New York’s new law legalizing cannabis for recreational use has been one of the most progressive in America.
The amended Marijuana Regulation and Taxation Act (MRTA) will encourage people who have been negatively impacted by cannabis prohibition to participate in the adult-use market. The law also expands the state’s existing medical cannabis program, allows home grows, and establishes an Office of Cannabis Management that will create and implement regulations for the adult-use program.
But this is something we’ve seen time and time again in New York.
In 2013, Assembly Majority Leader Crystal D. Peoples-Stokes (D) and Senator Liz Krueger (D) began submitting the MRTA to the New York Legislature to make sure people from communities who have been disproportionately impacted by drug laws can participate in this new industry with hopes that it would help those communities economically flourish if given an opportunity to enter into legal cannabis trade.
It’s a plan that will benefit New Yorkers and ensure cannabis is accessible for medicinal purposes, as well as recreational use — at a level we haven’t seen across America yet.
But how will this impact social equity applicants? And how will the community reinvestment fund work? What about expungement for past cannabis-related criminal convictions?
This article offers insight into New York marijuana legalization and what the industry and its supporters can expect.
Interested in expanding your business to serve New York’s legal cannabis sector? CONTACT US today for expert assistance.
MRTA & Social Equity Applicants in New York
“For generations, too many New Yorkers have been unfairly penalized for the use and sale of adult-use cannabis, arbitrarily arrested and jailed with harsh mandatory minimum sentences. After years of tireless advocacy and extraordinarily hard work, that time is coming to an end in New York State,” Governor Andrew Cuomo said. “Legalizing adult-use cannabis isn’t just about creating a new market that will provide jobs and benefit the economy, it’s also about justice for long-marginalized communities and ensuring those who’ve been unfairly penalized in the past will now get a chance to benefit. I look forward to signing this legislation into law.”
New York’s new law defines social equity applicants as people from “communities disproportionately impacted by the enforcement of cannabis prohibition.” But it also stands to serve minority- and women-owned companies, financially distressed farmers, and disabled veterans.
But what considerations come into play to qualify as disproportionately impacted by cannabis prohibition?
The new rules should outline precisely what characteristics one must possess to qualify as a social equity applicant in New York.
The goal here is to create social equity definitions and programs that are most likely to benefit the most impacted communities. But data will be essential to ensure this happens.
Amber Littlejohn, the executive director of the Minority Cannabis Business Association, has voiced some concerns.
The main issue here is that the state hasn’t invested enough money in research to learn which communities have taken the most damage from marijuana prohibition.
Littlejohn and others in the cannabis space are concerned about New York’s social equity program. These concerns include:
- How will social equity applicants have the capital to break into the market during its early stages if the programs rely on tax revenues generated by recreational cannabis sales?
- How will social equity applicants compete with existing MSOs? The economies of scale resulting from vertical operations and financial depth make this challenging, if not impossible.
- How will New York define microbusinesses? Sensible canopy regulations will be essential to allow social equity applicants to stay competitive in this space.
Key Provisions of New York’s Marijuana Regulation and Taxation Act
Here’s how New York’s MRTA aims to help social equity applicants:
- 50% of all adult-use licenses will be awarded to social and economic equity applicants. Experts believe that microbusiness and delivery licenses will be prioritized.
- Out of the tax revenue adult-use sales generate, 40% will go to improve communities disadvantaged by the war on drugs.
- A one-time “special licensing fee” will be required from existing medical marijuana operators to convert three of their MMJ dispensaries into dual medical-recreational stores. This fee, while not outlined in this law, will aid fund social equity programs.
- Social equity applicants will receive financial support in the form of low- or no-interest loans, assistance preparing applications and operating a business, and fee reductions or waivers.
- Microbusinesses will now be able to form vertical operations, which will aid these applicants in achieving economies of scale. Other operations, besides the existing MMJ operators, will not be allowed vertical integration capabilities.
- Social equity licensees will not be allowed to sell or transfer their licenses within the first three years once they’re issued.
Social equity programs in other states, like Illinois and California, haven’t accomplished enough. New York aims to ensure its lawmakers understand what works and the circumstances needed for this program to succeed.
One hope is that New York finds financial solutions to support minority businesses. Simply partnering with social equity applicants isn’t enough with overarching barriers still in place, and this is something we hope will get resolved.
New York Community Reinvestment Fund
New York’s MRTA is expected to encourage economic recovery by generating around $3.5 billion per year in revenue, which will also aid in mitigating the social and economic wrongs of marijuana prohibition. The new laws will make New York a leader in the US cannabis space and have the potential to allow the state to generate more revenue than any other adult-use legalized state.
Through the Cannabis Fund, revenue from recreational cannabis will be used to pay operating expenses for the Office of Cannabis Management and provide public safety training for law enforcement agencies. But the remaining funds go towards social equity enhancement.
The leftover funds will allocate 40% to a Community Reinvestment Fund that will give back to communities disproportionately affected by cannabis prohibition. Another 40% will go to Public Education. The other 20% will be allocated towards drug treatment. The main focus here is that New York stands to positively impact the communities in ways that no other state has been able to do so far.
Expungement for Cannabis-Related Criminal Convictions
The ACLU reports that 8.2 million arrests were made for marijuana-related charges from 2001 to 2010. Incredibly, 88 percent of these arrests for possession as opposed to selling or trafficking the controlled substance. Furthermore, despite cannabis use between Caucasians and African-Americans maintaining similar rates in the US, African-Americans are four times as likely to get arrested for possession.
With this in mind, the last social justice component of New York’s MRTA is prioritizing the expungement of previous marijuana-related criminal offenses. This will involve the Office of Cannabis Management automatically expunging criminal records over the next two years.
Through this feature, employment and personal economic growth will be facilitated in New York’s cannabis industry. People who have been convicted of possession of up to three ounces will also be eligible for record expungement.
As the 15th state to legalize adult-use cannabis and the fourth to pass a statute by the Legislature, New York is making tremendous strides for the cannabis sector. This MRTA will elevate the standard for states that legalize cannabis for adult use by prioritizing social and economic incentives.
Between New York’s social equity program, community reinvestment fund, and expungement efforts, we can expect the entire sector – consumers included – to feel a positive change.
If you’re looking to grow your cannabis operation, there’s no time like right now. CONTACT US TODAY to learn how we’ll scale your business with the right financial services.