February 18, 2021

Cuomo said he hopes to pass this legislation through the budget process by April 1, and that he has been negotiating with lawmakers to come to a final deal.

In a February 16 announcement, New York Governor Andrew Cuomo released 30-day amendments to the cannabis plan in his budget proposal, detailing how $100 million for social equity funding will be spent, allowing the use of cannabis delivery services and refining criminal charges for improper sale of cannabis to reduce the impact on communities hardest hit by the “war on drugs.”

Social Equity Funding

Cuomo’s proposal includes a $100 million fund to help revitalize communities most impacted by the war on drugs. In order to allocate this funding, Cuomo is proposing that qualified community-based nonprofit organizations and local governments could apply for funding to support community revitalization efforts such as job placement, housing, mental health and substance abuse treatment, among other things. The New York Department of State would allocate the funding through grants administered by the Empire State Development Corporation, in collaboration with the departments of Labor and Health, the Division of Housing and Community Renewal and the offices of Addiction Services and Supports and Children and Family Services.

Enabling the Use of Delivery Services

Recognizing that adult-use cannabis legalization will likely play a role in New York’s economic recovery following the COVID-19 pandemic (projections include more than 60,000 jobs, $3.5 billion in economic activity and $350 million in tax revenue), Cuomo intends to enable the use of delivery services of cannabis products to allow a low-cost entry point into the industry. He expects this will especially benefit communities most impacted by the war on drugs. Local governments would have the ability to opt out of delivery services within their jurisdiction, however.

Criminality of Improper Sales

Lastly, in keeping with his goal of addressing the war on drugs’ disproportionate impact on communities of color, Cuomo’s amendments include the reduction of specific penalties for the criminal sale of marijuana, as follows:

  1. Criminal sale in the third degree (sale to those under 21 year old) will be made a class A misdemeanor;
  2. Criminal sale in the second degree (sale of over 16 ounces or 80 grams of concentrate) will be made a class E felony; and
  3. Criminal sale in the first degree (sale of over 64 ounces or 320 grams of concentrate) will be made a class D felony.

The announcement noted that in 2019 Cuomo signed legislation to decriminalize unlawful possession of marijuana and put forth a process for expungement of certain marijuana convictions, and that the “proposal builds on years of work to understand and decriminalize cannabis for adult use.”

Cuomo said he hopes to pass this legislation through the budget process by April 1, and that he has been negotiating with lawmakers to come to a final deal.

The Legislature will hold a joint budget hearing on February 23 to discuss the governor’s proposals, including this one. Following the hearings, the Senate and the Assembly will each release their own budget proposals. Last month, the Legislature reintroduced a competing cannabis legalization proposal, the Marihuana Regulation and Taxation Act (MRTA), a version of which may be included in the Senate and Assembly’s standalone budget proposals.

For further details about Cuomo’s proposal and the Legislature’s proposal, read our Duane Morris Alerts from January 11 and January 22.

For More Information

If you have any questions about this Alert, please contact Michael D. SchwammDeanna J. Lucci, any of the attorneys in the Cannabis Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.

https://www.duanemorris.com/alerts/governor_cuomos_amendments_adult_use_cannabis_proposal_would_reduce_criminal_charges_0221.html

 

THE ANNOUNCEMENT

30-Day Amendments Detail How $100 Million in Social Equity Funding will be Allocated, Enable the Use of Delivery Services, and Refine Criminal Charges Related to Improper Sales to Reduce Impact on Communities Hit Hardest by the War on Drugs

Governor Andrew M. Cuomo today announced 30-day amendments to the Governor’s proposal to establish a comprehensive adult-use cannabis program in New York. Specifically, these amendments will detail how the $100 Million in Social Equity funding will be allocated, enable the use of delivery services, and refine which criminal charges will be enforced as it relates to the improper sale of cannabis to further reduce the impact on communities hit hardest by the war on drugs.

“As we work to reimagine, rebuild and reopen New York, we’re taking every opportunity to address and correct decades of institutional wrongs to build back better than ever before,” Governor Cuomo said. “We know that you cannot overcome a problem without first admitting there is one. Our comprehensive approach to legalizing and regulating the adult-use cannabis market provides the opportunity to generate much-needed revenue, but it also enables us to directly support the communities most impacted by the war on drugs by creating equity and jobs at every level, in every community in our great state.”

Allocation of $100 Million Cannabis Social Equity Fund

Social and economic equity are the bedrock of Governor Cuomo’s proposal to legalize cannabis for adult-use and as part of that, the Governor’s proposal includes a $100 million dollar fund to help revitalize communities that have been most harmed by the war on drugs.

Through this fund, qualified community-based nonprofit organizations and local governments would apply for funding to support a number of different community revitalization efforts, including, but not limited to:

  • Job placement and skills services,
  • Adult education,
  • Mental health treatment,
  • Substance use disorder treatment,
  • Housing,
  • Financial literacy,
  • Community banking,
  • Nutrition services,
  • Services to address adverse childhood experiences,
  • Afterschool and child care services, system navigation services,
  • Legal services to address barriers to reentry, and
  • Linkages to medical care, women’s health services and other community-based supportive services

The grants from this program may also be used to further support the social and economic equity program.

Under the amended proposal, the Department of State would allocate the funding, through grants administered by Empire State Development Corporation, in collaboration with the departments of Labor and Health, as well as with the Division of Housing and Community Renewal, and the offices of Addiction Services and Supports and Children and Family Services. Final allocations and administration of funding would also be contingent upon approval from the Division of the Budget.

Enabling the Use of Delivery Services

The legalization of cannabis is expected to play an important role in helping rebuild New York’s economy following the damaging effects of the COVID-19 pandemic. In fact, legalization is projected to create more than 60,000 new jobs, and spur $3.5 billion in economic activity while generating an estimated $350 million in tax revenue once fully implemented.

Cannabis legalization also has the potential to have a significant economic benefit on distressed areas in New York, providing employment opportunities for all levels of the workforce. As social and economic equity are the bedrock of Governor Cuomo’s proposal, delivery services offer a low-cost entry point into the industry, particularly in communities which have been especially impacted by the war on drugs.

Recognizing this, the Governor is amending his proposal to allow for the permitting of delivery services as a way to open up access to this new industry even further so more New Yorkers can participate as it grows. As part of this, local governments would have the opportunity to opt out from delivery services occurring within their jurisdiction.

Criminality of Improper Sales

When establishing a new product market as the Governor’s proposal does, there will inevitably be attempts by bad actors to skirt rules and commit fraud for their own financial gain. This makes it critically important to ensure that penalties are carefully calibrated to ensure that all those who wish to participate in this new market, are operating on the same level playing field.

Cannabis, however, adds another complicating factor to this dynamic – years of outdated policies stemming from the War on Drugs have disproportionately impacted communities of color. Already, New York has taken steps to decriminalize cannabis and as this new market is realized, and it’s critical that criminal penalties are thoughtfully assigned, as to ensure that the progress which has already been made, is not inadvertently reversed.

As such, under the Governor’s amended proposal, specific penalties will be reduced as follows:

  • Criminal sale in the third degree (sale to under 21 year old) will be made a class A misdemeanor
  • Criminal sale in the second degree (sale of over 16 ounces or 80 grams of concentrate) will be made a class E felony
  • Criminal sale in the first degree (sale of over 64 ounces or 320 grams of concentrate) will be made a class D felony

The Governor’s proposal builds on years of work to understand and decriminalize cannabis for adult use. In 2018, the Department of Health, under Governor Cuomo’s direction, conducted a multi-agency study which concluded that the positive impacts of legalizing adult-use cannabis far outweighed the negatives. It also found that decades of cannabis prohibition have failed to achieve public health and safety goals and have led to unjust arrests and convictions particularly in communities of color.

In 2019, Governor Cuomo signed legislation to decriminalize the penalties for unlawful possession of marijuana. The legislation also put forth a process to expunge records for certain marijuana convictions. Later that year, the Governor spearheaded a multi-state summit to discuss paths towards legalization of adult-use cannabis that would ensure public health and safety and coordinate programs regionally to minimize the cross-border movement of cannabis products.

Building on that important work, the Governor’s proposal reflects national standards and emerging best practices to promote responsible use, limiting the sale of cannabis products to adults 21 and over and establishing stringent quality and safety controls including strict regulation of the packaging, labeling, advertising, and testing of all cannabis products. Cannabis regulation also offers the opportunity to invest in research and direct resources to communities that have been most impacted by cannabis prohibition.