New York takes a hit of Cannabis Legalization
Grab a paper, get a pipe, recreational cannabis has reached the Big Apple!
In this post, we'll cover some of what you need to know about recreational cannabis legalization in New York.
New York Cannabis Legalization
On March 31st, 2021, after several failed attempts, New York State legalized the adult use of marijuana. Decriminalized or permitted for medicinal use in 38 states, fully legal in 19 others, and the District of Columbia. New York’s move made it the 15th state to allow recreational adult use of the plant -- and with the state’s population and demand, is expected to become one of the largest legal cannabis markets in the country.
New York’s cannabis legalization, provided under the MRTA - Marijuana Regulation & Taxation Act, will focus on reinvesting in groups and communities that have been disproportionately impacted by the “war on drugs.” Lawmakers in New York pushed successfully, with 40% of tax revenue from marijuana sales going back to social equity groups.
Taxes for cannabis in New York are set to be 13%; 9% State Tax and 4% Local Tax*, plus:
$.005/mg of THC for Flower
$.008/mg of THC for Concentrate
$.03/mg of THC for Edibles
*3% to the municipality, 1% to the county, for communities that have not opted out
The taxes collected will be distributed:
50% for community grants and investment funds for social equity groups
25% for New York State Education
25% for drug addiction treatment and rehabilitation
In addition to investment in communities hardest hit by decades of cannabis arrests, people with marijuana-related convictions whose charges fall under the now legal limits will have their records automatically expunged. These individuals, and those previously incarcerated for cannabis charges, will also have an opportunity to participate in the new legal market.
Municipalities had until 12/31/21 to opt-out of allowing legal cannabis businesses in their communities. The opt-out prohibits retail and consumption sights in the community but does not opt-out of legalization. Municipalities will have the opportunity to opt back in at a later date.
What New York Cannabis Legalization Means Now
Although cannabis is now legal in New York, some pieces have not gone into effect yet. Recreational possession and consumption are legal, growing and purchasing are not. The legal possession limits for marijuana in New York are:
3oz of flower in public
24g of concentrate in public
5lb of flower at home
Legalization also permits the smoking of cannabis anywhere that smoking cigarettes are permitted. Home growing will eventually be permitted, but no sooner than 18 months after the first recreational retail sales in New York.
For entrepreneurs, that doesn’t mean there is time to wait. New York's Office of Cannabis Management, OCM, will issue licenses and oversee the program in New York, people planning to get into the market should prepare now.
On February 22, 2022, Governor Hochul signed S.8084-A/A.9283-A into law, creating an Adult-Use Conditional Cultivator license, authorizing eligible hemp growers to apply for a license to grow cannabis containing over 0.3% THC for the upcoming adult-use market. To be eligible, the hemp grower must have been authorized to grow hemp under the Department of Agriculture and Markets Industrial Hemp Research Pilot Program and meet certain other requirements. Applications opened March 15th, 2022, and close today, June 30th, 2022.
This law also created an Adult-Use Conditional Processors license, this application is only available to active cannabinoid hemp processor license-holders who applied for their license before January 1, 2022. Adult-use conditional processor licensees will be permitted to process cannabis products containing over 0.3% THC for the Adult-Use Cannabis Program. The license will also be authorized for the distribution of cannabis products to duly licensed adult-use retail dispensaries until June 1, 2023. After June 1, 2023, conditional processors seeking to distribute cannabis products, will be required to apply for a separate distributor license. The OCM approved this application and opened on June 28, 2022, remaining open until August 31, 2022.
There is a $2,000 non-refundable application & licensing fee for both cultivators and processors, with 50% of applications expected to be awarded to members of social equity groups:
People from communities disproportionately impacted by cannabis prohibition
Minority-owned businesses
Women-owned businesses
Distressed farmers (that can show 3 years of distress)
Service-disabled veterans
People previously incarcerated for cannabis charges
Some of the steps prospective owners may want to take now could be building a team, developing a brand or market plan, looking at or purchasing real estate, and of course insurance.
Cannabis Insurance in New York
While operators of CRBs face many unique challenges, there is one faced by virtually all business owners: insurance. General liability, property, business auto, and workers comp, are some of the coverages needed by almost every business.
Whether you’re operating in the medical marijuana space for New York, looking to get into recreational or even working in CBD/Hemp, we’re here to help. Although all of us are waiting for updated guidance from New York on insurance requirements for cannabis businesses (in the entirety of the MRTA “insurance” isn’t mentioned once), that doesn’t mean we can’t start now with proven best practices -- following what is being done in other states, as well as guidelines from companies.
The easiest way to figure out what’s best for your business is by starting the conversation. That may be diving into your existing policy for any gaps or asking a few questions about your start-up plans to give an estimate, whatever stage in the process you’re at, we can work with you towards your goal.
Looking for a quote, have a question, see a bug? Let us know!