During a New York State Bar Association event on Monday that was focused on legal cannabis, discussion among lawmakers and a key regulator swung between excitement about dollar signs and social justice goals.
The virtual panel on Monday included: Axel Bernabe, assistant counsel to Gov. Andrew Cuomo; Assembly Majority Leader Crystal Peoples-Stokes, a long-time legalization supporter and co-sponsor of the state’s adult use legislation; Senator Jeremy Cooney of Rochester; and Lynelle Bosworth, a shareholder at Greenberg Traurig. The conversation covered the forthcoming adult use licensing structure and other regulatory updates, cannabis tax revenue and the potential economic engine that New York’s cannabis landscape could fuel, and the push for equity and racial justice.
Cuomo signed legislation last month that legalized cannabis for adult use and also expanded the state’s existing medical cannabis program, as Cannabis Wire reported. Under the new law, adult use, medical, and cannabinoid hemp would all be regulated under the umbrella of the Office of Cannabis Management.
“This is about regulating and controlling and taxing marijuana to generate significant revenue. And it will, because we know that New York is one of the largest currently underground markets in the nation,” Peoples-Stokes said. “Revenue, though — we thought it was important that that makes substantial investments into communities and the people that were impacted by cannabis criminalization to really kind of address some of the collateral consequences.”
Peoples-Stokes spoke about the specific effects that the disproportionate enforcement of cannabis laws has had on communities of color, including, for example, people who served time for cannabis crimes but then couldn’t move back in with parents who lived in public housing. She added that expungement levels have increased from one ounce qualifying in 2019 to now three ounces of cannabis.
“There’s just been a horrible impact on these folks who have been incarcerated as a result of these low levels of marijuana,” Peoples-Stokes said.
The Majority Leader also spoke about one of the elephants in the room: the existing illicit cannabis market in New York, which is difficult to measure, but a persistent policy concern.
“There are people engaged in it who should also have the opportunity to become above ground. And so the equity piece allows them that opportunity. It doesn’t exclude you if you have prior felony convictions,” Peoples-Stokes said, noting that there are some exceptions.
The “excitement” for New York cannabis is real, People-Stokes said, adding that over the last eight years, she has “probably met most every wealthy, influential person in America that deals in this industry,” either in her Buffalo office or Albany office. But, the Majority Leader said, the licensing structure was set up so that “no one can just come in and gobble up four or five of them.”
“I know there is excitement at that level of getting access to this market. This legislation intentionally set it up in a way that, yeah, maybe you can get access, too, at some point. But first, New Yorkers are going to get access to it,” Peoples-Stokes said, emphasizing her goal of ensuring that 50% of the licenses be awarded to equity applicants, which include minority, women, and veteran-owned businesses, and distressed farmers.
“There are a lot of farmers in the state of New York,” Peoples-Stokes said. “Agriculture is one of our largest industries. There are a lot of farmers who are losing ground and they really do need an opportunity to reinvent themselves. And a lot of them are Black farmers and some of them are not. But we should offer them that opportunity before we allow a mega industry to come in and grow the product that we will eventually be using.”
New York’s law, unlike some others, allows for delivery licenses — where equity will again be front and center. To help equity applicants have their plans cross the finish line, regulators are aiming to provide things like reduced application fees and low interest loans.
“We all know who the delivery giants are in America. I mean, everybody knows their names. They would be happy to just run this operation,” Peoples-Stokes said. “Well, this law says that at least to the tune of 50%, we’re going to have to allow equity to happen first and then we’ll think about Grubhub and all the rest of those folks.”
Bernabe spoke about cannabis microbusiness licenses and the regulatory structure, which, in New York, will be two-tier, meaning that supply and retail chains are separated to create opportunities to “make a go of it and survive as a small business.”
In the past, legalization negotiations fell apart over equity provisions and revenue allocation. In the bill that passed this year, after administrative costs, revenue will head to three funds: a “state lottery fund,” which will get 40%; a “drug treatment and public education fund,” which will get 20%; and a “community grants reinvestment fund,” which will get 40%.
Regarding the community fund, Bernabe said, “That’s fairly unique because you have grants that are earmarked for the communities that have been impacted by the historical war on drugs,” adding, “It’s going to be very impactful. We’re talking about potentially significant sums of money going into those communities.”
Cooney, a Democrat who represents part of the City of Rochester, said that licensing is a “big deal” to him and his constituents.
“A lot of us kind of skip right to the retail dispensary question, but there’s so much for those of us from upstate New York,” Cooney said. “We have the land, right. And so we have the opportunity to talk about cannabis crops and then talk about what does processing look like? Distribution? How do you get a product from Jamestown and Fredonia all the way down to Montauk?”
Cooney added that he’s heard from town supervisors and mayors across upstate who already have “ideas” on how they want to spend cannabis tax revenue that stays within the community.
“I always remind people, ‘hey, let’s just get you a dispensary first, because there is a taxation built in that will stay local,’” Cooney said.
People-Stokes followed up by reminding listeners, most of whom were lawyers, that localities—though, not at the county level—can opt out of cannabis retail sales, but that’s it.
“You can’t stop a farmer from farming in your township or in your village, but you can stop a dispensary,” Peoples-Stokes said.
Finally, the panelists touched on homegrow, which as Cannabis Wire noted in January in a deeply-reported preview of New York’s legislative session, was a potentially contentious issue. At the time, Senator Liz Krueger, co-sponsor of the adult use bill alongside Peoples-Stokes, told Cannabis Wire at the time that homegrow 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.” Meanwhile, Peoples-Stokes told Cannabis Wire at the time, “I’m not willing to say that people don’t have a right to home grow.”
Bernabe described home grow as a “topic of a lot of back and forth and a lot of negotiation during the process over the last couple months and over the last several years.”
“It’s a tricky topic, to create a tax and regulate system, but also allow for folks to try to grow their own cannabis,” Bernabe said. “I think, in the end, we heard and understood that people really do need to have access, there are medical concerns for some people, their location or remoteness for others that can’t get to a dispensary. And so, the amount of support that was generated from local communities and individuals, a lot of upstate individuals in particular, too, for this topic, we all decided we needed to find a way to make it available in a responsible way.”