New York Legalizes Cannabis, Setting Stage for a Potential $4.6 billion market

Landmark act immediately legalizes of public possession of up to three ounces of cannabis, extends employment protections to individuals who use recreational cannabis, and sets the stage for a potential $4.6 billion market

ALBANY, New York — New York has legalized recreational cannabis, after years of failed attempts and stalled efforts. New York Gov. Andrew Cuomo (D) signed the New York State Marijuana Regulation and Taxation Act (MRTA) into law on Wednesday, just a few hours after lawmakers sent it to his desk the night before.

Under the MRTA, adults 21 years or older can now possess up to three ounces of marijuana (or 24 grams of concentrated versions of the cannabis plant) outside of their home.  In their home, adults may store up to five pounds of the plant. While adult use retail sales of cannabis will not begin until at least 2022, most aspects of the law have taken immediate effect.

“This was one of my top priorities in this year’s State of the State agenda and I’m proud these comprehensive reforms address and balance the social equity, safety and economic impacts of legal adult-use cannabis,” New York Gov. Andrew Cuomo (D) said in a press release.

“The bill creates automatic expungement of previous marijuana convictions that would now be legal,” the governor said. “This is a historic day—one that rights the wrongs of the past by putting an end to harsh prison sentences, embraces an industry that will grow the Empire State’s economy, and prioritizes marginalized communities so those that have suffered the most will be the first to reap the benefits.”

#BREAKING: I just signed legislation legalizing adult-use cannabis.

The bill creates automatic expungement of previous marijuana convictions that would now be legal.

This is a historic day.

I thank the Leader and Speaker and the tireless advocacy of so many.

— Archive: Governor Andrew Cuomo (@NYGovCuomo) March 31, 2021

The bill, approved by state lawmakers on Tuesday, legalizes the drug for adults 21 and older and moves toward the creation of a potential $4 billion-plus industry that could become one of the nation’s largest markets.

Estimates put the state’s total cannabis market at $4.6 billion in annual sales (this includes the state’s illicit market). The legal cannabis industry is expected to capture $1.2 billion in sales by 2023 and $4.2 billion by 2027. New York State expects to eventually collect $350 million in annual tax revenue, according to estimates by Governor Andrew Cuomo’s administration.

Yup, we are still celebrating #marijuanajustice in NY pic.twitter.com/JZfj64eXzd

— SMART-NY (@startsmartNY) April 1, 2021

A new Office of Cannabis Management—an independent agency operating as part of the New York State Liquor Authority—would be responsible for regulating the recreational cannabis market as well as the existing medical marijuana and hemp programs and would be overseen by a five-member Cannabis Control Board. Three members would be appointed by the governor, and the Senate and Assembly would appoint one member each.

The Office of Cannabis Management will create a system of licenses for commercial cultivators, processors, distributors, retailers, cooperatives and nurseries would be created, with a prohibition on vertical integration except for microbusinesses and existing medical cannabis operators.

More Highlights of the Act:

Individual municipalities would be allowed to opt out of allowing retailers or social consumption sites by the end of this year, but residents could seek to override such bans via a local referendum process.

Current medical cannabis businesses could participate in the recreational market in exchange for licensing fees that will help to fund the social equity program.

Social consumption sites and delivery services would be permitted, when regulations are in place. Municipalities could also opt out of allowing these sites. And smokable hemp flower sales will be allowed.

Taxes

Cannabis products will be subject to a state tax of nine percent, plus an additional four percent local tax that would be split between counties and cities/towns/villages, with 75 percent of the local earnings going to the municipalities and 25 percent to the counties.

Cannabis distributors will also face a THC tax based on type of product, as follows: 0.5 cents per milligram for flower, 0.8 cents per milligram for concentrated cannabis and 3 cents per milligram for edibles.

Tax revenue from cannabis sales would cover the costs of administering the program. After that, 40 percent of the remaining dollars would go to a community reinvestment fund, 40 percent would support the state’s public schools and 20 percent would fund drug treatment facilities and public education programs.

What Does The This Cannabis Act Mean For New Yorkers?

Effective immediately, there are no penalties for public possession of up to three ounces of cannabis or 24 grams of cannabis concentrates, such as oils derived from a cannabis plant.

People who are 21 and older are allowed to use, smoke, ingest or consume cannabis products; they can also give them to others who meet the same age requirement.

People are legally allowed to smoke in public wherever smoking tobacco is legal … Smoking publicly where it’s not permitted will result in civil penalty of $25 or up to 20 hours of community service.

People are legally allowed to smoke in public wherever smoking tobacco is legal.

Smoking cannabis is not permitted in schools, workplaces or inside a car.

Localities, as well as a new state cannabis agency, could create rules to more strictly regulate smoking cannabis in public. Smoking publicly where it’s not permitted will subject people to a civil penalty of $25 or up to 20 hours of community service.

An officer is not allowed to use the smell of cannabis as a justification to stop and search a pedestrian.

An officer, however, is not allowed to use the smell of cannabis as a justification to stop and search a pedestrian.

People are legally allowed to smoke cannabis in private residences, as long as the landlord doesn’t prohibit you from doing so, as well as in hotels and motels that permit it.

For recreational purposes, users will be allowed to cultivate up to six plants at home, indoors or outdoors, and a maximum of twelve plants total per household.

Homegrow would not take effect until regulators set rules for it, and they would have a maximum of six months to do so for medical patients and must do so for adult-use consumers no later than 18 months after the first retail recreational sales begin. Once home cultivation becomes legal, people could store up to five pounds of cannabis at home.

Medical marijuana patients, or their designated caregivers, will also be able to grow the plants, six months from now.

Cannabis Employment Protections

With the new law, New York also joins a number of other states in extending employment protections to individuals who use recreational marijuana. Under NYS Labor Law Section 201-d, employers are generally prohibited from discriminating against, terminating, or refusing to hire, employ, or license individuals based upon their participation in legal recreational or political activities or use of consumable products.

MRTA amends Section 201-d by prohibiting employers from refusing to hire, employ, or license, terminate, or otherwise discriminate against individuals because of their lawful use of cannabis outside of work hours, off the employer’s premises and without use of the employer’s equipment or other property.

What MRTA Means For New York Medical Marijuana Patients

The state’s existing medical marijuana program, first legalized in 2014, will undergo several changes aimed at making it less restrictive.

Impaired Driving Restrictions and Devices

It remains illegal to drive under the influence of marijuana, just as it’s illegal to drive while intoxicated by alcohol, and the police will still be able to pull people over who they believed were impaired.

Driving while impaired from marijuana would remain a misdemeanor, despite early reports that lawmakers had settled on downgrading it to a violation.

An officer can use the smell of burned cannabis as a reason to suspect that a driver is under the influence, but he or she is only allowed to search parts of the car that are readily accessible to the driver, so not the trunk, for example.

Unlike with alcohol, there is currently no easy way to quickly and reliably measure whether a person is under the influence of cannabis, especially since traces of the drug can stay in someone’s system after the high has worn off.

So under the new law, the New York Health Department will be required to look at emerging devices that could potentially allow officers to use a saliva test to detect whether a driver is high.