Just days after a revised bill to legalize marijuana in New York was released following negotiations between the governor and Senate and Assembly leaders, formal hearings have been scheduled for the proposal in three committees on Tuesday. And floor votes could immediately follow action by the panels, a top lawmaker says.
Put simply, things are moving fast—which is consistent with what legislative leaders and Gov. Andrew Cuomo (D) said to expect after a deal was reached. The Assembly Codes and Ways & Means Committees and the Senate Finance Committee are scheduled to start considering the legislation within minutes of each other on Tuesday morning.
While the bill is not currently listed on the floor schedule for either body, Assembly Majority Leader Crystal Peoples-Stokes (D) said on Monday that she anticipates that a vote in her chamber will take place after the committees move the bill. Cuomo will sign the measure “right away,” she told a WIVB-TV reporter.
I just spoke with Assemblywoman Crystal Peoples-Stokes, who told me she expects a vote on the marijuana bill tomorrow after it gets through the committees. She also tells me she expects to governor to sign the bill "right away". https://t.co/AwrwZ3dbC1
— Chris Horvatits (@ChrisHorvatits4) March 29, 2021
This legislation is being handled outside of the budget, but lawmakers are still pushing to pass it on schedule ahead of Thursday’s budget deadline.
Peoples-Stokes, who is carrying the Assembly version of the bill, said last week that the legislation they negotiated with the governor “provides long awaited marijuana justice for New Yorkers, and makes significant steps and investments to begin to address the generational devastation caused by marijuana prohibition and mass incarceration.”
Senate Finance Chairwoman Liz Krueger (D), the lead Senate sponsor of the Marijuana Regulation and Taxation Act (MRTA) whose panel is set to take up the bill on Tuesday, similarly said that the newly revised version of her legislation will “legalize adult-use cannabis in a way that foregrounds racial justice, while balancing safety with economic growth, encouraging new small businesses, and significantly diminishing the illegal market.”
Cuomo said that “for generations, too many New Yorkers have been unfairly penalized for the use and sale of adult-use cannabis, arbitrarily arrested and jailed with harsh mandatory minimum sentences.”
“After years of tireless advocacy and extraordinarily hard work, that time is coming to an end in New York State,” the governor said. “Legalizing adult-use cannabis isn’t just about creating a new market that will provide jobs and benefit the economy—it’s also about justice for long-marginalized communities and ensuring those who’ve been unfairly penalized in the past will now get a chance to benefit. I look forward to signing this legislation into law.”
Here’s a summary of the main components of the 128-page New York marijuana legalization bill:
-Adults 21 and older would be able to possess and purchase marijuana products from licensed retailers, which are expected to launch sometime in 2022.
-Effective immediately, there would be no penalties for public possession of up to three ounces of cannabis or 24 grams of marijuana concentrates,
-Adults could also cultivate up to six plants for personal use, three of which could be mature. A maximum of 12 plants could be grown per household with more than one adult. Homegrow would not take effect until regulators set rules for it, and they would have a maximum of six months to do so for medical patients and must do so for adult-use consumers no later than 18 months after the first retail recreational sales begin. Once home cultivation becomes legal, people could store up to five pounds of cannabis at home.
-People with convictions for marijuana-related activity made legal under the legislation would have their records automatically expunged.
-Protections against discrimination in housing, educational access and parental rights would be instituted for people who consume cannabis or work in the marijuana industry.
-A system of licenses for commercial cultivators, processors, distributors, retailers, cooperatives and nurseries would be created, with a prohibition on vertical integration except for microbusinesses and existing medical cannabis operators.
-Social consumption sites and delivery services would be permitted.
-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.
-A new Office of Cannabis Management—an independent agency operating as part of the New York State Liquor Authority—would be responsible for regulating the recreational cannabis market as well as the existing medical marijuana and hemp programs and would be overseen by a five-member Cannabis Control Board. Three members would be appointed by the governor, and the Senate and Assembly would appoint one member each.
-The legislation sets a goal of having 50 percent of marijuana business licenses issued to social equity applicants, defined as people from “communities disproportionately impacted by the enforcement of cannabis prohibition” as well as minority- and women-owned businesses, disabled veterans and financially distressed farmers.
-Cannabis products would be subject to a state tax of nine percent, plus an additional four percent local tax that would be split between counties and cities/towns/villages, with 75 percent of the local earnings going to the municipalities and 25 percent to the counties. Marijuana distributors would also face a THC tax based on type of product, as follows: 0.5 cents per milligram for flower, 0.8 cents per milligram for concentrated cannabis and 3 cents per milligram for edibles.
-Tax revenue from marijuana sales would cover the costs of administering the program. After that, 40 percent of the remaining dollars would go to a community reinvestment fund, 40 percent would support the state’s public schools and 20 percent would fund drug treatment facilities and public education programs.
-Police could not use the odor of cannabis to justify searches.
-The State Department of Health would oversee a study of technologies for detecting cannabis-impaired driving, after which it could approve and certify the use of such a test. Additional funds for drug recognition experts also would be made available.
-Driving while impaired from marijuana would remain a misdemeanor despite early reports that lawmakers had settled on downgrading it to a violation.
-The state’s existing medical cannabis program would also be changed to expand the list of qualifying conditions and allow patients to smoke marijuana products. Patients could also obtain a 60-day, rather than 30-day, supply.
-Smokable hemp flower sales would be allowed.
-Current medical cannabis businesses could participate in the recreational market in exchange for licensing fees that will help to fund the social equity program.
“The legislature finds that existing marihuana laws have not been beneficial to the welfare of the general public,” the bill’s findings section states. “Existing laws have been ineffective in reducing or curbing marihuana use and have instead resulted in devastating collateral consequences including mass incarceration and other complex generational trauma, that inhibit an otherwise law abiding citizen’s ability to access housing, employment opportunities, and other vital services. Existing laws have also created an illicit market which represents a threat to public health and reduces the ability of the legislature to deter the accessing of marihuana by minors. Existing marihuana laws have disproportionately impacted African-American and Latinx communities.”
Marijuana Moment is already tracking more than 900 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.
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Cuomo said last week that he and lawmakers were “inches” away from reaching a final deal on the legalization proposal, adding that enacting the reform is a “priority” this year to make the state the “progressive capital of the nation.”
The governor has made several concessions to the legislature that represent large differences from the legalization plan he proposed in his annual budget, accepting provisions allowing home cultivation and directing how to distribute cannabis tax revenue for social equity purposes.
Earlier, he also proposed amendments to his own legislation last month that he hoped would address certain concerns from lawmakers and advocates. Those changes primarily concerned that issues such as social equity funding and criminal penalties for underage marijuana possession.
Senate Majority Leader Andrea Stewart-Cousins (D) said in a press release on Saturday that “there were many important aspects of this legislation that needed to be addressed correctly—especially the racial disparities that have plagued our state’s response to marijuana use and distribution as well as ensuring public safety—and I am proud we have reached the finish line.”
Assembly Speaker Carl Heastie (D) said legalization “had to be done the right way—in a way that would help not harm our communities that have been devastated by the state’s drug laws.”
“The MRTA does not just legalize the adult use of marijuana,” he said, “but it rights decades of disproportionately targeting people of color, ensures they are included in the legal marijuana industry and reinvests in education and in communities that have been harmed.”
State Attorney General Letitia James (D) said legalization “is a racial and criminal justice imperative” and “a critical step towards a fairer and more just system in New York.”
Peoples-Stokes said earlier this month that talks had been “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 negotiations with the governor’s office over the legalization had become heated to the point of screaming.
In the late stages of the negotiations, lawmakers said that they had reached an “impasse” with the governor over provisions related to impaired driving.
But Stewart-Cousins said last week that the legislature was “really, really, really close on marijuana” following talks with executive staff office over recent weeks. “We have gotten past the impasse of the impaired driving.”
Krueger said earlier this month that she’s “feeling that there is impetus to get this done as quickly as possible, and I am prepared to do everything in my power to close this out, get this bill to both floors and get it signed by the governor.”
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.
Krueger said that “you can’t ignore the fact that there was an interest in getting the marijuana bill done” on the governor’s end as these allegations were raised. “That seemed to pop up at around the same time.” However, she caveated, “pick a day and another shoe was dropping for the Cuomo administration.”
Another factor working against Cuomo’s negotiating power is that Democrats now have supermajority control over the legislature, which could embolden them to override a potential veto if they were to pass a legalization bill that contained provisions the governor didn’t like.
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.
Lt. Gov. Kathy Hochul (D)—who would become governor is Cuomo were to resign or be impeached—told Marijuana Moment in a January interview that there would be room for revisions to the current governor’s budget 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.”
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.
There’s growing recognition among lawmakers 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 session.
Cuomo said in November that the “pressure will be on” to end cannabis prohibition in the state following New Jersey voters’ passage of a legalization referendum.
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: