N.Y. Recreational Cannabis: Waiting for the Ball to Drop [Infographic]

Updated: May 26, 2019

As 2018 draws to a close, we tend to reflect on our (hopefully) productive year and we prepare for a new year with fresh endeavors—for the cannabis industry, it’s no different. 2018 was considered a victory for cannabis culture. From the successful events such as MJBizCon and the Cannabis Business Summit to the even more successful November elections, it’s evident the procession for cannabis is far from over.

With 2019 near, marijuana industry leaders predict that N.Y. legislators will be ringing in the new year with new legislation: recreational cannabis.

Although lawmakers aren't due back in Albany until January, a bill to legalize adult-use marijuana in New York is expected to be introduced during the upcoming 2019 legislative session, which begins Jan. 3. With New York State legislation under democratic-control, new cannabis laws could go into effect as early as 2019.

State health officials issued a long-awaited report earlier this year that the benefits of legalization in New York outweigh the risks. The report also found that depending on the tax rate, the state could generate between $250 million and $678 million in revenue.

Evidence of progress and change in N.Y. cannabis culture is apparent. Most recently, New York expanded the qualifying medical conditions in 2017 to include chronic pain and authorized an additional five Registered Organizations. City and state officials have also taken steps toward possible legalization, with public listening sessions and governmental reports throughout this year.

For years, the biggest obstacle to legalizing recreational marijuana in New York was Governor Andrew Cuomo, who opposed the move. However, after reviewing a state evaluation recommending cannabis legalization, Cuomo’s tune has changed. While it might take some time for them to hammer down the details, it won’t be too far in the future before New York legalizes marijuana.

Reflection: New York & Cannabis Legislation

July 2014

New York enacts the Compassionate Care Act, authorizing a state medical marijuana program.

April-June 2015

The initial application window—during this phase, 43 companies submitted applications.

July 2015

New York state selects five winners. Each winner will have a single manufacturing location and four dispensaries.

The state does not permit medical dispensaries to sell unprocessed whole flower or edibles, and smoking is prohibited. Patients are expected to use cannabis-based oils, liquids, and pills, either orally or through vaporization.

January 2016

The first four dispensaries open their doors. While estimates of the potential patient population range from 100,000 to 400,000, early patient numbers are considered low.

526 physicians register to certify patients for medical marijuana and 2,675 patients receive certifications. Low numbers may relate to the process of certifying physicians, who must undertake a four-hour course before writing recommendations, and a conservative approach to patient certification. Many prospective patients have challenges finding a registered physician.

March 2017

After medical marijuana patient numbers struggled to grow initially, New York added chronic pain to the list of qualifying conditions. New York also adds five additional registered organizations, selecting the next-highest-scoring applicants from the 2015 process.

August 2017

The number of certified patients increases by 72% (from 14,992 prior to the addition to 25,736). However, this remains substantially below initial predictions for the state.

November 2018

New York Senate Bill S3040 – The Marijuana Regulation and Tax Act. The bill is placed in the Senate Finance Committee awaiting further review.

Cannabis Forecast: 2019

If passed, Senate Bill S3040 would establish a legal market for adult-use cannabis in the state, with cannabis taxed and regulated in a fashion similar to how alcohol is regulated for adults 21 and over.

The proposed bill also includes measures aimed at promoting racial equity and small business. Proposed “micro” licenses would be similar to those granted to New York’s craft wine and beer industry. It would allow small-scale production and sale plus delivery to reduce barriers to entry for people who have limited access to capital or traditional avenues of financing. On-site consumption will be available for certain retail dispensaries.

While there are no current opportunities to apply for marijuana licenses in the Empire State, New York Officials have officially embraced cannabis legalization and are already taking action to expand and regulate commercial cannabis on a larger scale.

New York State Senator Liz Krueger plans a new push in favor of the Marijuana Regulation and Taxation Act (MRTA) (Senate Bill S3040B), legislation to legalize the adult possession, use, and sale of marijuana in New York.

There are recently announced regulations to improve the state’s medical marijuana program which includes changes to the application, including “chronic pain” as a qualifying condition. Also, a task force is currently researching and crafting legislation for consideration in the upcoming 2019 legislative session, and public hearings on the matter are being held statewide.

Gov. Andrew Cuomo has recently softened his stance on legalization, after previously referring to marijuana as a “gateway drug” and last week, Albany County District Attorney David Soares said his office would not prosecute low-level marijuana offenses, joining the Manhattan and Brooklyn district attorneys.

These progressive politics, in conjunction with the aforementioned 2017 addition of “chronic pain” as a qualifying condition, suggests new marijuana licenses in New York may be forthcoming.

Resolution: Don’t Pot-crastinate

New York’s medical marijuana program is based on Registered Organizations, who cultivate, manufacture, and sell medical marijuana at four geographically distributed retail locations. New York’s program authorized each of four license winners to operate one cultivation and processing facility and four geographically-spread out dispensaries. With each facility needing significant security and operational build-out, start-up costs are not small in this state.

Meanwhile, 10 states across the country have legalized recreational marijuana as well as Canada earlier this year. New Jersey, Connecticut and Pennsylvania are also discussing whether to legalize the drug for recreational use. While legislatures dabble in the laws of recreational pot, cannabis industry leaders are taking advantage of the head start and developing their business logistics.

The licensing application process, recruiting potential investors, employees, and consumers, creating reports, budgets, maximizing marketing strategies- every tool will be utilized. The market will be limited- therefore only the ready and able will step into the new year and marijuana market successfully. Entrepreneurs and organizations that act now will be well best equipped to harness their position in the cannabis market. At The J. Whitney Group, we are experienced cannabis consultants providing business solutions to meet all your needs - from this year to the next. Contact us today to request a free consultation.

© 2019 by The J. Whitney Group.

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