At this time last year, we reported on the provisions in the NYS 2020 executive budget proposal for adult-use cannabis. Ultimately, NYS Governor Cuomo and the legislature could not agree on its provisions, leaving passage of the proposed Cannabis Regulation & Taxation Act (CRTA) for another day.
This week, Governor Cuomo renewed his efforts to legalize adult-use cannabis and has released a revised CRTA as part of the 2021 executive budget. The act contains significant new and revised provisions since last proposed, including:
- No home-grow option
- No delivery-service licenses or permits
- No on-site consumption licenses
- Inclusion of social and economic equity provisions
The social equity provisions are a welcome addition to promote diversity in ownership and employment for inclusion of minority- and women-owned businesses. Social equity applicants may be given priority in submission and review for licenses, reduced or deferred fees, and low- or zero-interest loans. Governor Cuomo, with the help of his budget director, proposed an allocation of $100 million in cannabis tax revenue to grants for communities most impacted by the prohibition over a four-year period.
Another important change involves the taxation of marijuana and moving from a weight-based tax to a THC tax regime. The governor is calling for three types of taxes on recreational cannabis products:
- Tax from the distributor to a retailer based on THC content on cannabis flower and concentrate
- A 10.25 percent surcharge tax at the point of purchase by the consumers
- Applicable state and local sales taxes
Overall, Governor Cuomo has indicated that the pressure will be on to legalize cannabis in the state, and lawmakers will approve it this year to boost the economy during the pandemic.
If you have any questions regarding the content of this alert, please contact Aleece Burgio, Cannabis Team leader, at aburgio@barclaydamon.com.