Marijuana reform advocates are seeing a number of positive signals in the push to legalize marijuana in New York—with the governor saying a deal is “very close” and a new resolution from the Senate saying that a legalization bill “shall be passed outside of the budget process.”
While Gov. Andrew Cuomo (D) included his own legalization plan in his budget request, the final version is expected to more closely resemble a proposal sponsored by two key lawmakers, and it will be handled outside of the annual spending legislation. And if either side needed any further motivation to act, a new poll released on Monday confirms again that a majority of New Yorkers support the policy change.
The news about how the legislation will be handled moving forward is welcomed by advocates who feel that lawmakers’ Marijuana Regulation and Taxation Act (MRTA) more comprehensively addresses social equity issues compared to the governor’s proposal. However, the legislature is still working to resolve a number of provisions before the language is released.
Cuomo said on Monday that “passing marijuana reform and legalizing recreational marijuana” remains a priority and that he spent the weekend speaking with Assembly Majority Leader Crystal Peoples-Stokes (D), sponsor of the MRTA, “working through” the legislation. He said they are “very close on marijuana.”
“We’ve tried to do that for the past three years, we have to get it done this year,” he said. “There’s been too many young lives that have been ruined because of the marijuana laws.”
“This is not about getting in the red zone anymore,” he added, using a football metaphor. “We have to get over the goal line this time. We need the seven points.”
The governor previously insisted on enacting the reform through the budget process, but that doesn’t seem to be part of the plan anymore. A new Senate resolution responding to his executive budget that was released over the weekend states that the chamber’s revised spending legislation “omits the Cannabis Regulation and Taxation Act, which if enacted would have increased All Funds revenue by $20 million in SFY 2021-22, but fully supports the MRTA (S.854), which shall be passed outside of the budget process.”
While Cuomo’s legalization measure is being omitted, the Senate concurred with his proposal to provide $37.4 million in additional funding for the state Division of Alcoholic Beverage Control in order to “support the creation of an office to regulate adult use recreational cannabis,” a further signal that legislative action is imminent.
Speaker Carl Heastie (D) said at a press conference on Monday that a deal on legalization is close and that the issue would likely be handled outside of the budget.
The chamber’s proposal on spending legislation says it wants to “continue discussions with the Executive and the Senate to provide for the legalization and regulation of the cultivation, production, sale of cannabis and cannabis products for adult-use, expanding the existing medical cannabis program and address the collateral consequences of the criminalization of cannabis.”
“The Assembly supports the establishment of a centralized regulatory approach for the licensure and regulation of medical, adult-use and hemp-based cannabis and cannabis products and businesses through the creation of a regulatory body comprised of legislative and executive appointments, as well as ex-officio agency representation from agencies involved in implementation.
“The Assembly also supports provisions to: reduce criminal penalties attributed to future cannabis related activity; expand the ability of individuals to vacate or expunge certain lower level past cannabis convictions; protect legal rights in the workplace; ensure appropriate standards and protections are in place as it relates to public assistance, child care workers, foster parents and investigations of child abuse, neglect, and endangerment involving the use of cannabis ; provide access to business mentoring, application process assistance, incubators, capital and other social equity programs necessary to support the long-term success of social and economic equity applicants as part of a plan to award 50 percent of adult-use cannabis licenses to individuals in communities that have been disproportionately impacted by past criminalization of cannabis, communities of color, minority- and women-owned business, disadvantaged farmers and service-disabled veterans; establish a reasonable tax structure related to the sale of adult-use cannabis; provide for personal cultivation; ensure access to medical cannabis is maintained and expanded; recognize community priorities through local opt-out provisions from the adult-use market; and other priorities deemed necessary and appropriate.
“The Assembly maintains that it is critically important that revenue generated from legalization of cannabis be invested in communities that have been disproportionately impacted by past criminalization of cannabis, including creating a Community Grants Reinvestment Fund. Therefore, the Assembly will further continue discussions on how to direct revenue to ensure that funds will be used for: public education; job creation, skills development and training; social justice and reentry services for impacted communities; substance use disorder services and mental health services; community-based supportive services; expanded training for state and local law enforcement to maintain driver safety; and any other uses deemed necessary and appropriate.”
Before the legislation is finalized, lawmakers and the administration are reportedly working through a number of sticking points, including how many plants people can cultivate for personal use and what type of evidence that can be used in impaired driving cases.
According to NY1’s Zack Fink, once those provisions are settled, votes on the reform bill in both chambers could come next week.
-The number of plants that can be grown in homestead model
-What kind of evidence can be used in court for those caught driving while impaired
— Zack Fink (@ZackFinkNews) March 15, 2021
The governor’s budget, unlike the plan put forth by lawmakers, did not allow people to legally grow their own marijuana at home.
Public defender and activist Eli Northrup said that he’s heard from sources that Cuomo is pushing to have the legislation make it so police could continue to justify stops and searches based on the odor of cannabis alone, regardless of its legalization. Advocates strongly oppose that policy.
Only where there is evidence that someone is driving under the influence of marijuana would odor be relevant. And even then, only the odor of burnt marijuana. Searches must be narrowly tailored to uncovering evidence of that offense. Not a license to search an entire car.
— Eli Northrup (@EliNorthrup) March 15, 2021
Details of the final legislation might be pending, but polling shows that New Yorkers are ready for cannabis reform. A Siena College survey released on Monday found that 59 percent of residents support adult-use legalization, compared to 33 percent who are opposed.
“Today’s Siena poll confirms that New Yorkers across the board are overwhelmingly in favor of marijuana legalization,” Melissa Moore, New York state director for the Drug Policy Alliance, told Marijuana Moment. “Given this broad-based mandate, it is imperative that the absolute best marijuana reform bill becomes law.”
“We urge swift passage of the Marijuana Regulation and Taxation Act (S.854/A.1248) to secure justice, jobs, and equity for the millions of New Yorkers that have borne the brunt of marijuana criminalization and restitution for the communities most harmed by the war on drugs,” she said. “The time to act is now.”
According to Cuomo and the sponsors of the MRTA, Peoples-Stokes and Senate Finance Chairwoman Liz Krueger (D), there’s recognition of that need to act, and the process is moving along.
“We’ve been working on a marijuana bill. I’ve had a number of conversations with members,” the governor said last week. “We’ve been making good progress.”
Krueger also said that lawmakers were “working hard on a three-way agreed upon bill that could pass the legislature before we get to the budget.” She added: “I feel like we are 95 percent there. We have taken some big steps towards getting this done.”
Peoples-Stokes said last week that talks “are really good and really fruitful and I’m really encouraged.” In fact, “I’ve never felt this encouraged before.” That’s despite her saying just days earlier that talks with the governor’s office over the legalization legislation had become heated to the point of screaming.
A state budget spokesperson said that the “administration is working with all parties to pass a comprehensive regulatory structure for adult-use cannabis that prioritizes social equity, social justice, economic development, and the public health and safety of all New Yorkers.”
There’s been speculation that the growing number of sexual harassment allegations against the governor—in addition to controversy over the state’s handling of nursing home COVID-19 death data—would leave him with less political clout to negotiate on behalf of his proposal over that of the lawmakers. Peoples-Stokes said previously that she wanted the legislature to take up the MRTA first and then consult the governor’s office about his plan.
Cuomo proposed amendments to his legislation last month that he hoped would address certain concerns from lawmakers and advocates. The changes primarily concern that issues such as social equity funding and criminal penalties for underage marijuana possession.
Unlike the MRTA, the revised plan would continue to criminalize people who grow their own marijuana at home, and it wouldn’t provide for any additional social equity funding on top of his original plan.
Another factor working against Cuomo is that Democrats now have supermajority control over the legislature, which could empower them to override a potential veto if they were to pass the MRTA against the governor’s wishes.
New York lawmakers last month held the first public hearing of the year on proposals to legalize cannabis, specifically focusing on budget implications.
Legislators heard testimony during the joint session from two pro-legalization industry representatives and one opponent. Despite their ideological differences when it comes to legalization in general, all three panelists were critical of Cuomo’s reform proposal. The two reform advocates said they would prefer to advance the MRTA over his legislation.
Last month, Lt. Gov. Kathy Hochul (D)—who would become governor is Cuomo were to resign or be impeached—told Marijuana Moment in an interview that there would be room for revisions to the current governor’s plan, stating that “much of it is going to be negotiated with the legislature, and all these details can be resolved with their input as well.”
Cuomo said that the changes in his bill reflect “the conversations we’ve had, but I’m hopeful that we can come to an agreement and we can get it done. He added that he believes, “because I’ve seen this movie before, “if we don’t get it done by April 1, we won’t get it done.”
This is the third year in a row that Cuomo has included a legalization proposal in his budget plan. The last two times, negotiations with the legislature stalled amid disagreements over certain components such as the tax structure for the market and funding for social equity programs.
Regardless of which direction the legislature ultimately goes on this issue, there’s growing recognition in the state that legalization is an inevitability.
The top Republican in the New York Assembly said in December that he expects the legislature to legalize cannabis this coming session.
Senate Majority Leader Andrea Stewart-Cousins (D) said in November that she also anticipates that the reform will advance in 2021, though she noted that lawmakers will still have to decide on how tax revenue from marijuana sales is distributed.
Cuomo also said that month that the “pressure will be on” to legalize cannabis in the state and lawmakers will approve it “this year” to boost the economy amid the health crisis.
Photo courtesy of Mike Latimer.
Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’
The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.
At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.
While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”
“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”
Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.
“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”
A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.
There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.
One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.
“Revenue officers will assist the marijuana companies in paying us,” she said.
IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”
“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”
In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.
IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.
As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.
Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.
IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.
Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.
IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.
The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”
Luxembourg Set To Become First European Country To Legalize Marijuana Following Government Recommendation
Luxembourg is poised to become the first European country to legalize marijuana, with key government agencies putting forward a plan to allow the possession and cultivation of cannabis for personal use.
The ministers of justice and homeland security on Friday unveiled the proposal, which will still require a vote in the Parliament but is expected to pass. It’s part of a broader package of reform measures the agencies are recommending.
Under the marijuana measure, adults 18 and older could grow up to four plants. However, under the non-commercial model that is being proposed, possessing more than three grams in public would still be a civil offense, carrying a fine of €25-500 ($29-581). Currently, the maximum fine for possession is €2,500 ($2,908).
In terms of access, adults would be able to buy and trade cannabis seeds for their home garden.
Justice Minister Sam Tamson said the government felt it “had to act” and characterized the home cultivation policy change as a first step, The Guardian reported.
👉🏻élaboration du projet de loi usage privé du #cannabis : jusqu’à 4 plantes à domicile & décorrectionnalisation <3g
👉🏻renforcement de la prévention & de l’accompagnement
👉🏻⬆️des moyens de la police
👉🏻élaboration d’un projet de production/vente #Luxembourg pic.twitter.com/8yre0Udt8J
— Sam Tanson (@SamTanson) October 22, 2021
“The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached,” he said. “We want to do everything we can to get more and more away from the illegal black market.”
While limited in scope, the reform would make Luxembourg the first country in Europe to legalize the production and possession of marijuana for recreational use. Cannabis has been widely decriminalized in certain countries in the continent, but it has remained criminalized by statute.
Government sources in Luxembourg told The Guardian that plans are in the works to develop a program where the state regulates the production and distribution of marijuana. Tamson said they are working to resolve “international constraints” before taking that step, however, referring to United Nations treaty obligations that multiple U.S. states and other countries like Canada and Uruguay have openly flouted.
The measures include:
🟢 Regulation of cannabis use and cultivation: adults will be able to legally cultivate up to four cannabis plants for their own use, provided the cultivation is happening at their place of residence.
— European Greens (@europeangreens) October 22, 2021
For now, the country is focusing on legalization within a home setting. Parliament is expected to vote on the proposal in early 2022, and the ruling parties are friendly to the reform.
This has been a long time coming, as a coalition of major parties of Luxembourg agreed in 2018 to enact legislation allowing “the exemption from punishment or even legalization” of cannabis.
Meanwhile in the U.S., congressional lawmakers are working to advance legalization legislation. A key House committee recently approved a bill to end marijuana prohibition, and Senate leadership is finalizing a separate reform proposal.
In Mexico, a top Senator said this week that lawmakers could advance legislation to regulate marijuana in the coming weeks. The Supreme Court has already ruled that adults cannot be criminalized over possession or cultivation, but there’s currently no program in place to provide access.
Photo courtesy of Mike Latimer.
New Bipartisan Marijuana Research Bill In Congress Would Let Scientists Study Dispensary Products
A bipartisan group of federal lawmakers introduced a bill on Thursday to remove barriers to conducting research on marijuana, including by allowing scientists to access cannabis from state-legal dispensaries.
The Medical Marijuana Research Act, filed by the unlikely duo of pro-legalization Rep. Earl Blumenauer (D-OR) and prohibitionist Rep. Andy Harris (R-MD), would streamline the process for researchers to apply and get approved to study cannabis and set clear deadlines on federal agencies to act on their applications.
“Congress is hopelessly behind the American people on cannabis, and the quality of our research shows why that is an urgent problem,” Blumenauer told Marijuana Moment. “Despite the fact that 99 percent of Americans live in a state that has legalized some form of cannabis, federal law is still hamstringing researchers’ ability to study the full range of health benefits offered by cannabis, and to learn more about the products readily available to consumers.”
“It’s outrageous that we are outsourcing leadership in that research to Israel, the United Kingdom, Canada, and others. It’s time to change the system,” he said.
Late last year, the House approved an identical version of the cannabis science legislation. Days later, the Senate passed a similar bill but nothing ended up getting to the president’s desk by the end of the last Congress. Earlier this year, a bipartisan group of senators refiled their marijuana research measure for the current 117th Congress.
Meanwhile, lawmakers are also advancing a separate strategy to open up dispensary cannabis to researchers. Large-scale infrastructure legislation that has passed both chambers in differing forms and which is pending final action contains provisions aimed at allowing researchers to study the actual marijuana that consumers are purchasing from state-legal businesses instead of having to use only government-grown cannabis.
The new bill filed this week by Blumenauer and Harris, along with six other original cosponsors, would also make it easier for scientists to modify their research protocols without having to seek federal approval.
Marijuana Moment is already tracking more than 1,200 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
It would additionally mandate that the Drug Enforcement Administration (DEA) license more growers and make it so there would be no limit on the number of additional entities that can be registered to cultivate marijuana for research purposes. It would also require the U.S. Department of Health and Human Services (HHS) to submit a report to Congress within five years after enactment to overview the results of federal cannabis studies and recommend whether they warrant marijuana’s rescheduling under federal law.
“The cannabis laws in this country are broken, including our laws that govern cannabis research,” Blumenauer said in remarks in the Congressional Record. “Because cannabis is a Schedule I substance, researchers must jump through hoops and comply with onerous requirements just to do basic research on the medical potential of the plant.”
The new legislation will “both streamline the often-duplicative licensure process for researchers seeking to conduct cannabis research and facilitate access to an increased supply of higher quality medical grade cannabis for research purposes,” he said, adding that expanded studies will help make sure “Americans have adequate access to potentially transformative medicines and treatments.”
For half a century, researchers have only been able to study marijuana grown at a single federally approved facility at the University of Mississippi, but they have complained that it is difficult to obtain the product and that it is of low quality. Indeed, one study showed that the government cannabis is more similar to hemp than to the marijuana that consumers actually use in the real world.
There’s been bipartisan agreement that DEA has inhibited cannabis research by being slow to follow through on approving additional marijuana manufacturers beyond the Mississippi operation, despite earlier pledges to do so.
In May, the agency finally said it was ready to begin licensing new cannabis cultivators. Last week, DEA proposed a large increase in the amount of marijuana—and psychedelics such as psilocybin, LSD, MDMA and mescaline—that it wants produced in the U.S. for research purposes next year.
Under the new House bill, the agency would be forced to start approving additional cultivation applications for study purposes within one year of the legislation’s enactment.
HHS and the attorney general would be required under the bill to create a process for marijuana manufacturers and distributors to supply researchers with cannabis from dispensaries. They would have one year after enactment to develop that procedure, and would have to start meeting to work on it within 60 days of the bill’s passage.
In general, the legislation would also establish a simplified registration process for researchers interested in studying cannabis, in part by reducing approval wait times, minimizing costly security requirements and eliminating additional layers of protocol review.
Read the full text of the new marijuana research bill below: