New York State Legalized Cannabis, Now What?

CANNABIS CULTURE – New York State is a world market in cannabis, and many who are close to the established industry are trying to determine how legalization will affect them. who will get rich and who will be left behind. 
David Holland, Executive Director of Empire State NORML says there has been infrastructure and a supply chain set up in New York, specifically New York City. For decades, whole communities have revolved around this industry that includes NYC-based delivery services, Syracuse growers, Buffalo-based Rick Simpson Oil producers, and many more. “It’s got its own rules to conduct. It’s got handshake agreements. It’s got whole credit systems where people may front loans to people who get backed. It has a very sophisticated market structure.”
It will not be an easy path for legacy companies according to Holland. Many will have to come up with their own five-year plan and may not be part of the first-year pooling of applicants. “There are extreme punitive measures that can be taken by the state once you start dipping into their revenue.”
Before New Jersey legalized gambling in casinos, illegal betting was widely accepted with minimal punishment. Hollands says the minute that they legalized state gambling, it was a five-year penalty for running an illegal card game underground.
Holland says it will be important to see how the new regulatory boards will be run. “If you bring in people that don’t have an appreciation for what you’re up against in trying to write the rules of the marketplace you’re gonna have a hard time establishing it.”
To help bring the industry into a more unified state, Holland set up the nonprofit New York City Cannabis Industry Association (NYCCIA). Along with its sister association in the Hudson Valley, NYCCIA speaks to both underground and aboveground industry members to foster dialogue and provide guidance for policymaking. 
One unique feature of the Marijuana Tax and Regulation Act (MRTA), signed into law by Governor Andrew Cuomo, is in its rules for social equity. Under the new law, 50% of licenses will go to social and economic equity applications with low-interest to zero-interest loans. Social equity applicants may include a minority- or woman-owned business, a distressed farmer, a service-disabled veteran, or those who have relatives with a marijuana conviction.
Criminologist Michael Tonry in his study of the drug war’s racial disparities wrote, “The War on Drugs foreseeably and unnecessarily blighted the lives of hundreds of thousands of young, disadvantaged Americans, especially black Americans, and undermined decades of effort to improve the life chances of members of the urban black underclass.”
In a report by the cannabis advocacy and prison reform nonprofit, Last Prisoner Project (LPP), in 2020—although white New Yorkers were twice as likely as their non-white counterparts to consume cannabis—Black and Latinx people made up over 93% of those arrested on marijuana charges.
One of the major policing tactics, stop-and-frisk, allowed officers to have “reasonable suspicion” instead of “probable cause” to search a civilian for drugs. In 2011, the NYPD made 700,000 stop-and-frisks. 87% were Black or Latinx and nearly 90% of those stopped were found to be innocent of any wrongdoing. 
Stop-and-frisk tactics were deemed unconstitutional in 2013. 
Another unique feature of the bill is that vertical integration, a business model allowing a company to grow, process, and sell cannabis products has been limited to microbusinesses and medical cannabis companies already established in New York State. However, one of the problems is that every medical cannabis company in the state except for Etain Health, is a multi-state operator (MSO).
This loophole was distressing to Holland because the whole idea behind the MRTA is to have people with low-cost entry points and that there needs to be some checks on the MSOs to keep small businesses competitive. “I think that it is hard to be a legislator and try to come up with a perfect law but there were aspects of the law that were not as well thought out as they could have been.”
Holland says Cuomo had his own version of the bill that was much more restrictive in how revenue was divided and what was allowed. For example, home grows would not have been allowed if Cuomo had his version of the bill passed.
Cuomo has been asked to resign by many state and federal officials after being accused of sexual harassment and inappropriate behavior by several women including former aides. Last month before MRTA was passed, analysts at BTIG argued, “Governor Cuomo is more motivated now to pass a highly popular piece of legislation that could have the added benefit of shifting public attention and at the same time notch a win for the state and himself.”
“I don’t know that the allegations sped things up, but what it did was it caused the CRTA, the governor’s proposal, to really get put aside and some of it amalgamated into the MRTA that had been very closely voted upon,” says Holland. “With a $15 billion shortfall in the state budget, I think they’re looking for every form of revenue they can find.”
For the future negotiations, Holland wants to see a more clear-cut path for legacy companies working in the underground to join the legal market and a clemency program to remove penalties for their past operations, “Otherwise you’re prioritizing giving licenses to people that haven’t been part of the existing market and don’t understand the market demands.”
One NYC-based cannabis delivery service, who wished to remain anonymous, will continue sales and says they don’t expect legal sales to begin for one to two years. “We will be doing our due diligence in trying to attain the appropriate license for when that day comes.”
Holland says NORML will continue to focus on being an advocate for adult-use consumers and medical patients to make sure things like illegal pesticides and improper testing don’t end up in the marketplace. “It’s about the consumer, it’s about the individual rights more than we’ve ever been about the industry.”
With the NYCCIA, Holland is looking to make it into a think tank for the industry and focus on solving problems with regards to getting municipal bonds, credit facilities, and integrating other infrastructure into the cannabis industry framework. 
The goal is to combine the already established infrastructure with the newly formed state regulations. “Let’s not try to reinvent the wheel because that wheel will crush the program if they don’t do it right,” Holland says.

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