December 6, 2021

Adult-use marijuana likely to become legal soon in New York

Associated Press

Marijuana plants grow at an indoor cannabis farm Aug. 15, 2019, in Gardena, California

Officials working on adult-use marijuana legislation firmly believe the crop will become legal this year, but how much money the state could generate in revenue will depend on the taxing structure the state comes up with.

“It looks like it’s finally going to happen this year,” said Alan Gandelman, president of the New York Cannabis Growers and Processors Association and a Cortland-area hemp farmer.

Gov. Andrew Cuomo proposed in his 2021-22 budget making adult-use marijuana legal, his third attempt to pass the legislation.

Gandelman said the move would make even more sense now after New Jersey recently voted to legalize it, meaning New York is surrounded by states where marijuana is legal.

“A lot of New Yorkers have already been driving to Massachusetts,” Gandelman said, noting the state has been losing out on revenue because of that.

The association has been in contact with the governor’s office over the past several months, he said. The sticking point to legalizing adult use marijuana will be the taxing structure, said both Gandelman and Darren “Hal” McCabe, the executive director of the state Legislative Commission on Rural Resources and the mayor of Homer.

McCabe said the commission sent an internal memo to legislators comparing the governor’s Cannabis Regulation and Taxation Act to Sen. Liz Krueger’s and Assembly Member Crystal Peoples-Stokes’ Marihuana Regulation and Taxation Act II based on the language the governor provided last year and the language the commission came up with in its bill.

“We have not seen the language yet from the governor, but the issue will come down to the money at the end, and that is where the battle will be fought,” he said, noting the commission is against the governor’s bill.

“We are pretty uniformly opposed to his bill, simply because it does not do enough to protect and incentivize small farms, offers no local share of the revenue — which is needed to offset costs — and is fairly vague in terms of how it handles the social justice component,” McCabe said.

But the biggest issue remains creating a taxing structure that will allow smaller farmers to participate in the industry and make people want to buy marijuana legally, Gandelman said.

Many people still believe that taxing marijuana at a higher level will reduce consumption.

“I don’t think people realize how easy it is to purchase marijuana,” he said, noting if they can’t get it at a decent price legally, people will head to the black market for it. “This is all about convincing people to switch from the illegal market to the legal market.”

Gandelman said that if the tax rate is set around 20%, the state could see $2 billion to $3 billion in revenue — or even more. If it’s higher than 20%, the revenue would be much less, Gandelman said.

Illinois in 2020 saw around $1 billion in revenue, Gandelman said, noting that the state has less population than New York.

However, he said everything depends on how much Cuomo will compromise. Democrats control both houses of the state Legislature, with the state Senate having a supermajority, capable of overturning a veto.

“They can really pass any bill they want,” Gandelman said.

Gandelman and McCabe ssaid that even if marijuana becomes legal this year, implementing it will likely take another year.

“Legalization and the expunging of convictions right away, but actually putting the structure in place to start licensing growers, processors and retail will take probably another year to implement,” McCabe said. “While I realize that some people are still opposed to this happening, it is going to happen. Frankly, I see it happening federally in the next few years, as it did in Canada. But until then, state by state, it is happening and all NY does by trying to stall is lose out on much needed revenue.”

But Gandelman said for businesses like his, which already deals in hemp, he could have products ready to sell in four to five months.

“We’re definitely heading in the right direction, we’re just going to have to pay attention to the details,” Gandelman said.