NY is latest state to legalize recreational marijuana

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New Yorkers can now possess and use up to 3 ounces of cannabis under a legalization bill signed Wednesday by Gov. Andrew Cuomo, while sales of recreational-use marijuana won’t become legal for an estimated 18 months until the state draws up regulations.

Advocates for criminal justice reform hope it will also help redress the inequities of a system that has locked up people of color for marijuana offenses at disproportionate rates. The legislation provides protections for cannabis users in the workplace, housing, family court and in schools, colleges and universities, and sets a target of providing half of marijuana licenses to individuals from underrepresented communities.

"By placing community reinvestment, social equity, and justice front and center, this law is the new gold standard for reform efforts nationwide," Melissa Moore, New York state director of the Drug Policy Alliance, said.

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New York will start automatically expunging the criminal records of individuals with certain past marijuana-related convictions, and law enforcement in the state won’t be able to arrest or prosecute individuals for possession of marijuana up to 3 ounces. That’s a step beyond a 2019 law that expunged many past convictions for marijuana possession and reduced the penalty for possessing small amounts.

The law also immediately allows using cannabis in public spaces, though New Yorkers can’t smoke or vape marijuana in locations prohibited by state law, including workplaces, colleges and universities, hospitals and within 100 feet of a school.

FILE - In this March 29, 2019, file photo, a man smokes marijuana at a Spleef NYC canna-cocktail party in New York. (AP Photo/Mary Altaffer, File) ((AP Photo/Mary Altaffer, File))

While the marketplace will take a while to set up, estimates by the trade publication Marijuana Business Daily show New York could become the largest on the East Coast — generating a potential $2.3 billion in annual sales by its fourth year.

Cuomo said it could take years to collect about $300 million in annual tax revenues, though Republicans are skeptical the state will see that much. California was forced to cut $223 million from state budget projections in 2019 due to slower-than-expected pot sales.

Tax revenues from marijuana would first cover the state’s cost of regulating and enforcing the marijuana legalization law, with the remainder divided among schools, drug treatment and prevention programs and a fund for investing in job skills, adult education, mental health and other services in communities that bore the brunt of the national and state drug war.

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New York will set a 9% sales tax on cannabis plus an additional 4% county and local tax and another tax based on the level of THC, the active ingredient in marijuana. 

Sen. Liz Krueger, the legislation’s Senate sponsor, estimates marijuana will end up facing an effective tax rate of around 20 to 21% in New York.

"In the beginning, marijuana prices will be higher because there’s less of it available," she said. "So the tax rate will actually be lower. As market matures and there’s more product in the legal market, the pricing with the tax will average around a 20 to 21% tax rate."

The state will provide loans, grants and incubator programs to encourage participation in the cannabis industry by people from minority communities, as well as small farmers, women and disabled veterans. Krueger said the state can’t mandate giving 50% of licenses to underrepresented communities because it could be unconstitutional.

"Fifty percent is a very high bar to try to reach, but if it happens, it would be amazing," said Hillary Peckham, chief operator of Etain Health, a women-owned New York medical cannabis company that is considering applying for a recreational marijuana license if it becomes legal. 

"The next step is to see how the regulations and the program are stood up to actually provide those opportunities," added Peckham, whose company has four dispensaries around the state.

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Social equity emerged as a key theme in marijuana legalization in recent years, with newly legal states trying to build it in and others seeking to make up for a lack of diversity in the businesses they approved earlier. But the plans haven’t played out as intended in many places.

Illinois, for instance, was touted for the equity provisions in its 2019 law. But that has drawn criticism and legal action from some Black-owned businesses that were passed over. Illinois has since revised its process in an effort to address those issues. 

New York joins at least 15 other states that have legalized recreational marijuana, including neighboring New Jersey. Voters moved to legalize recreational and medical use of marijuana in South Dakota in November, though it is currently being challenged in the state’s Supreme Court.

Opponents of legalization include law enforcement organizations and groups representing parents, who are concerned legalization will encourage marijuana use among children and lead to more traffic accidents caused by impaired drivers.

"We are in the midst of the COVID-19 pandemic, and with the serious crisis of youth vaping and the continuing opioid epidemic, this harmful legislation is counterintuitive," several organizations wrote in an open letter earlier this month.

Supporters who hope legalization will reduce illegal sales say it’s already easy for young adults to access marijuana and that there’s no clear link between marijuana legalization and impaired driving accidents. 

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New York officials plan to conduct a study that will examine the extent that cannabis impairs driving, and whether it depends on factors like time and metabolism. The law also allows state police to receive sales revenue to train more officers as "drug recognition experts," though University at Buffalo professor R. Lorraine Collins said there’s no evidence those experts can tell whether someone’s high or not.

The new law allows cities, towns and villages to opt out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses by passing a local law by Dec. 31, 2021, or nine months after the effective date of the legislation. They cannot opt out of legalization.