On January 15, 2019, as part of his sweeping state budget, New York Governor Andrew Cuomo proposed a plan to legalize, tax and regulate adult-use cannabis (as well as to expunge past cannabis-related criminal records) under his proposed “Cannabis Regulation and Taxation Act.”
The new law would cap the number of cultivation, distribution and retail licenses allowed in the state. The new law does a “180” from the present compassionate care act, by prohibiting companies from vertically integrating (there are 10 licensees under the current law). Only the present 10 licensees (“Registered Organizations” under the present law) are exempt from the new proposed vertical-integration provisions. The law also opens up the cannabis market to flower and edibles and other cannabis-infused products (which were not permitted under the compassionate care act).
Governor Coumo stressed in his state-of-the-state speech, the focus of the new law regarding the New York adult-use cannabis market would be on small business development and helping disadvantage farmers.
The law creates a new state entity to oversee New York’s adult use market called the Office of Cannabis Management (OCM) within the Division of Alcoholic Beverage Control. It would be responsible for reviewing applications, issuing licenses, tracking sales data and enforcing the regulations.
The law does not guaranty wide-spread proliferation of canna-businesses — counties and local municipalities would be able to ban cannabis sales if desired.
Governor Cuomo anticipates about $300 million in tax revenue for the state. That money would help fund a traffic safety committee, small business development and substance abuse services in New York.
Medical cannabis products would have a seven percent (7%) excise tax imposed on gross receipts. The law did not address the sales tax at the retail level. The proposed Cannabis Law creates a new cannabis tax, Article 20-C “Tax On Adult-Use Cannabis Products” and under §493 there would be a state tax at the cannabis wholesale level at 20 percent (20%) and a 2 percent (2%) county tax. The taxes at the cannabis cultivator level would be $1-per-gram on flower and a $0.25 tax on trim.
The proposed law permits medical cannabis to be home-grown. “Certified patients and their designated caregiver(s) twenty-one years of age or older may apply for registration … to grow, possess or transport no more than four (4) cannabis plants per certified patient with no more than eight (8) cannabis plants per household.”
Of course, as the proceeds through the legislature, the proposed law may be amended and eventually voted into law. And once law, the rules and regulations have to be adopted. Coincidentally, the proposed law’s enactment is slated to take effect on the first of April 2020 (yes folks, “4/20” — do the governor and his counsel have a sense of humor or what?)!
Click here for a link to New York’s “Cannabis Regulation and Taxation Act”.