The 2024 legislative session has kicked off in New York, and with its start comes the consideration of new cannabis proposals.
The rollout of New York’s adult use cannabis industry seemed poised for success this time last year, soon after the state’s first legal shop had just opened. But, a combination of factors – including litigation, fundraising headwinds for equity efforts, and a persistent and evolving unlicensed market – dampened spirits by the end of the year.
While there is much that the state’s Office of Cannabis Management can do – it has already set out some priorities in its annual report – lawmakers are planning to take the lead in several ways.
Sen. Jeremy Cooney, chair of the Senate Subcommittee on Cannabis, told Cannabis Wire that “helping the legal cannabis marketplace jumpstart retail sales across the state is a top priority” this year.
“To improve sales, we are working to repeal the potency tax on adult-use products and excise tax on medical marijuana,” Cooney added, by email. “We will also continue our push to have the [Conditional Adult Use Retail Dispensary] program codified in state law to more clearly demonstrate the legislature’s intention to prioritize social equity.”
CAURD licensees are “justice-involved,” meaning they have a cannabis conviction, or a close family member with one, and were prioritized in the rollout of New York’s legal cannabis licensing. This prioritization was at the heart of the lawsuits that repeatedly stalled the adult use rollout. As a result, regulatory meetings last year were packed with public commenters who requested that the CAURD program be codified.
Another theme that came up at regulatory meetings, including the last one of 2023, was the need to lift up farmers, who have faced several difficult years in the hemp and cannabis industries. Cultivators organized to push regulators to extend the temporary Cannabis Growers Showcase program, which allowed them to sell to consumers in a pop-up format while stores slowly opened their doors; that program ended on Dec. 31.
Assemblymember Donna Lupardo, a champion of New York’s ag industry, including cannabis farmers, was one of the elected officials to ask regulators to extend the program. Looking ahead to this year’s legislative session, Lupardo told Cannabis Wire that the state’s cannabis growers are facing an “agricultural emergency,” and that she’s focused on ways to advocate for them, particularly through a “recompense fund.”
On Thursday, Sen. Liz Krueger, a co-author of the Marihuana Taxation and Regulation Act, which legalized adult use cannabis in New York, spoke at the opening of the first legal adult use cannabis shop on the Upper East Side of Manhattan, a district that she represents.
“We’re all working carefully together now to see what bills actually make sense to do, and what OCM believes they can do for regulation,” Krueger told Cannabis Wire at the dispensary opening.
One topic that’s expected to remain center stage in the legislature this session: enforcement against unlicensed shops. Krueger told Cannabis Wire that she is thinking about “coordinating” with the city and its police department on “new tools” to get the “illegal stores closed as fast as possible.”
In May, Gov. Kathy Hochul signed a bill that focused on enforcement and fines against landlords who knowingly rent to unlicensed cannabis sellers. However, months later, closures are slow and new shops are popping up.
Krueger said that with enforcement, too, she is thinking about the balance between lawmakers and regulators.
“Legislators often want to jump to a new law to fix something. And I tend to come more from, all right, we did an incredibly huge, complex law. Everyone’s still trying to even get the regulations done and rolling. Maybe we shouldn’t be messing with anything too quickly,” Krueger told Cannabis Wire. “We should wait and see what the agency thinks it can handle regulatorily, and what we actually realize we need to change.”
Cannabis taxes are expected to come up in the legislature, too, Krueger told Cannabis Wire.
“There are reasonable concerns about the tax formula that’s based on THC levels, and how complicated that is. And so I think we will probably try to tackle a new tax math, so to speak,” Krueger said.
The potency tax also came up in the most recent meeting of the Cannabis Advisory Board. (While the advisory board can make recommendations to regulators, it does not craft regulations.)
John Kagia, director of policy for OCM, said at the December meeting that the potency tax is a topic that he’d like to “lead with” at the next meeting.
He said that there is “very significant debate happening around whether the tax is the right model for the market,” adding that “taxation and timely payment can be the tip of the spear for our next board meeting.”
The Senate Subcommittee on Cannabis held its first hearing in October, collecting information about what lawmakers and members of the cannabis industry wanted to see changed when the legislature reconvened. At that hearing, two themes were mentioned repeatedly: litigation and unlicensed sales.
Krueger specifically asked regulators at the October subcommittee hearing what state lawmakers could do to curb unlicensed sales, which are concentrated in New York City.
“I just wanted to ask you,” Krueger said to Chris Alexander, executive director of the Office of Cannabis Management, “in public, if you close an illegal store and you take the product, but the fines aren’t big enough to actually discourage people from just opening up again – and we did change the law to make the fines much bigger – then I don’t believe it works at all.”
“So,” she added, “what do you recommend? And maybe it does require legislative action as opposed to just regulatory action. What do I need to do?”
Alexander was unsure. “I just don’t know what the exact number may be to fully deter,” he said. “But, to be able to take some more significant action at the onset when we issue that notice of closure, a violation of the cannabis law, might be a helpful direction.”
The question of what, exactly, to do looms large at both the state and local levels. There’s been friction and confusion in New York City, for example, about which agencies and departments are responsible for enforcement and to what extent, what data exist, and what specific plans are in place to curb unregulated sales, as Cannabis Wire has reported.
In recent weeks, New York City Mayor Eric Adams has repeatedly pointed a finger at Albany and said that the state legislature should step up to help solve the city’s rampant unlicensed cannabis sales problem.
“We need the enforcement power. I will clean up our crisis of cannabis in 30 days if they give me the enforcement power,” Adams said during a Dec. 26 press briefing. Cannabis Wire asked Adams’ office what kind of specific levers or tools the mayor is looking for to start to stem unregulated cannabis sales.
An Adams spokesperson told Cannabis Wire that “the mayor has said numerous times that the state must give local authorities control over cannabis enforcement. Right now, state cannabis law as it is limits enforcement to state-level authorities, particularly state agencies that don’t have the manpower to take on the amount of shops we’re seeing pop up in the city. With so many illegal shops, our agencies should have the distinct authority to crack down on them.”
One bill, the “SMOKEOUT Act,” introduced last week, aims to give localities more control in enforcement.
