It’s been one year since New York state legalized recreational marijuana use. Former Governor Andrew Cuomo signed the Marijuana Regulation and Taxation Act (MRTA) into law on March 31, 2021. Along with legalizing the substance, the bill included the formation of the Office of Cannabis Management (OCM) to regulate cannabis use and distribute cannabis business licenses. While officials are still determining cannabis guidelines, especially as it relates to how cannabis is grown and distributed, here are some recent updates:
1.Hemp farmers are allowed to apply for cannabis licenses
Under a law signed by Governor Kathy Hochul in February, hemp farmers will now be allowed to apply for a license to grow marijuana. The current legal New York grower group consists of only 10 companies that cultivate marijuana for medical patients. The bill will allow hemp farmers, previously only permitted to harvest the plant for hemp and CBD products, to establish themselves in the cannabis market.
2. New York legislators have proposed tax relief for cannabis businesses
New York State and Assembly lawmakers have included tax relief for cannabis businesses at the state level in their budget proposal measures. Because cannabis is not legal at the federal level, Internal Revenue Code Section 280E prohibits cannabis operations from deducting expenses afforded to other businesses. If passed, Bill A8808/S7518 is estimated to save cannabis businesses more than $25 million annually by 2024.
3. Cannabis licenses will first go to people with marijuana convictions
New York will be the first state to prioritize administering cannabis licenses to people convicted of a marijuana-related crime. The decision, announced by Governor Hochul in March, is an attempt to correct the state’s history of cracking down on marijuana-related offenses and allow communities impacted by those convictions to get a head start in New York’s marijuana market. The application process for priority licenses is expected to begin summer 2022.
4. New York continues to prioritize social equity goals
Last year’s legalization legislation included a goal of awarding 50% of all cannabis business licenses to social equity applicants – and lawmakers are working hard to achieve those goals. In January, Governor Hochul proposed a plan to create a $200 million public-private fund to help social equity applicants create their cannabis operations. These social equity groups include minority and women owned businesses, distressed farmers and disabled military veterans.
- OCM cracks down on “gifting”
New York regulators are targeting marijuana “gifting”, the practice where an unlicensed business sells a product or service to a customer and includes a marijuana gift as part of the sale. The OCM has sent cease-and-desist letters to operations suspected of engaging in the practice, warning they might not be able to apply for a legal license once they become available.
- MTA prohibits cannabis ads
The New York Metropolitan Transit Authority released new advertising policies, including a ban on marijuana related ads on subways and buses. The ban, announced late 2021, appears to include medical marijuana ads, which were previously allowed.
- First New Jersey conditional licenses approved
Slightly ahead of New York in its efforts to bring cannabis to the market, New Jersey has approved 68 licenses to cultivate and sell recreational marijuana. The conditional licenses allow the applicants, 50 cultivators and 18 manufacturers, to advance business operations by securing a physical location.
As New York is still relatively new to the legal cannabis industry, its statutes and anticipated timelines are fluid. Janover’s team of cannabis experts are staying up-to-date on all cannabis related legislation, especially as it relates to tax and accounting. For more information or to speak to a cannabis team member, contact us today.