New York lawmakers are days away from a renewed effort to legalize cannabis—their third push in three years—and the state’s top Democrats have pledged to focus on equity.
New York Governor Andrew Cuomo, who has introduced legalization through his budget for the past two years, is expected to do so again as the legislative session kicks off on Wednesday. During a recent news conference, Cuomo said that cannabis legalization could be a new source of revenue for New York, as the state faces a budget shortfall in the billions. New York’s looming legalization talks come as neighboring New Jersey prepares to launch its adult use industry.
“Are there other ways to get revenue? How about marijuana?” Cuomo said during the press conference. “Marijuana we were supposed to have done for the past two years anyway, and it would raise revenue. So if the legislature wants to do the budget now, we can do that.”
Meanwhile, Senator Liz Krueger, a lead sponsor of lawmakers’ legalization bill last year, told Cannabis Wire that she and her Assembly counterpart Majority Leader Crystal Peoples-Stokes are “definitely reintroducing the bill,” adding that it would be pre-filed.
While several lawmakers across the US have pushed cannabis as a solution for pandemic-related budget woes, that isn’t Kreuger’s approach. Adult use industries in other states have, in some cases, taken years to ramp up, and New York’s market will, too, take time to mature.
“Is there a large amount of revenue to be expected in the early years from legalizing cannabis? No, there really is not. So, the state is still looking at an enormous hole in our revenue for the next few years. And I think that anyone who thinks marijuana is a significant silver bullet for that problem is incorrect,” Krueger, who represents the east side of Manhattan, told Cannabis Wire.
Peoples-Stokes agrees that the COVID-19 pandemic, which has wreaked havoc on budgets across the country, might be more of a talking point than an actual catalyst for cannabis law reform in New York.
“I respect whatever decision people come up with, but I don’t think it should be the pandemic that drives us to do something that’s right. But if that’s what it takes, let’s go,” Peoples-Stokes told Cannabis Wire.
Senator Diane Savino, a longtime supporter of cannabis law reform who represents parts of Brooklyn and Staten Island, echoed Krueger and Peoples-Stokes, saying that cannabis legalization isn’t going to plug the budget hole.
“Doing an adult use marijuana bill is not going to solve our budget problems,” Savino said. “We’re not going to derive the kind of revenue that we need to stabilize our budget problems. That doesn’t mean we shouldn’t do it. We should do it because it’s the right thing to do. The public supports it. We’re surrounded now by states that have legal programs.”
A focus on funding equity
Dedicated legalization talks fell through last year, just after New York became the global epicenter of the COVID-19 pandemic, because lawmakers couldn’t agree on the details of specific policy areas, like equity, by the June budget deadline. The lawmakers who spearheaded legislation last year, and plan to do so again this year, emphasize that equity and social justice remain at the center of their 2021 efforts.
“There is a specific percentage of revenue that is in the legislation that I and Senator Krueger carry that will require investment into the lives of the people who have been disenfranchised by mass incarceration,” Peoples-Stokes said. Cannabis law enforcement has disproportionately targeted communities of color, and cannabis arrests can result in barriers to housing and employment, among others.
“We don’t have to wonder who those people are. We can look at the George Floyd movement and see them loud and clear,” Peoples-Stokes said.
Last year, another major hangup was disagreement between lawmakers and Cuomo over cannabis revenue. Cuomo proposed putting the revenue into the general fund to allow flexibility in allocating funding, but lawmakers countered that this doesn’t guarantee that specific communities will receive funds if they’re not earmarked. If lawmakers and Cuomo don’t find common ground in 2021, this could be another area of friction in the negotiations.
“We’re going to legalize marijuana and take all the revenues and dump it into the state budget and do what we’ve always been doing? I’m not going to be supportive of that,” Peoples-Stokes told Cannabis Wire, emphasizing that funds need to flow back to the communities that were most harmed. “That’s something the governor needs to come to the table and negotiate because that has to be there, period,” she said, adding that the cannabis industry is very “lucrative.”
Peoples-Stokes pointed to safeguards for the future, “because there could be a new governor in four years, so you don’t want to put something in place, hoping that the current governor is going to be fair to legacy communities, and then there’s another governor and it goes away.” Peoples-Stokes added, “At the end of the day, things don’t shake out being well-intended for Black people in New York or in America.”
Krueger said that her equity priorities remain unchanged from last year, and that she, too, is focused on the allocation of funds for those hit hardest by prohibition.
“I am, as always, open to new ways to address those targets, and modifying language in the bill. But I know for me, my focus on this topic completely has always been: can we create a new model of economic activity that fairly ensures communities who are hardest hit by the failed drug wars can be helped to be made whole by investment in businesses that serve those communities, so that there’s entrepreneurship with Black and brown people, the owners of new kinds of related cannabis companies.”
Savino added that it will be difficult to achieve equity so long as federal prohibition continues to result in low access to banking and startup capital, as mainstream financial institutions remain skittish about dealing with businesses that are illegal in the eyes of the federal government.
“We can insert all the language we want into the legislation, it’s not going to change anything for the people that we claim to want to change it for, unless we tackle the federal restrictions on it,” Savino told Cannabis Wire.
Equity looks different in every state. In New Jersey, advocates applauded when lawmakers agreed to earmark revenue for “impact zones,” but criticized the state’s lawmakers for not more specifically defining equity applicants themselves. Massachusetts has, among other things, reserved new delivery licenses for equity applicants, and Denver has recently proposed a similar plan. In New York, could the grip on the existing medical cannabis industry by a handful of companies pose an equity hurdle, considering several states gave medical cannabis businesses a head start when launching adult use?
Krueger told Cannabis Wire that she’s “not a supporter” of the existing handful of licensed medical cannabis companies in the state—or, as she called them, “big pharma companies”—ultimately “controlling the market.” She continued, “I think that that pretty much is a guarantee of lockout for the smaller mom and pop and entrepreneurial people in communities of color that will never be as well capitalized as giant corporations.”
(Read Cannabis Wire’s coverage of the flurry of entities that filed disclosures that indicated they were lobbying on cannabis issues.)
New Jersey lawmakers have passed legislation that directs 70 percent of cannabis sales tax revenue, and 100 percent of the “impact fees” on cultivators, to “impact zones,” or communities disproportionately harmed by the enforcement of cannabis laws. Peoples-Stokes said that no other state has yet “honored that level of commitment.” Krueger said this aspect of New Jersey’s legislation could prove useful as legalization talks resume in New York.
“I’m very encouraged by that because I do think part of the challenge for us in New York is a disagreement with the governor about how the revenue should be used. And being able to point to our neighbor, saying ‘look what they just did,’ would be very valuable,” Krueger said.
Could home grow be coming to New York?
New Jersey’s bill doesn’t allow home grown cannabis for medical or for adult use. Will New Yorkers ever see a day in which home cultivation is legal? Democrats appear divided.
“I would be fine with home grown for personal use, for medical, or recreational,” Krueger said, highlighting that home growing is a potential area of disagreement among New York lawmakers. “This is one of the issues that people really do get split about and have different feelings about. And so I’m not drawing a line in the sand for myself, of what I could live with or not live with. Because I have heard from some legislators that people really don’t want home grown in the backyards of their neighbors. People don’t want a home grown in apartment complexes. And there is an issue there.”
Peoples-Stokes said that “home grow should be an opportunity… I’m willing to negotiate that, but I’m not willing to say that people don’t have a right to home grow.”
Savino was firmly opposed to home grown cannabis, but said that there could, perhaps, be room for micro licenses, similar to those that exist for microbreweries.
“You can’t have a legal regulated market if you let people grow their own product. Sorry, you just can’t do that. There’s no room in a legal regulated market for people growing and selling their own pot,” Savino told Cannabis Wire.
The “Northeast Approach”
In October 2019, Cuomo hosted the Regional Cannabis Regulation and Vaping Summit, which brought together governors, lawmakers, and regulators from New York, Connecticut, New Jersey, Pennsylvania, Rhode Island, Massachusetts, and Colorado to debate cannabis policies, from legalization to vaping.
Cuomo and Connecticut Governor Ned Lamont urged states in the region to link arms on cannabis policies, acknowledging how small northeast states could see residents in non-legal states crossing borders for legal cannabis next door.
“This patchwork quilt of regulations makes no sense at all,” Lamont said at the summit. “My state of Connecticut, people cross the border. They drive up to Massachusetts where they buy some cannabis and bring it back, and that makes a real problem for our state police.”
During this summit, leaders came to some general consensus around criminal justice, like expungement related to past cannabis crimes, and an age limit of 21 and over, Krueger said. Already, legalization conversations are resuming in states neighboring New York, including Connecticut and Rhode Island.
“There were advantages to all states going down a similar path, with a belief that no way would they all go down identical paths or identical timeframes,” Krueger said.
Peoples-Stokes added that another area where state regulators in the northeast should confer is around tax structures, which “need to be similar,” because higher taxes in New York could drive people to New Jersey, for example. Similar regulatory structures would be ideal, too, Peoples-Stokes said.
“I think it was smart to have a regional approach because it’s not like there are walls between our borders,” Peoples-Stokes said. “I’m just kind of disappointed that, with New York taking the lead on creating that approach, we’re not keeping the lead in managing how it looks.”
Savino suggested a federal memo could work, perhaps an updated version of the Cole Memo, to “allow states to develop an interstate compact, if they pass it.” In other words, the Justice Department could indicate that if a group of regional states want to link arms on a cannabis policy like interstate commerce or activity, the feds “won’t prosecute you if you move product across state lines.”
“Growing support” for legalization in New York
Several factors could contribute to a higher likelihood that New York lawmakers will pass a cannabis legalization bill this year.
“There is definitely growing support for legalized marijuana in the legislature,” Krueger told Cannabis Wire. “There are more people going out and talking to each other about this, responding to real concerns.”
Krueger referenced Senator Pete Harckham, who represents parts of Dutchess, Putnam and Westchester counties, and is chair of the Committee on Alcoholism and Substance Abuse. Harckham held a news conference last January with Krueger to discuss his support of Krueger’s version of legalization after an “evolution” of thought on the issue. At the time, Harckham told Cannabis Wire that the “essential linchpin that has to be there” for him to support a legalization proposal is funding for treatment and prevention.
“That was a huge boost for me in the Senate because it was assumed that he would be, like, the last one to support it, given the area that he worked on,” Krueger said.
Krueger told Cannabis Wire that she and her colleagues are also prioritizing “significant investments in drug treatment and drug prevention of serious and addictive drugs, illegal and legal, because those also have done so much harm to specific targeted people and communities.”
There’s another reason for the rising support for legalization in New York’s legislature, Krueger said: the legislature is getting younger.
“I am going back to a legislature that is even younger than the outgoing legislature, and that matters because,” Krueger said, younger people are more comfortable with the concept of legalizing cannabis products.”
Peoples-Stokes agrees that while legalization has come up repeatedly in New York, “now, I think they do have the votes for it.” More colleagues are talking to Peoples-Stokes and her staff about legalization “than were willing” to talk about it last year at this time, she said, adding that she and Krueger have traveled across New York to educate constituents about legalization.
“We’ve done a lot of preparing people to understand that if you are in business now underground, you have an opportunity to be above ground,” Peoples-Stokes said.
Momentum in other states and at the federal level is likely to shape the forthcoming debate, as well. On Election Day, voters in five states legalized cannabis for medical or adult use. And lawmakers in several states have taken steps to do the same in 2021, including Virginia and South Carolina.
“As more states come down this road, Krueger said, “it, I think, adds to the comfort level of legislators that their voters also, even if we don’t give them a vote on this, are more comfortable with this,” Krueger said.
And in Congress, in recent weeks, both the Republican-controlled Senate and the Democratic-controlled House have passed separate cannabis research bills. And, the House passed the MORE Act, which would end the federal criminalization of cannabis While the legislation has stalled in the Senate, the hearings and votes have put cannabis in the spotlight.
“The irony is, once you have the feds going down this road, it’s almost why wouldn’t states just go down this road?” Krueger said. “Sometimes, issues blow up in your face because one party or the other is supposed to make it a boogeyman, even when it’s not. But I don’t even think there’s oxygen to try to make cannabis into a boogeyman by one party against the other.”