuse, or other illegal conduct relating to cannabis.
The applicant’s ability to comply with applicable state laws and regulations.
The applicant qualifies as a social and economic equity applicant or sets out a plan for benefiting communities and people disproportionately impacted by enforcement of cannabis laws.
Whether it is in the public interest that the applicant be granted a license.
Whether the applicant and its managing officers are of good moral character and do not have ownership or controlling interests in more licenses or permits than allowed by the Bill.
Whether the applicant has entered into a labor peace agreement.
The applicant’s contribution to communities and people disproportionately harmed by enforcement of cannabis laws.
If the application is for an adult-use cultivator or processor, the environmental and energy impact of the facility to be licensed.
The legalization bill expands the New York medical market by adding additional medical dispensaries, additional patient access (a larger list of medical conditions that qualify), and more permitted products. It will also increase the number of caregivers allowed per patient and permit home cultivation of medical cannabis for patients. In addition to being allowed to operate three adult-use stores apiece, co-locating them with three of their medical dispensaries, medical operators will have the opportunity to double their current number of dispensaries from four to eight, provided two are in unserved or underserved areas.
Previous hemp regulations in New York banned smokable hemp flower. However, the new legislation permits the sale of hemp flower in the cannabinoid hemp program and allows for smokable forms only when adult-use retail stores are operational.
Wholesale excise tax will be moved to the retail level with a 9% state excise tax.
The local excise tax rate will be 4% of the retail price.
Counties will receive 25% of the local retail tax revenue and 75% will go to the municipality.
The new bill also implements a new cannabis tax structure that will replace a weight-based tax per mg of THC at the distributor level with different rates depending on the final product type. Cannabis distributors will face a THC tax based on the type of product:
0.5 cents per milligram for flower
0.8 cents per milligram for concentrated cannabis
3 cents per milligram for edibles
40% of state tax revenue would be reinvested in communities disproportionately impacted by the war on drugs, 40% to schools and public education and 20% to drug treatment and prevention.
Uncertain Times Ahead
There is quite a lot unknown at this time and the implications are difficult to decipher. Industry players wait for the movements and decisions of the OCM and thousands of localities that must make their decisions in a rather short span of time. Access to the latest information moves the opportunity needle in your favor. What will you do to keep ahead of this monumental opportunity?
Introducing, CannaRegs, the cannabis industry’s leading regulatory tracking and research platform that empowers you to:
1. Keep track like no one else
CannaRegs tracks local government activities and ordinance developments specifically for cannabis with both expertly-reviewed entries and daily files pulled from thousands of sources. With our breadth of information, you can quickly determine where you can potentially compete for licenses, open dispensaries or cultivation/ processing facilities, and focus your efforts. Effortlessly track specific jurisdictions with either daily or weekly updates through our Saved Queries and Digest features.
2. Stay ahead of the curve
CannaRegs enables you to pinpoint cities so you can get involved in policy conversations as they are occurring, rather than waiting for the decisions to be made, which can sometimes mean being too late to take action. Our calendar view feature lets you view what government meetings are occurring at localities you could be interested in. You can also view meeting minutes or other cannabis government files that are available directly on our application.
3. Accelerate your jurisdictional expertise
CannaRegs provides relevant information to help you understand the varying jurisdiction laws and become a reliable source of cannabis information for your company strategy or client base. Serving as your singular source of cannabis regulatory research, you or your team will no longer have to spend hours or even days doing patchwork research.
Schedule a demo today to learn more about how CannaRegs can help you keep pace with New York adult-use cannabis growth.
The information provided is current as of April 14, 2021, and subject to change.