New York Gov. Andrew Cuomo’s three-year effort to legalize cannabis for adult recreational use appeared to have succeeded Thursday, amid reports of an agreement with lawmakers that could lead to a vote as soon as next week.
State. Sen. Liz Krueger said lawmakers are finalizing a bill that is set to be taken up next week by the state Democrat-led Assembly and Senate, according to multiple media reports. Cuomo, a Democrat, proposed the move in the state budget that is due this week, his third year in a row to attempt to legalize weed in the Empire state.
The last two attempts failed when lawmakers were unable to agree on the safeguards needed to ensure minorities and communities of color who suffered disproportionately during the yearslong “War on Drugs” would benefit from a new legal sector that is expected to generate millions of revenue a year.
Matt Hawkins, founder and managing partner at cannabis focused private-equity firm Entourage Effect Capital, welcomed the news.
“We at Entourage Effect Capital are optimistic about the agreement New York legislators came to for adult-use cannabis in the state, and Entourage Effect Capital looks forward to investing in unique opportunities upon legalization,” he said.
“Given the status of New York City as not only one of the most influential cities in the United States, but also the world, New York has the potential to impact the industry in profound ways both economically and culturally. In addition, with New Jersey legal and New York soon to be, it is sure to have a ripple effect on the entire East Coast of the country.”
The bill will allow New Yorkers aged 21 or older to legally purchase cannabis and people who sell or have sold cannabis illegally in the past will be able to gain licenses. It will allow New Yorkers to cultivate their own plants for personal use. A new state regulator will be appointed to oversee products. Some of the revenue raised will be diverted to communities that were most impacted by draconian drug laws.
“A percentage of revenue that is raised will get invested into the communities where the people who suffered mass incarceration come from and still live in many cases,” Assemblywoman Crystal D. Peoples-Stokes, a Democrat who has been at the forefront of the legalization effort in the lower chamber for years, told the New York Times. “For me this is a lot more than about raising revenue: It’s about investing in the lives of the people that have been damaged.”
The bill will also allow for the creation of “consumption sites,” like bars for cannabis not alcohol, according to the New York Times.
Cannabis will be taxed at 13%, 9% of which would be steered toward the state coffers and 4% to localities, according to media reports. A wholesale tax will be added based on potency, rather than weight, as planned in the past.
Cuomo has said he expects legalization to create more than 60,000 jobs, to spur $3.5 billion of economic activity and generate more than $300 million in tax revenue once the program is fully up and running. That money is much needed given the $15 billion deficit the state is facing with revenue having been decimated by the coronavirus pandemic.
A cannabis program is expected to take at least a year to get up and running, however. Members of the new office need to be appointed, regulations need to be drafted and approved and licenses awarded.
The news failed to spark a fire under the cannabis sector, with some of the multi-state operators that already operate in New York such as Curaleaf Holdings Inc.
declining Thursday. The sector had rallied hard early in the year amid hopes the administration of President Joe Biden would move fast to reform cannabis laws that continue to classify the plant as a Schedule I drug, the same category as heroin.
The Cannabis ETF
was up 0.7%, however, and Canadian companies were mostly higher.
Canopy Growth Corp.
which has an option to acquire Acreage Holdings Inc.
once there is a change in federal cannabis laws, giving it an immediate foothold in the U.S. market, was up 2.7%. Cronos Group Inc.
was up 2.4% and Tilray Inc.
was up 1.9%.
Aurora Cannabis Inc.
was up 2.9%.