What’s Happening in NYS with Implementation of the New Cannabis Law: Equity Needs More Than Lip Service
In the final days of the last Legislative session that ended in June 2021, Governor Cuomo submitted a plan to restructure the leadership of the Metropolitan Transportation Authority (MTA). The plan, which proposed to consolidate more power over for the MTA under the Governor, was rejected by the Legislature. This impasse has apparently ground the appointment of the Executive Director of the Office of Cannabis Management and his three Cannabis Control Board (CCB) Appointments to a stagnant halt. All four appointments require Senate confirmation. The Senate and Assembly who each get to appoint one Board member have also not announced the names of their Appointments.
The MTA is a $17.6B line item in the Governors budget. If the appointments to the Cannabis Board and their timing are in fact being used as political leverage over the MTA, one could conclude this Democratic state government trifecta do not just lack consensus over who to appoint but more likely over how to implement this new law. Given the vast differences at the start of 2021 between the Governor’s and
Legislature’s cannabis legalization proposals (and the fact that the Legislature’s was both vastly more popular and the prevailing one that was finally signed into law), this incongruity continuing now in implementation is not surprising.
Chief among the differences between the two approaches was the strength of the commitment to social equity. Specifically, the differences centered on the level of economic inclusivity in market access for equity applicants; the percent allotment of tax revenue earmarked for communities most harmed by prohibition policies; and the full decriminalization of legal use and sale.
Notably, although the MTA can continue functioning with its current leadership structure, no leadership exists for New York cannabis. So while state officials battle over control of what implementation should look like, their constituents are also preparing their war footing to claim their piece of the pie. Stakeholders are taking advantage of this pregnant pause to plant their seeds of how regulations should be rolled out. White papers on the need for tax incentives to encourage indoor growers to volunteer to be energy efficient; proposed amendments to the law that effectively allows established or funded growers to begin cultivation ahead of unlicensed (and new) cannabis growers, ahead of other sectors, and even ahead of the regulations and appointment of the CCB, and preliminary handshake agreements are all afoot and all being put forward by those with access, not the equity applicants who should be beneficiaries.
Some of the registered organizations (ROs) (also known as medical operators) got an even earlier start. Less than 4 weeks after the signing of the law, Columbia Care paid $30M towards a $42.5M dollar, 740,000 square foot cultivation facility. It plans to pay the final $12.5M this August. Before the law was even signed, the Orange County Industrial Development Agency finalized a deal offering Green Thumb a sales and use tax exemption and a 15-year property tax abatement to build a $50M cultivation and processing facility in Warwick. So Green Thumb was already $109M in before either chamber had passed the bill and before the cannabis giant even submitted a social equity plan. Orange County gave them a sales tax and 15-year property tax break for a mere 125 jobs; 413,000 New Yorkers are currently unemployed. Green Thumb and Columbia Care are two of the 10 medical marijuana operators in the state of NY, all of who were granted by the new legislation an 18- month head start in recreational cultivation, processing and sales.
All these carefully targeted policies and requests seem to center squarely on money and dreams of getting rich. None of them, however, seem to center around equitable economic inclusivity, social market access, or environmental resiliency. Most equity applicants, including distressed farmers, require government and other assistance to enter the market.
Even the proponents of some of these proposals acknowledge that the equity applicants will not be able to be up and running without some assistance. The New York Cannabis Growers and Processors tweeted: “The reality is that without large up-front injection of capital into the social equity provisions of the MRTA [NY’s new cannabis law], then social equity applicants will be left waiting years for tax revenues”. Yet, in addition to a head start over these needy applicants, the industry- focused Castetter Cannabis Group is also requesting tax breaks on the revenues collected to eventually fund the market access for those communities. In 2017, of the total 58,000 farmers in New York only 139 of them were black. That number has not really changed. In addition to Black farmers, other people who have not historically been represented in farming including BIPOC, women, veterans, the disabled and distressed farmers.
While tax incentives are an effective tool, shouldn’t they be reserved for extraordinary circumstances? These include situations such as zero carbon footprint, 100% renewable energy, biodegradable packaging, and farming techniques that contribute to climate resilience. Shouldn’t tax breaks be allocated to those that need it most, like equity and legacy applicants? Do we really want to give companies tax breaks to voluntarily agree to be energy efficient? Doing so essentially says that in today’s day and age, new energy intensive businesses that are not energy efficient are acceptable.
If we are going to allow an industry sector or segment of the NY Cannabis Law a “head start,” why not allow consumption lounges preliminary licenses? After all, the legal consumption of cannabis is already being implemented. Why not allow home growers the preliminary go-ahead and give everyone wanting access to this medicine affordable access?
This race to make money and boost those endeavors above others does not provide for thoroughly addressing environmental concerns either. Allowing unlimited licenses to any grower who applies and meets the preliminary guidelines a head start in order to supply the market may sound good on face value. But that means letting them go ahead in advance of establishing regulations on pesticide use; without limiting single-use plastic production and energy consumption; failing to establish building code standards for energy efficiency; neglecting waste handling and dumping; and ignoring a host of other human health and environmental considerations.
NY’s new cannabis law is the country’s most forward leaning cannabis law in terms of social equity and environmental protection. The eagerness to start and grow capital assets should not take precedence over human capital assets. How tragic would it be if the implementation of such an enlightened law, commenced with environmental degradation and everyone profiting but those communities ravaged by prohibition policies?
Industrial cannabis and businesses willing to do the bare minimum in energy efficiency shouldn’t get a head start and tax breaks. Instead, they should be funding operations that contribute to climate resiliency and accelerator programs for equity applicant businesses. Social equity applicants should be, at minimum, extended the privilege to access lands to farm and businesses to process and sell cannabis, and assistance to be competitive in this already competitive market at an equal level if not the ones receiving the head start.
It’s only fair.
Link to our letter to the Governor: https://nycannabisunited.com/