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Legalized Adult-Use Marijuana Coming to New York?

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In January’s speech on the New York State budget, Governor Andrew Cuomo authorized a working group led by the State Department of Health to examine New York’s approach to marijuana. After six months of rigorous analysis that involved numerous New York State agencies and subject-matter experts in the fields of public health, mental health, substance abuse, public safety, transportation, and economics/taxation, New York released a 75-page report[1] (the “Report”) unequivocally recommending that the State move towards adopting a program of regulated, legal adult-use[2] of marijuana. The impact assessment involved a public health approach to examining the benefits and risks associated with legalizing marijuana in New York as compared to maintaining the status quo.

New York was widely criticized for a slow, conservative rollout of its medical marijuana program which launched in 2014 with the Compassionate Care Act. Skeptics viewed the program as having too restrictive a list of qualifying medical conditions, unduly hampering adoption and patient enrollment.[3] The writing seemed to be on the wall, however, with respect to New York’s reluctance to embrace marijuana, as surrounding States such as Massachusetts and New Jersey began to adopt adult-use marijuana programs[4]. New York, of course, also shares a large border with Canada, which is legalizing marijuana use nationally for adults, becoming just the second country in the world after Uruguay to do so.

While citing several negative health consequences of marijuana use[5], the Report stated that “the negative health consequences of marijuana have been found to be lower than those associated with alcohol, tobacco and other illicit drugs.” In addition, the Report found that regulated adult use leads to little or no additional marijuana use; rather the usage shifts from an unregulated, black-market lacking in labelling, quality control and standards to a regulated, open and taxed system with improved consumer protection.

New York’s Report found the benefits to legalization far outweighed the negatives. The Report focused on (i) health; (ii) social justice; and (iii) economics. With respect to health, as noted above, the Report said that regulating the industry with effective labeling, quality control and dosage guidelines was greatly preferable to illegal, black-market marijuana, which has historically included the use of certain synthetic products that the Report found to be inherently dangerous and undesirable. The Report also cited the potential role a legalized adult-use regime could have on cutting opioid dependence and over-prescription.

With respect to social justice, the Report focused on statistics indicating that people of color were four times more likely to be incarcerated for marijuana possession or use than Caucasian people despite statistics showing similar marijuana usage levels among their populations. “The status quo (i.e., criminalization of marijuana) has not curbed marijuana use and has, in fact, led to unintended consequences, such as the disproportionate criminalization of racial and ethnic minority communities and incarceration that has a negative impact on families and communities[6].”

As to economics, the Report projected, in addition to the potential for significant job growth in the cannabis industry[7], the potential total annual State and local tax benefit to be between $248 million (with an assumed 7% tax) to in excess of $675 million (with a 15% tax). In addition, “legalizing marijuana is anticipated to lead to a reduction in costs associated with illegal marijuana, including police time, court costs, prison costs and administrative fees.”

Unfortunately, the announcement of the Department of Health’s analysis came with only two days left in Albany’s legislative session and the full report came during summer recess. Comprehensive adult-use marijuana legislation will require concurrence of both the liberal Assembly and the more traditionally conservative State Senate. We can expect the heavy lifting on a potential bill to come following the November elections.

If you have any questions about this topic, contact James Rieger at Rieger@thsh.com or 212.508.6728, any member of Tannenbaum Helpern’s Cannabis Law practice group, or your usual contact at Tannenbaum Helpern.

James Rieger | Rieger@thsh.com | 212.508.6728

Wayne H. Davis | Davis@thsh.com | 212.508.6705

Michele Itri | Itri@thsh.com | 212.508.6732

Drew Jaglom | Jaglom@thsh.com | 212.508.6740

David R. Lallouz | Lallouz@thsh.com | 212.702.3142

Michael Riela | Riela@thsh.com | 212.508.6773

Beth Smigel | Smigel@thsh.com | 212.702.3176

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[2] Sometimes called “recreational use” in other venues, a term the Report doesn’t use.

[3] Chronic pain and post-traumatic stress disorder were subsequently added, positively impacting patient enrollment, and it was recently announced that opioid use will be added as a qualifying condition.

[4] New York’s impact assessment cited a study estimating annual expenditures in New Jersey on marijuana from New York and Pennsylvania residents at over $108 million. The mere act of crossing State borders or the border with Canada with marijuana legally obtained in those jurisdictions constitutes a federal felony.

[5] E.g., Lung issues when smoked, underweight babies when used during pregnancy, cognitive impairment associated with adolescent use.

[6] Further collateral consequences could include barriers to housing, education and voting rights.

[7] As noted above, because cannabis is still illegal federally, any marijuana that might be consumed by New York residents under a future New York adult-use regime will necessarily have to be grown, processed and retailed in New York, leading to new jobs in the New York cannabis industry.

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