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Gov. Cuomo’s recreational marijuana bill will limit vertical integration in NY

Jan 31, 2019

PotNetwork has been reporting on progress in New York towards developing legislation to create a legal recreational marijuana market in the state. Earlier in the month, the governor revealed his plans as part of his annual budget.

Along with the legalization of recreational marijuana, changes may also be coming for the state’s medical marijuana program including abolishing strict patient eligibility rules and allowing for medical patients to grow cannabis plants at home.

Gov. Cuomo’s proposal, should it be instated as is, would place both medical and recreational marijuana under a new agency named, Office of Cannabis Management. The agency would be lead by an executive director who would have broad powers over the ongoing operation of the program.

Here it is: Gov. Cuomo’s plan to legalize recreational use of marijuana for adults. pic.twitter.com/2eRnLEGYnw

— WXXI News (@WXXINews) January 15, 2019

A recently release 75-page report by the state’s Health Department recommended the creation of a regulated recreational market in the Empire State claiming that the "positive effects" of cannabis legalization "outweigh the potential negative impacts,” and “areas that may be a cause for concern can be mitigated with regulation and proper use of public education that is tailored to address key populations.”

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According to the report, "numerous NYS agencies and subject matter experts in the fields of public health, mental health, substance use, public safety, transportation, and economics worked in developing this assessment. No insurmountable obstacles to regulation of marijuana were raised," and "Regulation of marijuana benefits public health by enabling government oversight of the production, testing, labeling, distribution, and sale of marijuana. The creation of a regulated marijuana program would enable NYS to better control licensing, ensure quality control and consumer protection, and set age and quantity restrictions."

I have reviewed the multi-agency report commissioned last January and have discussed its findings with Health Commissioner Dr. Howard Zucker. The next steps must be taken thoughtfully and deliberately. As we work to implement the report’s recommendations through legislation, we must thoroughly consider all aspects of a regulated marijuana program, including its impact on public health, criminal justice and State revenue, and mitigate any potential risks associated with it. — NY Governor Andrew Cuomo

Cuomo’s proposal would place a 20 percent state tax and 2 percent county tax on wholesalers marijuana sales and a $1 per gram tax on dry flower for cultivators and a $0.25 per gram tax on trim. The administration estimates that the state will bring up to $300 million in annual tax revenue depending on how many cities opt into the program.

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What’s in Gov. Cuomo’s proposed bill?

Under the proposal, licenses would be awarded via an auction system. Proceeds from the auctions would be earmarked for business loans and business incubators for cannabis entrepreneurs in communities hardest hit by the racially biased War on Drugs.

Another key point in the governor’s draft legislation, which was reviewed by USA TODAY Network New York, would prohibit recreational marijuana growers from owning retail pot shops. The incentive behind this is to keep big marijuana companies from taking over the entire market in the state. Any existing medical marijuana companies would be exempt from the rule at the executive director’s discretion. As a result, pre-existing medical cannabis operations would be allowed to both grow and sell recreational marijuana.

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Cuomo's plan also provides a process by which those with a minor marijuana conviction can have their records expunged.

Source: Sonya Yruel/Drug Policy Alliance

Changes to the medical marijuana program

New York’s medical marijuana program has been growing steadily and nearly 90,000 patients currently registered. The bulk of those patients fall into the 50 to 70 age range and are using medical marijuana to treat chronic pain. Thousands more are expected to enroll if the prosed changes are implemented.

One particularly interesting point found in the draft that medical marijuana patients would be permitted to grow up to four cannabis plants at home. This is surprising considering Cuomo's past anti-marijuana stance. The move was championed by patient advocates to allow patients who might not be able to afford the high cost of medical marijuana charged by dispensaries. Four plants can produce around 50 pounds of cannabis per year which will is more than enough to treat any medical condition.

Another big change in the proposal would eliminate the state’s list of qualifying medical conditions and put the decision as to whether or not medical marijuana would be an effective treatment into the hands of health care providers rather than politicians. The main argument against this idea is that it would drive up costs which would simply be passed onto consumers.

Source: Sonya Yruel/Drug Policy Alliance

Will it come to pass?

Cuomo made his support for a recreational market in the state official in mid-December.

Cuomo reiterated his support for legalizing marijuana in a speech given at his inauguration at the start of January. In the address, the governor promised to propose “the most progressive agenda this state has ever seen, period,” within 100 days, noting that marijuana legalization is part of that.

When they write the history books and ask what did we do – in the face of anger and division, when people were disillusioned, let New York’s answer be that in this defining moment we brought healing and light and hope and progress and action. That New York led on legalizing recreational marijuana, bringing justice and new economic opportunity not for rich corporations, but for the poor communities that paid too high a price for too long. — From NY Gov., Andrew Cuomo’s Inauguration Speech

The chances of the governor’s bill passing in one form or another are considered to be quite high due to a shift in the state’s balance of power resulting from last November’s midterm elections when Democrats took control of the state Senate.

Furthermore, support for legalization has been growing among both voters and lawmakers in New Yorkers for some time. According to a Quinnipiac University survey from early 2018, 63 percent of New Yorkers support legalizing marijuana for personal use.

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Current estimate suggests that to meet statewide demand for recreational marijuana growers in the state would have to produce more than 600,000 pounds of cannabis. This is currently far more than the existing cadre of growers can produce.

Currently, marijuana is legal in bordering states such as Vermont and Massachusetts, while to the south, Pennsylvania offers a thriving medical marijuana program. New Jersey is on the verge of legislating a recreational marijuana market.


Header Image: Pat Arnow

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