ALBANY, N.Y. (WIVB) — Gov. Andrew Cuomo seems serious this year about legalizing adult-use recreational cannabis after failing to do so for two consecutive years.
What is different this time is the governor has a $15 billion budget deficit created in large part, he said, by the Covid-19 health pandemic. And neighboring state New Jersey legalized cannabis last year, which some say could force the governor’s hand. In fact, he has vowed to pass the legislation, which would make New York the 16th state to legalize adult-use cannabis.
At least $300 million per year in new tax revenue is at stake. In fact, some believe the state could rake in as much as triple the revenue projected by the governor. (For the purpose of comparing, Colorado, which has more than three times fewer residents than New York, collected $274 million in tax revenue.)
“I think you could be looking at a billion dollars in tax revenue per year, and then the really interesting question is how do you decide what to do with that money?” said Brian Vincente, a Colorado attorney, and the lead drafter of that state’s historic legalization initiative.
The governor’s proposal includes two taxes. One is based on the potency of the product that is imposed on the sale of cannabis from the wholesaler to the retail store. The second tax is 10.25% at the register when consumers purchase products at cannabis retail stores.
And the governor this time included a somewhat controversial opt-out clause for counties and cities with population of 100,000 or more residents to appease more conservative opponents of legalization.
Disagreements over how to spend the windfall of revenue the state will get from taxing cannabis and how to distribute licenses have derailed legislation in past years. Unlike in prior years, the governor’s proposal includes social equity spending, but caps it at about $50 million across the state and that amount will not be realized until 2027.
That is money for communities worst impacted by the failed war on drugs. The funds can be used for projects such as affordable housing, accessible transportation, clean environments, parks and better educational opportunities.
He also proposes giving priority in licensing of cannabis-related businesses – growers, distributors, and retailers – to “social and economic equality” applicants, which could provide a much-needed boost in job opportunities in those neighborhoods.
State Assembly Majority Leader Crystal Peoples-Stokes, D-Buffalo, has cosponsored a bill that calls for 50% of the revenue to go to social equity projects that benefit those most harmed by the failed war on drugs. Her bill also proposes one, flat 18% tax on cannabis products.
In other words, she proposes pumping tens of millions of dollars more than the governor has proposed into social equity projects that can help resurrect neighborhoods and families wiped out by the war on drugs. Peoples-Stokes has joined a chorus of legislators advocating for cannabis legalization that have already criticized the governor’s plan for being “watered down” or “all wrong.”
“I get it that it’s time to make it legal,” Peoples-Stokes said. “But it’s also time to do right by the people who were unnecessarily incarcerated during this whole I would say the last three decades. And so, we need to figure out how do you deal with the residual impacts of all of these folks that were incarcerated on a product that we’re now getting ready to make resources on.”
State Sen. Patrick Gallivan, R-Elma, who is the former sheriff of Erie County, said he believes an adult-use legalization bill will pass this year. “Unfortunately, I think the focus will be on the revenues and how the revenues are distributed, and very little discussion about the public health and safety part of it,” Gallivan said.
Indeed, there are other issues of concern that experts said are worth discussing before the state legalizes adult-use cannabis. Health effects is one concern. Traffic safety is another.
In January 2018, the governor directed state agencies to review the pros and cons of cannabis legalization and to evaluate the health, public safety, and economic impacts. A panel of experts across the state assembled, concluding more than two years ago that there are more benefits to legalization than disadvantages.
R. Lorraine Collins, a professor at the University at Buffalo and associate dean for research, served on that panel that reviewed those pros and cons. She said one major concern that keeps coming up has to do with driving while high on cannabis.
With alcohol, our breath can register alcohol content, so it is much easier to detect in motorists. But cannabis is a whole new challenge. “That is a very complicated issue,” Collins said.
“With cannabis, it’s fat soluble and so it stays in the body for longer periods of time. You could have used it yesterday and still it might register today. And so the issue is how do you know that somebody has used it right before they drove or are still high?”
New York might look to Colorado to answer many of these questions, being it is the state that has had the most time and practice working through different challenges. Vincente, the lead drafter of Colorado’s legalization effort, said it is important that New York approach this concern thoughtfully. “We can’t just have marijuana fall from the sky,” he said.
Having a strong program that IDs people who come to buy any cannabis product and developing educational programs tailored to teaching people that it is not safe to drive after using cannabis and how to store your products to keep away from the prying eyes of teenagers.
The result in Colorado, he said, has been positive with an overall drop in teen consumption and there were no statistically significant increases in traffic crashes linked to cannabis use. “The broad point here is we have not had blood in the streets,” Vincente said. “The state has not had sharp spikes in wrecks. Youth usage has actually gone down.”
What about health impacts? Collins said people might be surprised that there is a lack of scientific research on health impacts of using cannabis.
The reason for this is because the federal government has cannabis on its list of scheduled drugs, putting it on the same level as cocaine and heroin. With such a classification, cannabis is not available to purchase by researchers. Instead, any research must come from government grown cannabis, the same strain and strength each time, and it must get approved by several federal agencies, including the DEA and FDA.
“The bottom line is that the substance they provide is not comparable to what people can by and use in many states,” Collins said. For example, the government-provided cannabis might have a potency of 13% of the psychoactive chemical THC, but there are products available in legal states that can be above 90% potency.
“So, even if we run a study with people, giving them a 13% THC product, it doesn’t tell us anything about the 50% THC, the 80% THC, the 90% THC that somebody might be using,” Collins said. Congress has not fixed this problem.
The House of Representatives has moved recently to decriminalize cannabis, she said, but there has been no movement in the Senate. The new administration has not indicated what direction it will go on this subject since President Joe Biden took office.
Gallivan, the Republican state senator in New York, said the lack of scientific data showing cannabis is safe to consume does bother him. In addition, promoting cannabis legalization as a way to help plug a budget hole is not entirely responsible, either, he said. “I think it’s completely inappropriate to make a decision on recreational marijuana just simply based on the revenue that can be brought to the state to help fix the budget when we don’t know its impact on public health and safety,” Gallivan said.
When it comes to health issues related to cannabis, Colorado’s expert was quick to dispel that the state morphed into a replay of the movie “Reefer Madness,” with people turning crazy from cannabis use. Nonetheless, there are always going to be some people who will argue that legalizing cannabis will result in bad outcomes for people, Vincente said.
“I guess I would say to those people, ‘Do you feel like the current system of prohibition is working?’” he said. “In 80 years of locking people up for marijuana, have we accomplished the goal of stamping marijuana use out of society in New York? And I think the answer is no. We have to accept that marijuana is here, adults will use this product. They’re already using it in New York.”
“Do we want to go ahead and regulate it and tax it as other states have? Fortunately, we’ve got a nine-year runway of history on this, anywhere from Colorado to Washington, Nevada, Massachusetts. We can learn something from each of those states and by and large it’s been a successful experience in those places,” Vincente said.
Despite naysayers, People-Stokes said legalizing cannabis would have been appropriate six years ago. Legalization of recreational cannabis will not generate enough money to plug the budget hole, so that obviously is not the reason she is behind the effort, she said.
Instead, cannabis use remains a brisk multi-billion-dollar underground industry, and while she has met “the most-wealthiest men and women in America from all over this country who have been in my office talking to me about their access to the market in New York,” she does not begrudge them at all.
“That’s not a problem,” she said. “At the end of the day, the people who suffered the most, we have to provide them an opportunity to turn around their communities. Now, exactly how that reinvestment looks, it depends. It could be something like people who work with kids whose parents were incarcerated or it could be something that invests in the communities where people still live, where you see very little investment. And all of these things need to be looked at. I think it’s a government responsibility.”