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How Will the Marijuana Regulation and Taxation Act Impact Your Operations?

By: Jason Hoffman

The Marijuana Regulation and Taxation Act, which New York Gov. Andrew Cuomo signed into law March 31, 2021, legalized the production, distribution and adult-use of marijuana in New York State.

While there are a lot of provisions that need to be reviewed, the Janover Cannabis Industry team has summarized some of the larger components of the law. We will continue to monitor developments with the legislation and provides updates as they become available.

Taxation Impacts

Cannabis products are now subject to a state tax of 9%. There’s an additional 4% local tax, with 75% of the local earnings going to municipalities and 25% to counties.

Marijuana distributors will also face a THC tax based on type of product, which includes:

  • 5 cents per milligram for flowers
  • 8 cents per milligram for concentrated cannabis
  • 3 cents per milligram for edibles

Legal Changes

  • Adults, which are defined as individuals 21 years old and older, can hold and purchase cannabis products from licensed retailers.
  • There no longer penalties for public possession of up to 3 ounces of cannabis flower or 24 grams of cannabis/THC concentrates
  • People can store up to 5 pounds of cannabis flower at home.
  • Adults can cultivate up to six plants for personal use (not defined)
    • Three can be mature
    • A maximum of 12 plants can be grown per household
    • Note: Home growing is not allowed until regulators come up with the rules. Regulators have six months to determine rules for medical patients and 18 months for recreational users.
  • A process has been created to reclassify past convictions related to marijuana and to resentence incarcerated individuals who are serving sentences for marijuana-related offenses.
  • Cannabis users and employees of the cannabis industry would have some protections including fair housing.
  • Police cannot use the odor of cannabis to justify searches.
  • The state Department of Health will study technologies to detect cannabis-impaired driving, which remains a misdemeanor

Regulatory Changes

A new Office of Cannabis Management will be set up as an independent agency as part of the New York State Liquor Authority. A five-member Cannabis Control Board will oversee the agency, which will be responsible for regulating the recreational cannabis market as well as the existing medical marijuana and hemp programs. The governor will appoint three members, and the Senate and Assembly will appoint one member each.

Regulators will set up rules for licenses for commercial cultivators, processors, distributors, retailers, cooperatives ,and nurseries. To provide opportunity for small and local businesses, no vertical integration will be allowed except for small-scale production and sale view micro-license. Existing vertically integrated medical cannabis operators will remain in place (There are currently five licenses.)

Individual jurisdictions would be allowed to opt out of allowing retailers or social consumption sites by the end of this year, but residents could seek to override such bans via a local referendum process.

There also is a goal that 50% of marijuana business licenses are issued to social equity applicants, who are defined as low-income individuals who can prove they or a close relative were targeted by a marijuana-related arrest in the past.

Medical Cannabis Impacts

MRTA expands the current medical cannabis program by providing a list of qualifying conditions that allows patients to smoke cannabis products and purchase a 60-day supply. It also allows medical cannabis businesses to participate in the recreational program, which includes selling smokable hemp flowers.

Janover Can Help You Comply With MRTA

While MRTA legalizes many components of the cannabis industry, there are still many challenges associated with direct involvement or investment in a cannabis-related business. Contact us by clicking here to learn how the Janover team can help you navigate the MRTA to make the most of your cannabis business.


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