New York became the 15th U.S. state to legalize adult-use cannabis after Governor Andrew Cuomo signed legislation to regulate the sale and possession of cannabis on Wednesday.

“I just signed legislation legalizing adult-use cannabis,” Cuomo wrote on Twitter, confirming an earlier tweet from a senior advisor. “This is a historic day. I thank the Leader and Speaker and the tireless advocacy of so many."

The Marijuana  Regulation and Taxation Act (MRTA) (N.Y. S854A /N.Y. A1248A) reached Governor Andrew Cuomo's desk Tuesday evening after passing the Democrat-controlled State Senate and Assembly by large margins. 

"Today, Mr. Speaker, we're reversing 90 years of prohibition," said New York State Assembly Majority Leader Crystal Peoples-Stokes, who sponsored the cannabis legalization bill. "Equity is not the second thought, it is the first one. And it needs to be, because people who paid the price for this war on drugs have lost so much."

Adult-use cannabis legalization was years in the making in New York. But, negotiations between Cuomo, Krueger, and Peoples-Stokes came down to the wire and passage of the bill on Wednesday just beat the April 1 budget deadline lawmakers set for themselves, even though the cannabis bill passed independently of the state budget.

The Contents of the Bill

The MRTA cannabis bill would legalize possession and sale of up to three ounces of cannabis flower or 24 grams of cannabis concentrate to anyone 21 years old or older. It contains provisions to automatically vacate, dismiss, and expunge past cannabis-related convictions for any violations rendered legal under the new law. 

One provision borrowed from Cuomo's budget proposal entails the establishment of an Office of Cannabis Management to oversee and regulate not only the new adult-use program, but also the medical and cannabinoid hemp industries in New York. The bill expands the existing, limited medical cannabis program by adding new qualifying conditions, legalizing smokable flower, setting up a caregiver system, and permitting existing medical operators to double their existing number of dispensaries. It also permits limited home grow for medical marijuana patients and recreational consumers, alike. 

The bill advocates for the creation of a number of new licenses ranging for everything from cannabis cultivation and retail sales to delivery and on-site consumption, meaning New Yorkers could vape or smoke marijuana products at licensed sites. Vertical integration is prohibited by a two-tier licensing structure, meaning those operators that cultivate and process cannabis cannot also sell it in retail stores. The state's existing 10 medical cannabis operators, however, will be grandfathered into the system and granted exceptions to the new rule, as will "microbusinesses."

Lawmakers Prioritize Equity

In a big win for proponents of building an equitable and inclusive industry, the bill reserves 50 percent of licenses for social and economic equity applicants. Lawmakers hope the requirement will encourage more diverse participation in the industry by minority-owned businesses, women-owned businesses, distressed farmers, and disabled veterans. Extra priority for licenses will be given to applicants from communities disproportionately impacted by cannabis criminalization, those who have income below a certain level, or applicants who have been convicted of prior cannabis-related offense or have close family with convictions. The bill dictates the creation of an incubator program to encourage equity applicants to apply. If they are granted a license, they will gain access to resources like financial planning, small business coaching, compliance assistance, as well as low- or no-interest loans.

One major area of compromise for Cuomo was tax revenue. His 2021 budget proposal had originally allocated $100 million across the first four years of the program and $50 million every year thereafter toward a cannabis social equity fund. 

But the MRTA bill dictates that after expenses related to running the program, collecting data, and conducting research on cannabis, 40 percent of tax revenue will go toward eligible public school districts, 20 percent toward public health education and drug treatment, and 40 percent toward the New York State Community grants reinvestment fund. The fund invests in communities that have historically been harmed by punitive cannabis laws by offering grants to qualified, community-based organizations to provide resources like job placement, adult education, mental health services, child care, and legal services. 

Cannabis criminalization has historically taken a much graver toll on low-income communities and communities of color. Even as more U.S. states push toward legalization and decriminalization of cannabis, racial disparities in arrest rates persist. According to the American Civil Liberties Union, Black Americans are almost four times as likely to be arrested for cannabis possession than white Americans despite comparable rates of use. In New York City, disparities are even worse. In spite of dramatic drops in the number of overall cannabis arrests due to decriminalization and a shift in NYPD policy, 93 percent of people arrested for cannabis possession in 2020 were Black or Hispanic, according to NYPD data.

Cuomo Bends on Equity

Longtime advocates of a social justice approach to cannabis legalization, Krueger and Peoples-Stokes introduced New York's MRTA in 2013. A version of the bill has been reintroduced in every session since. A more recent convert to adult-use cannabis legalization, Cuomo called cannabis a "gateway drug" as recently as 2017 but has been pushing to legalize it through the state budget since 2019. In the years since, he butted heads with lawmakers on a number of issues dealing with cannabis, including whether to pass legalization in the state budget at all and whether or not to allocate tax revenue specifically toward social equity. In 2021. However, the governor seemed to come around.

Lobbyists and lawmakers told the New York Times they were shocked at the number of compromises and concessions the governor was willing to make this year. Cuomo is under tremendous pressure. Not only did voters in neighboring New Jersey approve adult-use cannabis in November 2020, but New York state is facing billions in deficits amid the financial devastation of the coronavirus pandemic. Cuomo is ensnared in his own web of scandals, including multiple sexual harassment allegations and revelations that his administration concealed statistics concerning COVID-19-related deaths in nursing homes.

BTIG analysts wrote in a note, tweeted by CNBC's Carl Quintanilla, that Cuomo was likely "more motivated now" to pass legislation that could draw attention away from his own problems, as well as benefit the state. Cannabis legalization is popular — some 60 percent of New Yorkers favor legalizing adult-use cannabis, according to a recent poll by Siena College Research Institute. But Peoples-Stokes told Cheddar she felt Cuomo's change of heart concerning tax revenue and equity may have been related to COVID-19-related pressure or the protests in the aftermath of George Floyd's death at the hands of Minneapolis police. Or, she said, he realized she and her colleagues wouldn't budge on cannabis legalization without substantial equity and reinvestment provisions.

"It may have something to do with the fact that he realizes that I have no desire to allow a multiple billion-dollar underground industry to be opened above ground if there ... cannot be a commitment made to the people who went to jail for decades," she said. "I just don't have a desire to do that, and I won't do it."

Bill Passes

The State Senate wrapped up more than three hours of debate with a vote on the MRTA. It passed the chamber 40-23. 

"It has been a long road to get here, but it will be worth the wait," Krueger said immediately before casting her vote in favor of adult-use cannabis legalization. "The bill we have held out for in this state will create a nation-leading model for legalization. New York's program will not just talk-the-talk on racial justice, it will walk-the-walk."

Debate and voting in the Assembly stretched on until around 10 p.m., but the bill passed 100 to 49. Concerns among lawmakers included the absence of caps on THC potency, a dearth of research on cannabis, quantities of cannabis permitted for home grow, safeguards against youth cannabis use and sales, and prevention and policing of drugged driving.

"Simply put, THC levels should be capped, as well as serving sizes," Assemblyman Michael Lawler, Republican representing a section of Rockland County, said before indicating he would vote against the bill. "We talked about revenue, yet other states have fallen far short of the projections ... We talked about social equity, yet no state has successfully done so."

Assemblyman Charles Barron, a Democrat representing a section of Brooklyn, in Kings County, expressed concerns that even with social and economic equity guardrails, the new industry would be white-dominated.

"I have those concerns when it comes to this bill. But I'm supporting it because one thing I know: I don't think we can use cannabis as a tool for our liberation, but neither can we use jail as a tool for our liberation," he said.

Activists praised lawmakers for their passage of the bill. 

"This day is certainly a long time coming," Drug Policy Alliance Executive Director Kassandra Frederique said in a statement. "We went from New York City being the marijuana arrest capital of the country to today New York State coming through as a beacon of hope, showing the rest of the country what comprehensive marijuana reform—centered in equity, justice and reinvestment—looks like."

Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws (NORML) added that momentum in New York will add to growing momentum toward legalization at the state and federal level.

"The passage of legislation legalizing the adult-use marijuana market in New York State will not only have serious economic and social justice ramifications for its nearly 20 million residents, but it no doubt will have ripple effects across the nation and arguably also within the halls of Congress — providing further pressure on federal lawmakers to amend federal law in a manner that eliminates the existing inconsistencies between state and federal cannabis policies," he said in a statement.

Once the law goes into effect, New York will become the 15th U.S. state to legalize adult-use cannabis. Although the market will likely take time to mature, officials project New York legal cannabis could generate up to $350 million in tax revenue and create 30,000 to 60,000 jobs

This story was originally published March 31, 2021. It was later updated to add a new video.

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