Stop me if you’ve heard it before, but New York may legalize cannabis in 2021. Governor Cuomo in last week’s state of the state address proposed an equitable adult-use cannabis program in New York for this year.  While we’ve said something similar the past two years, this time it seems more plausible than 2020 or 2019. Why? It’s simple: pressure from New Jersey implementing its own adult-use program, and a growing budget shortfall due to a lack of tax revenue from the ongoing pandemic. So let’s take a look at what may (or may not) drive New York cannabis legalization in 2021.

New York cannabis legalization driver #1: Recovery

The pandemic-induced budget pinch. New York, like the rest of the globe, saw its economy paralyzed with lockdowns and the utter collapse of world and local tourism. And as we’re seeing in California where tax-revenue-starved municipalities have begun opting in on cannabis and opening up application windows; states such as New York are facing a fiscal reckoning unseen in a generation.

Legalization in New York state means application fees and, eventually, licensing and tax revenue on the local and state level. A press release from the governor’s office made this fairly clear: citing “$3.5 in economic activity, $300 million in tax revenue” and “60,000 jobs created.” More than fees and revenue, cannabis legalization in New York means jobs. With the pandemic leaving so many in the state unemployed or severely under-employed, job creation from legalizing is one of the most impactful aspects of lawmakers getting the law on the books. For an entirely nascent industry we’re talking: cultivation, manufacturing/processing, testing, packaging, retailing, which all means demand for jobs (and pay checks!)

New York cannabis legalization driver #2: Neighboring states

We’ve been discussing New York’s tough dilemma when it comes to legalization and New Jersey since 2018. But with NJ voters legalizing this past November, that marginally abstract concern is suddenly far more concrete, and Cuomo understands this. New Jersey and New York law enforcement would have a very difficult time enforcing cannabis trafficking via the many bridges and tunnels that connect New York City and cities across the Hudson in New Jersey such as Jersey City, Newark, and others. To say nothing of the loss of tax revenue and transactional dollars that New York and NYC if legalization does not occur. Lawmakers across the state do not want to have to face that, making legalization all the more imperative.

Furthermore, with other bordering states such as Vermont and Massachusetts already legalized, and with other states such as Connecticut and Pennsylvania giving adult-use legalization some more serious consideration post-Covid, New York has no choice but to legalize so as to keep up with its geographical Joneses.

What to expect with New York cannabis legalization

We’re not yet sure what the exact language of the bill will look like, but Cuomo in his State of the State address this year and in past years has dropped some significant clues. Additionally, with a pre-filed bill from New York lawmakers landing in Albany last week, here’s a few points and factors to consider.

• Social equity will matter
  Cuomo and New York lawmakers all agree that those most adversely impacted by the war on drugs, minorities, predominantly Black and Latinos from lower income levels and disadvantaged regions of the state, deserve a substantial share at the industry. Where folks in the statehouse don’t necessarily agree is how to implement social equity measures. Cuomo is pressing for the state to have more management of distributions from tax revenues, while some lawmakers are advocating for specific earmarks/designations of the funds. Either path has its own concerns and risks to take into account, but this is a matter that must be addressed and resolved before April 1, 2021.
• Formation of a regulatory entity at the state level
  New York deserves a little credit for pressing for regulatory appointments/formation of a board in previous years and iterations. Considering the headaches and time lag that forming these types of boards can sometimes create, New York is well served to get out in front of this from Day 1.

MMLG will continue to update through the course of the spring of 2021 any changes or new developments in New York cannabis legalization. Have questions in the meantime? Get in touch.