With adult recreational use of cannabis now legal in fifteen states (and the District of Columbia), including New York’s neighbor New Jersey as of January 1, 2021, New York has fallen behind. New York should have acted at a time when it would have been a leader in the region in ending cannabis prohibition but, instead, it let politics get in the way.
In 2019, a bill was close to passing as part of the budget, but the legislature couldn’t agree on how the tax revenue would be allocated and who would decide. 2020 was going to be the year, but then Covid-19 struck, and marijuana reform was put on the back-burner. 2021 must be the year, but it will be done under pressure from legalization in New Jersey and without the benefits of working together with New Jersey, Pennsylvania, and Connecticut, as previously contemplated.
For the sake of all New Yorkers, the legislature must act this year. Doing so will have many positive short- and long-term benefits for New York, including job creation, new tax revenue, racial and social justice reform, cannabis quality control, reduction in crime and incarceration costs, and improved use of law enforcement. Also, if the New York legislature learns from mistakes made by California, it will enact a reasonable tax regime as part of the legislation ending marijuana prohibition, which eventually will eliminate the current marijuana underground economy in New York.
In terms of job creation, the end of weed prohibition will create new jobs all across New York State. Once legal, New Yorkers will have the opportunity to participate in the entire supply chain for cannabis in New York, including growing the plant by farmers, processing the plant by manufacturers, distributing cannabis by wholesalers, and selling cannabis by retailers. And there are numerous other entities along the way, such as fertilizer, packaging, transportation, testing, and research and development organizations, that will be able to participate in the marijuana marketplace and create numerous jobs for New Yorkers in doing so.
If job creation is not reason enough to legalize marijuana, then the much-needed revenue created from a legal marketplace should put an end to any debate. Marijuana Business Daily projects that annual recreational cannabis sales in New Jersey will reach up to $950 million by 2024. Based on that projection, given that New York has more than twice the population of New Jersey, annual recreational sales in New York could be over $2 billion by 2024. As such, any tax structure adopted by New York will undoubtedly result in significant new revenue for New York.
While there will be debate about how to use tax revenue derived from recreational cannabis sales, it is my hope that some part of it will be used for racial and social justice reform and earmarked for New Yorkers and New York communities most harmed by the war on drugs. It is my further hope that the legislature will designate some of the added revenue for drug rehabilitation programs and, as in New Jersey, for retraining law enforcement. Given the economic devastation that Covid-19 is having on New York and its disproportionate impact on the same communities that were unequally affected by marijuana prohibition, such new revenue is imperative for New York at this time.
New York simply cannot afford to fall further behind in creating a legal recreational cannabis marketplace. It’s high time for the New York legislature to act and get on with pot.
Lori B. Green is a Nixon Peabody LLP partner and the co-leader of Nixon Peabody LLP’s nation-wide Cannabis Practice as well as M&A and Corporate Transactions Team.
SOURCE: Section Page News – Crain’s New York Business – Read entire story here.