This story was first published in the Cannabis Wire New York newsletter. Want the next issue? Subscribe here.
Yesterday, Cannabis Wire hosted our first event. It was a candid conversation with Sen. Jeremy Cooney, the chair of the Senate’s Subcommittee on Cannabis.
It was a packed house at Fox Rothschild LLP. Thanks to Matt Kittay for co-moderating, and to Lori Rosen for bringing it all together.
We discussed the cannabis policy topics that are top of mind for New Yorkers right now: taxes, advertising, tourism, and of course, enforcement.
While we talked, Gov. Kathy Hochul was across the river in Brooklyn, taking a victory lap that highlighted the state’s efforts since she signed the enforcement bill into law last month, which focused on civil penalties like steep fines. So far, enforcement actions have netted 1,000 pounds of unlicensed cannabis worth roughly $11 million being sold illegally in more than two dozen storefronts in New York City, Albany, Ithaca, and Binghamton.
Hochul said that she wants to be “aggressive.”
“I want to send a message loud and clear across this state that if you’re operating illegally, you will be caught, and you will be stopped,” Hochul said, later adding that agencies will be working together to “enforce the law quickly.”
“Instead of just being a cost of doing business, these fines now have the power to put these shops out of business,” Hochul added later.
The city is also getting more serious about unlicensed cannabis sales. Yesterday, the New York City Council passed a bill that now awaits Mayor Eric Adams’ signature. It would ban commercial property owners from “knowingly” leasing commercial premises to unlicensed sellers of cannabis.
Stay tuned for our next event if you couldn’t make this one.
Here are the highlights from Cannabis Wire’s conversation with Cooney:
• This fall, New Yorkers can expect a “forum” to “create opportunities” for people to “speak directly” with the Office of Cannabis Management.
That announcement will come later this summer.
• People of color remain underrepresented.
After a lawsuit blocked the awarding of Conditional Adult Use Retail Dispensary (CAURD) licenses for months, the Finger Lakes just got their first ones.
“Of the seven CAURD licenses that were given out, none were given to people of color or women. And I have a real problem with that,” Cooney said, referencing data that show that people of color have been arrested at disproportionately high rates.
• The 2023 legislative session ended on a bit of a thud for New York’s cannabis industry.
“I don’t think we did enough for the industry before we left the legislative session,” Cooney said. “So I think that was a miss on our part. You know, I think we had some good conversations. But ultimately what happened was we just ran out of time.”
“Unfortunately, I think we’re just going to kind of be in a holding pattern, where we’re going to keep opening up CAURD dispensaries. Not fast enough, in my opinion, but keep on opening them throughout the fall. And then, assuming the draft regulations stay somewhat the same, we’ll see ROs be able to transition in after December 29. And I expect that 8 out of 10 will.”
• The pop-up (or farmers market) model will face an uphill battle with local leaders.
As a refresher, there was a bill in the legislature this year that would have allowed cultivators, in partnership with a licensed retailer, to sell their products directly to consumers, similar to buying beer at a craft brewer event. Regulators have also hinted that they would issue guidance on the topic soon.
“As that was working its way through the legislative process, [regulators] said, ‘Well, we’re just going to do that through regulation, we’re just going to allow a farmers market set up.’ But that didn’t give any of the details around what that is,” Cooney said. “The ball’s in their court to come up with proposed regulations around it. We were hoping to see that this past Cannabis Control Board meeting this past week because, as you know, we have to wait a number of days, 60 days, to go through these regulations. And we don’t want to lose out on the growing season, right?”
The vision, loosely, is a setting in which growers have a showcase that could involve education, tours, and sampling.
“I’m not opposed to it. One of the big challenges, however, from a local government perspective,” Cooney said, is that “different towns have different rules with zoning. We talked about some of those challenges. Some are more open than others.”
• What about taxes?
“The impact of taxes does have a direct relationship to the ability to stand up both medicinal but also the adult use market,” Cooney said.
Cooney introduced a bill this session that failed to reach Hochul’s desk, but it would have removed the tax on medical cannabis products.
“The phrase that we always use is ‘you don’t tax Tylenol,’” Cooney said.
“We want to make access much more affordable, especially knowing that their insurance at this point is not going to cover,” Cooney said. “I think there’s support for that.”
• On the tax note, could legacy growers face huge IRS bills?
“I want to find a way to preference and incentivize the legacy market to move into the legal market. And I want to give them an opportunity first, because this is how they make their business and they’re obviously very skilled at what they do,” Cooney said.
“My concern is we’re opening them up to federal tax liability,” he continued, “like, ‘okay, well, you checked the box on the State of New York form saying that you’ve been a legacy dealer for this, and your average sale is this, and so your calculated tax for the last ten years is this: you better pay up. I’m not convinced the federal government won’t do that. I don’t want to put anyone in that position where they would be opening themselves up to liability.”
• What’s top-of-mind?
“Getting legislators both in the Senate and the Assembly, both sides of the aisle, giving them a sense of urgency. We can’t wait every six months and get almost there and then do nothing,” Cooney said.
“For those of you who follow state politics, that happens a lot, right? Most bills don’t pass the first year. But the problem is this market needs to be nimble and needs to be reflective. We can’t just allocate that responsibility to [OCM] because they won’t get there. And so there are things that we need to do with a sense of urgency that if we don’t pass in the budget next year – it could be the potency tax, for example, or the medical excise tax – if we don’t do that, we’re going to miss a whole other year of that. And then there’s going to be the aggregate effect.”
• New York’s cannabis lobby day is coming next year.
“There’s Dairy Day, right? All the farmers come” to the Legislative Office Building in Albany to show “how important that is to the New York economy,” Cooney told the audience at our event. “It’s education. Next year we’re going to have Cannabis Day and it’s to bring industry partners and we’ve never done that before.”