New York Legalizes Adult Use Cannabis | Bressler, Amery & Ross, PC – JDSupra – JD Supra

After years of failed attempts, on March 31, 2021, Governor Cuomo signed into law the Marijuana Regulation and Taxation Act (“MRTA”) legalizing adult use cannabis for adults over the age of 21. The MRTA provides for a regulatory scheme with multiple governing offices encompassing multiple license tiers, automatic expungements, home grow and social equity provisions. Below are some of the highlights of the MRTA:

Regulatory Framework: Establishes an Office of Cannabis Management with a board comprised of 5 members, 3 of which are to be appointed by Governor and 1 by each legislative house, with the chair subject to Senate confirmation. The MRTA also establishes a Cannabis Advisory Board responsible for making recommendations to the cannabis control board, the office and the legislature on cannabis and hemp, cultivation, processing, distribution, transport, social and economic equity in the cannabis and hemp industries, criminal justice, public health and safety concerns, law enforcement related to cannabis and cannabis products, and on the testing and sale of cannabis and cannabis products.

Taxes: Sets a 9% sales tax on cannabis, plus an additional 4% tax split between the county and city/town/village, plus an additional tax based on THC content as follows: 0.5 cents per milligram for flower, 0.8 cents per milligram for concentrated cannabis, and 3 cents per milligram for edibles.

License Types. The MRTA contemplates the following types of licenses: cultivation, processing, cooperative, distributor, retail, delivery, on-site consumption and nursery licenses.

Community Reinvestment: The MRTA dedicates a portion of cannabis tax revenue to reinvestment in communities disproportionately impacted by the drug war, with 40% to schools and public education, and 20% to drug treatment, prevention and education. In addition, the MRTA contemplates equity programs in the forms of loans, grants, and incubator programs to ensure broad opportunities for participation in the new legal industry by people from disproportionately impacted communities as well as by small farmers. The MRTA has set a goal of 50% of licenses awarded to equity applicants. A Chief Equity Office is also provided for to oversee the development and implementation of, and ensure the cannabis control board and the office of cannabis management’s continued compliance with, the social and economic equity plan.

Home-grow: The law will allow individuals to plant, cultivate, harvest, dry, process or possess no more than 3 mature cannabis plants and 3 immature cannabis plants at any one time subject to regulation by the Office of Cannabis Management. Additionally the MRTA provides that no more than six mature and six immature cannabis plants may be cultivated, harvested, dried, or possessed within any private residence or on the grounds of a person’s private residence.

Home Possession: The law allows a person to lawfully possess up to 5 pounds of cannabis in their private residence or on the grounds of such person’s private residence.

Prior penalties: Elimination of penalties for possession of less than three ounces of cannabis. Automatic expungement of records for people with previous convictions for activities that are no longer criminalized.

Current Operators: Allows current Registered Organizations limited access to the adult use market in exchange for licensing fees that will help fund equity programs. The legislation prohibits vertical integration for all other licensees except micro-businesses to protect the retail sector from being controlled by larger cannabis producers, and establishes a goal of 50% of licenses going to equity applicants.

Before sales of adult use cannabis can occur, the state will need to set up regulatory mechanisms and rules for production and licensing retailers to sell it. Businesses can use this time to bring their production into compliance. Bressler attorneys have extensive experience in assisting cannabis businesses in regulatory and other legal compliance matters. We look forward to work with New York clients in this historic change. For more information or assistance, please contact us.