New York Gov. Proposes Adult-Use Cannabis Legalization in State Budget
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New York Gov. Proposes Adult-Use Cannabis Legalization in State Budget

Cuomo’s plan caps the number of business licenses allowed in the state, and would prohibit companies from vertically integrating.

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January 16, 2019

As part of his sweeping state budget, New York Gov. Andrew Cuomo today proposed a plan to legalize, tax and regulate adult-use cannabis and to expunge past cannabis-related conviction records of residents. Because this is contained within a state appropriations package, this plan could move quickly in the state legislature.

Cuomo’s pitch would cap the number of cultivation, distribution and retail licenses allowed in the state, and would prohibit companies from vertically integrating.

That’s a departure from the state’s vertically integrated medical marijuana market, which currently has 10 businesses up and running. It’s not clear whether those businesses would have a head-start on any adult-use licenses. Last fall, State Sen. Diane Savino, who worked on a task force that assisted this legalization proposal, told Cannabis Business Times that an underpinning of any adult-use cannabis market in New York would be focused on small business development.  

The licensing regime and regulation will take place in the proposed Office of Cannabis Management, a new state entity that would over the industry: reviewing applications, issuing licenses, tracking sales data.

Counties and municipalities would be able to ban cannabis sales if desired.

The proposal includes a 20-percent state tax and a 2-percent county tax on cannabis wholesalers. Further, the plan includes a $1-per-gram flower tax and a $0.25 tax on trim for cultivators. Cuomo said he sees this plan generating some $300 million in tax revenue for the state. That money would flow toward a state traffic safety committee, small business development and substance abuse services in New York.

A sales tax at the retail stage of the market was not mentioned.

Following the example of other states, cannabis would be legal for adults 21 and older. No sort of home grow policy was brought up during the Jan. 15 announcement.

Cuomo arrived at this point of laying out a legalization plan under great pressure that built through 2018. His Democratic primary opponent, Cynthia Nixon, drew him into a public debate over the merits of a legal adult-use cannabis market; two years ago, Cuomo had opposed the idea of legalizing cannabis, calling the plant a “gateway drug.” 

Plus, neighboring states have either legalized cannabis or have taken strides to get some form legalization passed in their respective state legislatures. “I think you have to look at New Jersey and you have to look at Massachusetts,” he said. “They are natural competitors in the marketplace.”