New York

New York became the 16th state to approve legal adult-use cannabis when Gov. Andrew Cuomo signed the Marijuana Revenue and Taxation Act (MRTA).

The legislation allows possession of up to three ounces, limited home cultivation, and automatic expungement of convictions for behavior legal under the new law.

For homegrow, the bill allows adults to obtain cannabis from state-licensed retailers or grow their own up to three mature plants at a time.

New Jersey allows possession of six ounces, did not include homegrow in legalization, and expungement is not automatic.

It’s noteworthy that homegrow passed in New York since a special interest group comprised of dispensaries sent a letter to Cuomo in 2019 telling him not to support homegrow. There was a great deal of backlash afterward.

“We commend Empire State lawmakers for aligning state law with the will of the vast majority of voters who support legal and regulated cannabis markets as an alternative to failed prohibition,” said Aaron Smith, co-founder, and chief executive officer of the National Cannabis Industry Association (NCIA).

New York Legalization

The Legal Aid Society found that last year in the five boroughs of New York City, Hispanic and Blacks comprised over 93 percent of those arrested for cannabis violations.

“These votes are historic because they signal the beginning of the end of the racially discriminatory policies that have long made the Empire State the marijuana arrest capital of the United States, if not the world,” NORML Executive Director Erik Altieri said.

New York plans to tax cannabis at 9 percent, with additional incremental taxes levied based on the type of product and the amount of THC contained in them. New Jersey has a lower tax, and no tax system connected to THC, the ingredient in cannabis that gets people high.

“It’s taken a great amount of work and perseverance by activists, patients, and consumers, to go from being the cannabis arrest capital of the world, to lead the world with a legalized market dedicated to equity, diversity, and inclusion,” Empire State NORML Deputy Director Troy Smit said.

Forty percent of the tax revenue generated in New York will be reinvested in communities that have been disproportionately harmed by cannabis prohibition. In New Jersey, it will be 70 percent.

Provisions in the MRTA seek to award half of all business licenses to social equity applicants. In New Jersey, 30 percent of licenses will go to those “socially and economically disadvantaged,” which has not been defined.

Cuomo did not embrace cannabis enthusiastically on his own. Rather, he has embraced many issues after the work building support for it among voters and the legislature was largely finished.

“Senator Krueger and Assemblywoman Peoples-Stokes have laid the groundwork for marijuana justice and a consumer-centric industry,” Smit added.

Senator Liz Krueger worked very hard pushing legalization, among many others.

Regulators will license commercial producers and sellers of cannabis and issue licenses for delivery services and on-site consumption facilities. Retail sales will be taxed at nine percent, plus up to a four percent local tax, as well as an additional tax based upon THC content.

Roughly 40 percent of the United States population now lives in states that have passed adult use-cannabis reform.

Domino Effects

Now New Jersey has a much smaller head start to begin adult-use sales with a medical cannabis market only slightly bigger than New York’s exceedingly modest medical cannabis program due to the size of New Jersey compared to New York.

New York’s medical cannabis program is not very impressive. They only have 143,000 patients in a state of 19.4 million people. Their qualifying conditions consist solely of the most serious illnesses. Forty dispensary locations are open across the state. Most of them are owned by Multi-State operators (MSOs). There are only three dispensaries on the island of Manhattan, a place where more one million live and visit on a daily basis.

New Jersey has about 105,000 patients and 15 dispensary locations open in a state of nine million people.

Many New Jersey legalization advocates repeated the refrain that people will come from New York to buy cannabis in New Jersey when advocating for legalization. This would stimulate business and increase tax revenue for the State. They also said it would create a domino effect by encouraging other states to legalize. These two ideas were never reconciled.

New York passed decriminalization in 2019 after failing to pass full adult-use legalization. The advent of the COVID-19 pandemic took most of the time that would have been devoted to cannabis in New York’s short legislative session. New Jersey in contrast meets all year round and therefore does not have the great rush that many other legislatures like New York have when they only meet in the first half of the year.

In New Jersey because the legislatures meet all year, there is often a lot of activity after the Election and the League of Municipalities conference in Atlantic City in the Lame duck session of the legislature. It was the great hope many advocates, New Jersey’s adult-use legalization would have been completed then and the state would have a great head start to New York.

The downside to meeting all year is there far less urgency to pass bills to address long-standing issues.

The side effect of no interstate commerce under federal cannabis prohibition is that it could allow the fostering of small businesses that do not have to compete with companies that can ship in goods made elsewhere. Or large corporations with no interest in the community can be approved for licenses.

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