After years of recreational cannabis legislation being denied, New York has finally passed a bill to legalize recreational cannabis use. Governor Cuomo signed the legislation on Wednesday, March 31st, 2021 after the state Legislature passed the bill earlier. New York is now the 15th state to legalize recreational use and is a momentous development for the industry. New York, similar to California, is a very influential state, with this bill potentially leading to other states passing similar legislation and put even more pressure on the Federal government to pass a national bill.
Some of the highlights from the legislation include:
- Individuals are now allowed to possess up to three ounces of cannabis flower or 24 grams of concentrated forms (oils) for recreational use
- Smoking Cannabis is permitted wherever tobacco use is currently allowed
- Consumers will be able to cultivate up to 6 plants at home for personal use
- Cannabis will be able to be delivered to consumers homes
- Consumption lounges and dispensaries will likely be allowed
*Regulatory framework will be created in the coming months
Social Equity Programs
Social equity programs intended to empower communities where Black, Latino and minorities have been disproportionately arrested on some sort of marijuana charges are at the heart of this New York bill. A staggering 40% of the tax revenue from sales will be earmarked for these communities, and all people with marijuana-related convictions that are no longer criminalized will have their records expunged.
The bill goes even further and a part of the social equity program is focused on encouraging those with past convictions to participate in the new legal market. The new legal market creates the opportunity for new jobs, which will help stimulate the states economy. Experts predict that legalization will generate $350M in tax revenue annually for New York state. Finally, half of the licenses are intended to be issued to social equity applicants to further try and provide balance to the industry and those communities most affected by the war on drugs.
Investment in New York’s Medical Market Pays Off
The medical market for cannabis has not been as lucrative as the operators who entered back 2014 would have thought. Their patience and continued investment in the NY cannabis market may have finally paid off however. Ten of the operators will be able to enter the recreational market by paying a one-time fee, providing a first mover advantage in the recreational market compared to those looking to get first time access.
The NY government has stated they would like to take a unique approach whereby most businesses will be only allowed to have one type license to avoid market consolidation. However, medical cannabis operators , who already have multiple licenses and are vertically integrated will be able to maintain that structure.
The Future of the NY Cannabis Industry
This is a positive step for the cannabis industry and could create a further domino effect for other states as well as the national government. The more states that come online, more data will be available to show the revenue and how the recreational cannabis market can stimulate the economy. As the state continues to struggle with the economic effects of the COVID-19 shutdowns, this legislation provides another opportunity for job growth and economic stimulation. For the cannabis industry, New York coming online provides another layer of legitimacy to the business and is another step towards federal legalization! AlphaRoot has always been an advocate for industry progress and will continue to support operators from a risk management perspective.