Legal Marijuana Sales Have Commenced in New York; What to Know About the Industry’s Launch

On Thursday, December 29, 2018, nearly two years after the Marihuana Legalization and Taxation Act (MRTA) was passed, the first legal retail sale of the formerly illegal narcotic took place in New York.

New York Governor Hochul hailed the day’s first legal adult-use cannabis sales as “historic” in a news statement. This is just the beginning of our work to make New York a leader in creating a safe, egalitarian, and inclusive sector for all people.

The first legal sale of cannabis was made in a dispensary in Manhattan’s East Village, run by Housing Works, a nonprofit that helps formerly jailed New Yorkers. Housing Works was one of the first 36 businesses in the state to receive an initial license from the Office of Cannabis Management (OCM).

New Yorkers lined up to make purchases as authorities from the city and state hailed the new industry’s legalization. Christopher Alexander, the executive director of OCM and a crucial figure in establishing the legal marijuana sector in New York, made the first formal purchase, followed by many others, including local City Council Member Carlina Rivera.

In a press statement announcing the upcoming first sale on December 21, Hochul remarked, “We set a course just nine months ago to get New York’s adult-use cannabis market out on the right foot by prioritizing equity, and now, we’re delivering that aim.” From here, the business will expand, bringing new possibilities to every corner of New York State and funding new initiatives in education and community revitalization with the proceeds.

Democratic Assembly Majority Leader Crystal Peoples-Stokes of Buffalo and New York State Senator Liz Krueger of Manhattan both applauded the passage of the MRTA, which marked a watershed moment in the development of cannabis policy in the Empire State.

After years of advocacy, marijuana was finally legalized on December 29. “I am happy to witness the launch of the adult retail cannabis sales and that Housing Works has opened the first retail store,” said Krueger. Their decades of experience working with underserved groups make them an ideal ally in the fight to open up New York’s cannabis market to the people who have suffered the most as a result of the state’s misguided prohibition policies.

Peoples-Stokes, who has worked tirelessly to ensure racial equity and make amends for over-criminalization in the legalization process, remarked, “I am so pleased to see the first legal sales of cannabis in New York occur today by a non-profit that has been dedicated to helping improve people’s lives for decades.”

New York City Mayor Eric Adams has also voiced his approval of the city’s historic first cannabis sale.

The Democratic mayor issued a statement proclaiming, “Today represents a key milestone in our efforts to develop the fairest cannabis sector in the nation.” For individuals who have suffered the most as a result of misguided laws in the past, the opening of the first legal dispensary in our state right here in New York City means more than simply a promising milestone for this developing sector.

New jobs, increased wealth in once-impoverished areas, and more money for state and local governments are just a few ways the legal cannabis industry might help New York’s economy recover.

After years of lobbying, on March 31, 2021, the MRTA was finally signed into law, setting in motion a chain of events that will culminate in the first sales. There are now intricate rules in place for the cultivation, distribution, possession, consumption, and disposal of marijuana in New York, making it the 15th state to do so.

Important clauses addressing racial justice and attempting to rectify the disproportionate impact of marijuana’s criminalization on Black and Latinx communities were also included in the bill.

Although widespread legal marijuana sales were anticipated by now, illicit retail operations have sprouted all throughout New York City with no response from law enforcement, and many municipalities across the state have decided against allowing legal retail operations altogether.

According to their website, the responsibilities of the newly established Office of Cannabis Management (OCM) under the MRTA’s Cannabis Control Board include “but are not limited to manufacturing, licensing, packaging, marketing, and the sale of cannabis.” The New York State Medical Marijuana Program was also taken over by OCM and the Cannabis Control Board.

According to a Bloomberg story from 2022, New York State has over 200 cannabis farms producing $750 million worth of marijuana (almost 300,000 pounds) that could be sold in retail outlets.

The Office of Cannabis Management (OCM) authorized the first 36 Conditional Adult-Use Retail Dispensary (CAURD) licenses for the retail sale of cannabis on November 30th, with many more licenses to come in 2023 and beyond.

In order to start, promote, and regulate the sector, the Adams administration in New York City has established Cannabis NYC within the Department of Small Business Services.

Expectations for tax revenue from cannabis sales range in the hundreds of millions of dollars annually for the state and municipal governments, as the name of the bill suggests.

Timelines have been jumbled and worries about licensing, enforcement, and more remain as retail sales and delivery both commence. As New York’s new legal sector begins operations, here is everything you need to know:

Administration of The MRTA

New York’s legislature enacted the MRTA in March 2021, and then-governor Andrew Cuomo signed it into law.

Despite some initial setbacks, the state’s Cannabis Control Board and Office of Cannabis Management were eventually established, and cultivation and sales could begin. Among all the deliberation, the OCM website emphasizes “ensuring the widest possible engagement by communities historically impacted by prohibition” as a means of addressing the wrongs of the harsh War on Drugs.

That includes requiring people who want to get a CAURD license to have a connection to a prior arrest for marijuana-related offenses.

According to the OCM website’s CAURD application information page, “you, or your parent, spouse, or child must have a conviction for a marijuana-related offense to be eligible for a CAURD license,” though a select number of initial licenses were also made available to nonprofits serving formerly incarcerated people, such as Housing Works.

The MRTA authorizes the cultivation of marijuana plants, their commercial sale and delivery by licensed small enterprises, and the use of marijuana for recreational purposes by adults in a variety of forms (smoking, edibles, etc.). The law aims to decriminalize marijuana, aid persons and communities afflicted by the illegality of marijuana, and reduce the illicit drug market by offering safe, tested legal goods, all while earning tax money for the state and its towns.

However, there have been several obstacles in the entire attempt to create a new state agency and business, including the creation of the details of the legalization process, the issue of licenses, the broader social adjustment, the reactions of local communities, and more.

In response to a series of questions from the Gotham Gazette in late December, Aaron Ghitelman, a spokesperson for OCM, wrote: “One of the bigger challenges we’ve faced this past year in moving the MRTA into action is not only starting from scratch to launch a regulatory structure from the MRTA for cannabis but simultaneously building an entirely new State agency as well.”

The number of people working in the Office of Cannabis Management has increased from 30 to around 150 in the past year, and by the time we reach about 300, we will have reached our full staffing capacity, Ghitelman said. As a result, OCM employees are juggling a number of responsibilities and working long hours to inform New Yorkers about the benefits of cannabis legalization and licensing. As our staff expands, so does our capacity, so we’re looking forward to next year. In 2023 and beyond, OCM will be able to ramp up its efforts in this area.

“The largest challenge is the essential attitude shift surrounding cannabis, from the government to business to community,” said a representative for New York City’s Department of Small Business Services, which houses the new Cannabis NYC office.

Although this is a newly legal industry, we nevertheless need to dispel the lingering prejudices of the prohibition era. Conversely, New York is home to the greatest “legacy” sector, which encompasses business owners, customers, and neighborhoods that have been negatively impacted by disproportionate incarceration and disinvestment.

The spokesman emphasized once again that this is why the MRTA was drafted: to aid those with prior convictions for minor marijuana offenses.

According to the email statement from the representative, “there is a big vacuum in cannabis education, community services, and government legislation available to enable that immediate shift.” “Cannabis NYC, in conjunction with numerous NYC agencies, has been working swiftly to construct a programmatic framework to enable education and resource allocation for all New Yorkers interested in participating in the legal cannabis sector.”

New York cities, towns, and villages have until December 21, 2021, to decide whether or not to allow retail marijuana shops within their borders. According to a database maintained by the Rockefeller Institute of Government, 759 out of 1,520 towns have rejected the idea of permitting dispensaries through local ballot initiatives. Much of Long Island has decided against participating in the retail industry.

When asked how OCM felt about the significant number of opt-outs from municipalities, Ghitelman said the organization was holding out hope that those municipalities would eventually realize the benefits of implementation and opt-in.

There will be widespread sales in New York, he added, “unlike other states that given the opportunity and a huge majority opted out.” The vast majority of New Yorkers will be able to easily visit a dispensary near their home, as cannabis sales will be legalized in 90% of communities across the state.

This includes New York City, Albany, and Buffalo. We anticipate a resurgence of opt-in policies as our consumer-focused business matures and more people have access to cannabis products that have undergone rigorous testing, reducing risks to the public and allowing local economies to expand fairly.

“We’re launching our next public health campaign that focuses on educating New Yorkers about all things legal for cannabis and hope those efforts will clear up confusion some New Yorkers may still have around legalization and help them understand their rights around the use of cannabis products throughout the State,” he said about public education efforts.

Adult Use and ‘Personal Cultivation’

The MRTA legalized recreational marijuana use for people over the age of 21 in all venues where tobacco smoking is permitted, including public walkways and smoking areas, but not in places where minors are present, such as restaurants, parks, and schools.

According to the OCM’s Penal Law fact page about the MRTA, anyone over the age of 21 “may possess up to 3 ounces of cannabis and 24 grams of concentrated cannabis (such vaporization oil or an edible)” when out and about in the state. Individuals who legitimately acquire marijuana goods cannot resell them.

An individual over the age of 21 is allowed to “have three mature and three [immature] cannabis plants within their private residence, with a limit of six mature and six immature plants per private residence,” as stated in a summary of the MRTA published by the New York State Association of Counties in April 2021.

Up to five ounces of marijuana can be kept by adults in their homes. The New York State Courts website states that people can legally carry up to three ounces of marijuana and up to 24 grams of concentrated cannabis in public.

Retail Sales

The MRTA was signed on March 31, 2021, but it took another 20 months for the first retail dispensary to open in New York. Officials eventually opened the first retail dispensary by the end of 2022, but only just barely, with only two days to spare and considerably fewer dispensaries in operation by then than originally expected.

After a lag in the process, on November 21, 2022, OCM stated that the first 36 Conditional Adult-Use Retail Dispensary (CAURD) licenses will be issued, with more to follow in 2023. In a subsequent announcement, Governor Hochul stated that retail sales would launch at the lone Manhattan outlet on December 29.

In a press release dated December 21, OCM Executive Director Chris Alexander said, “Not only have we ended the prohibition in New York, but we’re showing the nation, and the world, how to build a market that is truly equitable and inclusive, and works to undo the harms caused by the disproportionate enforcement of cannabis prohibition.” Spending in this expanding sector is vital to the survival of locally owned-enterprises, public institutions, and neighborhoods.

According to a press release issued by OCM on November 21st, “28 licenses for business owners with a cannabis conviction or a family member with a cannabis conviction [and] 8 approved for nonprofit organizations” are among the initial 36 CAURDs approved by the Cannabis Control Board and issued by OCM. In each of the state’s regions where they were offered, at least one CAURD license was issued, according to the announcement.

The areas without pending legal challenges that would prohibit cannabis licensing were prioritized for license allocation. There is a pending lawsuit that would restrict such permits in places like the Bronx, Queens, and Long Island.

OCM received “almost 900 applications” in the first application cycle for CAURD licenses, which closed in September of last year.

In a November press release, Cannabis Control Board Member Jen Metzger exclaimed, “I’m thrilled that we’ve approved the first adult-use retail licenses as part of the Seeding Opportunity Initiative, which sets our industry off on the right foot- with equity, justice, and sustainability at the forefront.”

These businesspeople will be selling cannabis grown in the sun in a way that has a negligible impact on the environment, and we need to make sure that the cannabis industry in New York continues down this path of social justice and environmental responsibility.

In order to be eligible for a CAURD license, a business must meet specific requirements, such as having “at least thirty percent (30%) of the applicant’s ownership by an individual who is/has: Justice involved, Qualifying business experience, Sole control of the applicant, and [a] Significant presence in New York State,” as stated by OCM.

Anyone “convicted of a marijuana-related offense in New York State prior to March 31, 2021” is considered “justice-involved.” It is lesser infractions, including possession of less than an ounce or the illegal sale of less than an ounce, that the MRTA seeks to erase or rectify. Within two years of the MRTA’s passage, convictions for lesser offenses like “possession of up to 16 ounces of marijuana,” “selling of up to 25 grams of marijuana,” etc., may also be expunged.

The MRTA intended to correct historical wrongs associated with the criminalization of marijuana by instituting these licensing requirements, especially with regard to minor offenses in communities of color. The new law also made it easier to get certain marijuana convictions sealed from your record.

A spokesperson for the New York City Department of Small Business Services (SBS), which houses the city’s new Cannabis NYC program, said, “The announcement of the first adult-use retail dispensary licenses was a historic moment for New York, establishing an equity-centered backbone of the legal market’s seed-to-sale supply chain in just over a year from the appointment of the OCM’s Executive Director, Chris Alexander.”

Rasheeda Dawson, also known as TheWeedHead, was hired as the first executive director of Cannabis NYC in August 2022 by Mayor Adams, a staunch advocate for marijuana legalization.

In a statement released alongside the mayor’s announcement of her hiring, Dawson remarked, “Leading Cannabis NYC is an extraordinary full circle moment.” I grew up in East New York during the height of cannabis prohibition and saw how it ruined the lives of my friends and neighbors who were subject to targeted enforcement.

My first impressions were molded by the fact that I was treated like a criminal when I tried to obtain the plant.

After saying that cannabis “was once used to oppress communities like mine,” Dawson went on to say, “Now, as a cannabis patient, educator, and regulator, I get to support other consumers, small companies, and local stakeholders in the burgeoning industry.” “I’m very happy to be back in my home city, where I can contribute to developing a framework for the city’s cannabis business that places all New Yorkers at the table.”

According to the SBS spokeswoman, Dawson has wasted no time getting started. Since taking over, she has been working on a strategy to improve the City’s, the media’s, and the public’s knowledge of cannabis on a wide range of issues, from policy to health equality.

She hopes to debunk misunderstandings and misconceptions while avoiding the mistakes made by other jurisdictions. She has represented the city government at various major cannabis industry events, where she has helped promote Mayor Adams’ equity-centered agenda.

The spokesperson continued, “Since launch, we have worked closely with the State’s Office of Cannabis Management (OCM) to support the initial Conditional Adult-Use Retail Dispensary (CAURD) license application.”

In a statement released by the city, Cannabis NYC said, “During the 30-day CAURD application window, Cannabis NYC engaged with over 1,000 New Yorkers across the suite of services made available through SBS, including a hotline, webinars, and providing direct services to applicants through our Business Solution Centers.”

The Control Board and OCM are establishing a wide variety of marijuana licenses, including CAURDs.

Even though the NYC SBS is “very excited” about the nearly 300 conditional licenses that have been approved across cultivation, processing, and retail by the state, “we understand that there are 9 license types within the MRTA that will represent most of the licensed cannabis business in the New York market,” the spokesperson said.

On November 22nd, OCM proposed adult-use regulations that would apply to seven of the nine MRTA license categories.

The MRTA lays forth nine different types of marijuana licenses, including cultivator, processor, cooperative, distributor, retail dispensary, microbusiness, delivery, nursery, and on-site use.

SBS continued, “Now the hard job begins!” When the 60-day comment period ends, the regulations will be updated. Cannabis NYC will offer a workshop series to analyze the regulations, collect feedback, and collectively submit comments to the State on behalf of interested parties. Whether your focus is on entrepreneurship, economic development, or law enforcement, we aim to represent the City’s priorities while the State works to build a more just and inclusive economy.

The New York State Counties Association MRTA report estimates that “New York State will earn $20 million in revenue from license fees” in the first year after legalization. When sales from authorized retail dispensaries begin to roll in, “the State expects $360 million in annual state revenue and $75 million for municipal governments.”

Some examples of these taxes are as follows, as summarised by the Counties Association: “cannabis flower is taxed at a rate of $0.005 per milligram, cannabis concentrate is taxed at $0.008 per milligram, and edible cannabis products are taxed at $0.03 per milligram.” Retail sales are subject to a 9% state tax and a 4% local tax in areas where dispensaries are permitted.

Many state drug treatment programs and disproportionately impacted neighborhoods would benefit from the tax money. According to OCM’s website, 20% of tax money will be dedicated to drug treatment programs and the public education fund; 40% will be sent to the community grants reinvestment fund, which will be utilized for job placements, adult education, mental health treatment, etc.

Additionally, the Cannabis Control Board has approved “home-grow regulations for medical patients and designated carers,” the OCM has “previewed new adult-use cannabis regulations,” and the New York Social Equity Cannabis Investment Fund has announced that it has selected firms to oversee the design and construction of New York’s first retail cannabis dispensaries as part of the ongoing process of implementing the MRTA.

The spokeswoman for the city’s Small Business Services and Cannabis NYC said, “This is only the very beginning stages of implementation, and we are not expected to see applications available for the MRTA licenses until April 2023.” Meanwhile, we must keep working hard to provide the groundwork for what is expected to be a multibillion-dollar sector.

Illegal Sales, MRTA Obstacles

The viability of the new legal cannabis sector in New York depends on the state and local governments collecting the tax income they expect to receive from marijuana sales.

Recent efforts to legalize marijuana have been complicated by the proliferation of smoke shops that continue to operate unlawfully, despite the lack of enforcement that would force them to shut down.

“More recently, we are seeing a proliferation of new players exploiting the goals of New York’s landmark bill, operating unlicensed smoke shops, and putting public health and equity at risk,” said a representative for the city’s Department of Small Business Services and its Cannabis NYC.

The clandestine market immediately undercuts the hard work of entrepreneurs reinvesting in their communities,” Ghitelman from OCM stated of unlawful sales. In New York, OCM collaborates with law enforcement to get rid of illegal cannabis trucks, close down unlawful storefronts, confiscate untested cannabis goods, and keep the legal market safe. While we are dedicated to ending activities in the black market and working toward eliminating unsanctioned outlets across the State, the legal, regulated cannabis sector in New York will continue to flourish.

During the middle of December, Mayor Adams announced “the results of a two-week interagency pilot conducting enforcement against unlicensed establishments selling cannabis, cannabis-infused edibles, illegal vaping products, illegal cigarettes, and other illegal tobacco products,” sparking widespread outrage and controversy just before legal marijuana sales were set to begin. More than $4 million in illegally sold goods were confiscated, and 566 criminal and civil summonses were issued as a direct result of the experimental operation.

At the same time, we will keep working to inform unlicensed businesses of the law and bring those who break it to justice, as Mayor Adams pledged at the time.

In the meanwhile, on January 18 the New York City Council will convene an oversight hearing on “the growth of unauthorized smoke businesses in New York City.” The hearing is being held in conjunction with the Council’s health, consumer protection, and oversight and investigations committees.

State Assemblywoman Amy Paulin has also authored legislation to crack down on the unlawful sale of cannabis. Her measure, which she announced in December, would impose fines of at least $2,500 for a first offense, $5,000 for a second, and possible seizure of the firm for a third for any establishment caught selling cannabis without a license. Paulin’s office reports that the current penalty for a business is only $250.

In addition, the bill would “add language to New York State penal law to clear that unlicensed cannabis dealers are subject to existing prohibitions relating to the unlawful selling of cannabis.” The Assembly Member’s news release adds that the current uncertainty in the legislation has in some cases delayed police crackdowns on unlawful sales at stores, allowing them to continue illicit selling.

“Individuals seeking the required licensure and complying with the law are at an extreme disadvantage when other individuals are circumventing licensing costs, product laws, and guidelines put forth by the OCM,” Paulin said in unveiling the proposal. “We must penalize bad actors in the adult-use cannabis market the same way we do for other lawful industries in our state who operate without the necessary license,” the bill reads.

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