Crain’s: What should marijuana legalization look like in New York?

By Caroline Lewis, February 12

Although it’s uncertain if a bill to tax and regulate marijuana like alcohol could become law in New York, a state Assembly hearing Thursday showed that lawmakers are taking the prospect of legalizing “adult use” seriously.

Rather than simply focusing on whether the state should end the prohibition of recreational marijuana, Assembly members asked pointed questions about what legalization should look like.

Advocates from the Drug Policy Alliance, Vocal-NY and a range of other advocacy groups said that full legalization in New York should address the harm that prohibition has caused to communities of color, whose members are disproportionately arrested for marijuana possession. One approach is to proactively diversify license recipients.

“I know there’s industry in the room,” said Kassandra Frederique, director of the New York chapter of the Drug Policy Alliance. “We will fight you tooth and nail every day if New York is set to create an industry that continues the subjugation and stealing of wealth from communities of color.”

Dr. Malik Burnett, a physician and advocate who helped shape marijuana policy in Washington, D.C., said lawmakers considering legalizing recreational use should prohibit the type of vertical integration that has created a marijuana oligopoly here. New York’s medical program has so far required each licensed company to be responsible for multiple stages of production—in this case, growing, processing and distributing cannabis.

Such vertical integration “causes political chicanery, skulduggery and fighting,” said Burnett. “The alternative strategy is a three-tier licensing system with separate licenses for cultivation, processing and distribution.”

Burnett noted that California went even further, subdividing each of those types of licenses to create different categories for small, medium and large companies. “That allows individuals, regardless of their economic starting point, an opportunity to get into the industry,” he said.

The state’s Medical Cannabis Industry Association did not explicitly endorse recreational cannabis when asked about the hearing Thursday (and individual cannabis executives have also been reluctant to do so). But the group did express concerns about New York remaining a prohibition state as others in the region legalize.

On the East Coast, only Massachusetts and Washington, D.C., have legalized recreational use so far, but Vermont’s legislature approved a recreational bill this week as did New Hampshire’s House of Representatives. The incoming governor of New Jersey campaigned on legalizing marijuana.

“The reality is, New York is surrounded by states with recreational marijuana policies, and some patients may choose to cross state lines to purchase cannabis for lower prices,” the Medical Cannabis Industry Association told Crain’s. “That could negatively impact the growth of New York’s medical program.”

However, the group’s hopes for what a legal system would look like may contradict the vision presented by policy advocates.

“It’s too early in the process to speculate on what a potential recreational model could be in New York,” the industry association said, “but successful existing platforms built by responsible, experienced and licensed companies in New York are already well placed to help build the best adult-use system in the country.”

The association represents the first five companies licensed under New York’s medical program, which invested substantially in startup costs while waiting patiently for the market to grow. The state has since extended licenses to five additional medical cannabis companies and the trade group sued the state in an effort to prevent the new companies from operating.

Assemblyman Richard Gottfried, both a critic and an author of the state’s medical marijuana law, said state officials are “close to recognizing” that vertical integration isn’t necessary.

The Marijuana Regulation and Taxation Act may advance out of committee in the Assembly this year, but it is unlikely it will get through both houses of the legislature, said Noah Potter, an attorney with the national cannabis firm the Hoban Law Group. Potter has been involved in New York’s legalization movement for decades.

And despite the tax revenue marijuana legalization could generate—a 2013 report estimated it would bring in $431 million in the city alone—Gov. Andrew Cuomo has yet to support the measure. However, the current political climate could impact his response.

“Cuomo is aligning himself with [U.S. Attorney General Jeff] Sessions if he refuses to contemplate this issue,” Potter said.

Cuomo’s office did not respond to a request for comment Thursday.