Gov. Cuomo Outlines Plans to Legalize Adult Use Cannabis in New York

Highlights from Gov. Cuomo’s Recently Outlined Plans to Legalize Adult Use Cannabis in New York

Governor Cuomo recently introduced a draft of the “Cannabis Regulation and Taxation Act” (“CRTA”) as part of his new $170 billion budget plan for New York State. CRTA sets forth Governor Cuomo’s plans to legalize adult use cannabis in New York and to implement significant changes to the State’s medical marijuana program and hemp market.  Here are some of the highlights.

Oversight of Cannabis in New York

• New York’s cannabis regulatory framework would be administered by a newly established Office of Cannabis Management (OCM).
• OCM would be the first state agency of its kind in America to regulate adult use, medical, industrial hemp and hemp-derived products (such as CBD).

Adult Use

• OCM would issue a discrete number of licenses for producers, processors, cooperatives, distributors and retailers (who can also apply for onsite consumption licenses). 
• There would not be a vertical integration requirement, and producers, processors, and distributors would be prohibited from also have any ownership interest in retailers.
• Licensees’ officers and directors would not have to be residents of New York, but they would have to be United State citizens or permanent residents. 
• OCM would give licensing priority to businesses owned by minorities, women and struggling farmers.
• Licensees would not be able to transfer their licenses.
• Dispensaries would be limited to selling one ounce of cannabis per consumer per day and five grams of cannabis concentrate per consumer per day.
• Cultivators would be taxed $1 per dry weight gram of cannabis flower and $0.25 per dry weight gram of cannabis trim.  Wholesalers would be taxed at a rate of 20% of the invoice price when selling cannabis to retailers.  An additional wholesale tax of 2% of the invoice price would be paid to the county in which the retail store is located.
• Larger municipalities and counties would be allowed to disallow adult use cannabis operations within their borders.

Expansion Of Medical Cannabis Program

• CRTA would allow for registration of additional Registered Organizations pursuant to an expedited registration plan, and non-New York licensed medical cannabis operators would be eligible for registration.
• Medical cannabis would be available to those suffering from additional conditions, including autism.
• Hospitals and other care facilities would be able to register as caregiver facilities, allowing them to possess and administer medical cannabis to patients.
• Patients would be able to possess a 60-day supply of medical cannabis rather than the current 30-day supply.
• Medical patients would be able to grow up to four cannabis plants at home. 

Industrial Hemp

• CRTA would distinguish “industrial hemp” from “hemp cannabis” and leave industrial hemp subject to the purview of the New York Agriculture and Markets Law.
• CRTA would provide for “cannabinoid grower” licenses and “cannabinoid extractor” licenses. Cannabinoid growers would be permitted to cultivate and sell hemp cannabis to cannabinoid extractors, who would then extract and manufacture the cannabis hemp products for human consumption.

Timeline for Legalization

Gov. Cuomo hopes to legalize recreational cannabis in the first 100 days of 2019.  Though aggressive, the inclusion of CRTA in Gov. Cuomo’s proposed budget – which must be approved by April – may mean that enactment will take place sooner rather than later.  However, as New Jersey Governor Phil Murphy learned, enacting cannabis law is easier said than done.

We will continue to track the progress of New York’s cannabis legalization and expansion efforts and provide updates. For businesses hoping to enter New York’s cannabis market, the competition will be fierce, and it is never too early to start preparing.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• Hemp Legalization & Other Top Cannabis Developments of 2018
• New Jersey Legislature Also Advances Medical Cannabis Bills
• Industrial Hemp Farming Poised for Growth Under New NJ Hemp Law

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.