New York is Set to Cash In On Cannabis. But Who Will Get the Green?

Imagine a New York where instead of the number of people getting busted for marijuana possession every year would fill Yankee Stadium, you could get off the D train and pick up a couple grams of Empire State cannabis at Boogie Down Buds on 161st Street, or pack a vaporizer in the back room of a St. Marks Place dispensary.

That might become a reality a couple years from now. Gov. Andrew Cuomo, a recent convert to the legalization cause, introduced a bill to allow cultivation and sales to people 21 or over as part of his state budget proposal in mid-January. With Democrats holding a solid majority in the state Senate for the first time since the 1960s, a legalization bill is considered likely to pass.

“After decades of a broken, racist prohibition model, the debate over marijuana legalization is largely over in New York,” Assemblymember Richard Gottfried (D-Manhattan) told The Indypendent. “Now it’s about the details.”

Those details, however, might determine whether the herb sold in state-licensed dispensaries is grown by a small farmer in Sullivan County or in a 40,000-square-foot industrial facility owned by a private-equity fund.

Cuomo’s proposed legislation, the Cannabis Regulation and Taxation Act, takes up almost half of the 197-page budget bill. It addresses issues as disparate and arcane as deadlines for submitting tax forms and ensuring that medical-marijuana patients are eligible for organ transplants. It would establish a state Office of Cannabis Management to oversee the industry. The governor has predicted that legal sales would bring in $300 million a year in tax revenues.

Preventing Monopolies

The bill’s key provision is that in order to limit the odds of monopolization, the industry would be divided along the same three-level lines as alcohol was after prohibition: Retail sales, distribution, and cultivation and processing would be kept separate, with businesses having a license in one area prohibited from engaging in the other two. The exceptions are that “microbusinesses” would be able to do all three, much as a small winery can serve glasses and sell bottles at its vineyard, and — a bigger exception — the “registered organizations” that now grow, process and sell medical-cannabis extracts might be allowed to stay vertically integrated, possibly by buying that right at auction. No company would be allowed to own more than three retail dispensaries.

Smoking or vaping in public would be lowered from a misdemeanor to a violation, with a maximum $125 fine. Cultivators would pay a $1-a-gram tax on buds, and retailers would have to pay a 22 percent tax on wholesale purchases. Companies with more than 25 employees would have to be unionized to keep their license. Counties or large cities would be able to stay “dry,” but the bill would allow “on-site consumption” — pot bars, albeit without alcohol — although it implies that the licensing regulations would be stricter than for regular retailers. Home-growing would remain illegal except for registered medical patients.

Many details, however, remain unclear, and the Assembly and Senate are both preparing responses. “We have no idea what licensing fees are going to be, or how many licenses in each category,” says Doug Greene, legislative director of Empire State NORML, an affiliate of the National Organization for the Reform of Marijuana Laws.

Restitution ‘Is The Starting Line.’

Those details are crucial for a key demand of the legalization movement: That marijuana be legalized in a way that benefits the communities most affected by prohibition — such as Brooklyn’s Brownsville, a poor, overwhelmingly black and Latino area where the number of police stops in 2011 exceeded a quarter of the neighborhood’s population, and together with adjacent East New York, accounted for 10 percent of the city’s total pot busts then.

That Cuomo has endorsed legalization is good news, says Assembly Majority Leader Crystal Peoples-Stokes (D-Buffalo), but his bill “does not totally meet the mark,” particularly as it lacks specific programs to aid such communities, like Buffalo’s East Side.

Restitution “is the starting line,” Kassandra Frederique, New York State director of the Drug Policy Alliance (DPA), said in a statement responding to the Cuomo bill. “Legalization can be an economic engine driving wealth and equity in marginalized communities and providing space for alternative economic systems — if we work intentionally.”

The biggest piece missing, says DPA deputy state director Melissa Moore, is “community reinvestment.” The Marijuana Regulation and Taxation Act, a legalization bill introduced last year by Peoples-Stokes and Sen. Liz Krueger (D-Manhattan), would specifically earmark a portion of pot-tax revenues for things like drug education, after-school programs and re-entry assistance for released prisoners. The Cuomo bill, Moore says, states that revenues “could” be used for that “or any other purpose,” which she sees as a large potential loophole.

People who formerly supported prohibition now see cannabis as a lucrative market.

Other key aspects of equity include ensuring access to the business and sealing or expunging criminal records for pot offenses. The Cuomo bill does give a preference for people with marijuana convictions for business licenses, but without access to loans, Moore says, it will be “incredibly difficult” for them to start businesses. She’s encouraged that the bill would include licenses for microbusinesses and let cultivators and others form cooperatives, which could provide technical assistance.

The state has plenty of business-incubator programs, says Peoples-Stokes, and it should set them up in black and brown communities to provide technical assistance and low-interest loans, so people there can get into the market “prior to it being gobbled” by those with more capital.

In practice, dispensaries are likely to be the easiest cannabis businesses for people with limited capital to start, says a staffer for a pro-legalization legislator.

Joe Bondy of the Cannabis Cultural Association, a lawyer who last year unsuccessfully challenged the constitutionality of the federal marijuana-prohibition law, says small businesses need affordable license fees and “an application form where you don’t need to hire a lawyer.”  However, he believes that domination by corporations is “inevitable” due to their market power, with smaller operations occupying an upscale artisanal niche.

Assembly Agriculture Committee chair Donna Lupardo (D-Binghamton) says she’s pleased with the Cuomo bill’s provisions for small farmers. It gives a “very specific” preference for cultivation licenses to farmers in counties where the poverty rate is greater than 10 percent, which covers most of upstate. She would prefer to see ganja cultivated under natural sunlight in greenhouses, rather than in “energy-intensive indoor grow facilities,” and the bill would allow three sizes of greenhouse operations, from a micro level up to a maximum of two acres.

She says, however, that she’s a little concerned about jurisdiction over hemp farming being divided, with production for fiber and seed regulated by the state Agriculture Department, but hemp-extract products such as CBD under the cannabis system.

The fate of the 10 registered organizations authorized to sell medical-cannabis products is another issue. “It’s important to expand patient access to the medical cannabis program, as well as ensuring that the availability of adult use does not disrupt the functioning of the medical market,” says Gottfried.

Those companies invested hundreds of thousands of dollars to open, as Gov. Cuomo insisted that medical cannabis be limited to a handful of large, vertically integrated operations that sell only extracts. Legalized adult use, however, would likely jeopardize them, as patients who prefer actual marijuana would buy from dispensaries instead. The Cuomo bill might auction off the right for them to remain vertically integrated, using the proceeds to fund social programs, but that would likely put the losers out of business. Another possibility is letting them operate dispensaries out of their current locations.

The opposition to legalization has been relatively minimal, with former mayor Michael Bloomberg the most prominent among police chiefs and county health associations. State Sen. Fred Akshar (R-Endwell), a former sheriff who is “personally opposed to legalizing marijuana,” posted an online survey on Jan. 23 to get constituents’ opinions.

“People have been taking it as a given and trying to change it rather than block it,” says Moore.

How The Movement Prevailed

After the draconian drug-law enforcement of the Reagan, Bush I, and Clinton eras, marijuana politics has proceeded along two lines the 21st century. Possession arrests, largely fueled by urban stop-and-frisk policing, have not fallen below 570,000 since 1996, peaking at 775,000 in 2007. According to FBI figures, they have exceeded the number of arrests for violent crimes every year since 2002. But beginning with Colorado and Washington in 2012, 10 states and Washington, D.C. have legalized cannabis, with all but Vermont and D.C. allowing sales.

What changed politically to enable this? Keith Stroup, who founded the National Organization for the Reform of Marijuana Laws in 1970, says the answer is more demographic than political. “It’s not because we’ve come up with better arguments or a strategy,” he says. “It’s because we’ve outlived our opponents.”

PUFF, PUFF, PASS: Pot lovers parade a 51-foot inflatable joint through the nation’s capital, April 2, 2016. Credit: ep_jhu/Flickr.

Stroup, now 75, explains that people born before World War II were much more likely to believe the Reefer Madness myths, that marijuana had as fiendish a grip on its users as heroin, while baby-boomers and those younger grew up around enough ganja to realize it was not the weed with roots in hell.

“We gradually won the hearts and minds of a majority of Americans, including nonsmokers,” he says — in part by convincing them that regulation was a better way than prohibition to prevent problems such as teenage use.

The legalization movement’s decision in the 1990s to focus on medical use also paid off. The motive was mainly moral — to put people wasting away from AIDS or vomiting from chemotherapy first in line for relief — but it also increased public acceptance of cannabis. “It’s hard to demonize a substance that helps people with serious illnesses,” says Stroup.

Melissa Moore says legalization in New York was a remote possibility when she began working for DPA in 2016, but “framing the conversation as a racial and economic justice issue” helped. The racism of pot-law enforcement had become painfully obvious, particularly in New York State. New York City became the pot-bust capital of the nation in the late 1990s under Mayor Rudolph Giuliani, with anywhere from 30,000 to 70,000 arrests for possession every year, the vast majority young black and Latino men.

That pattern continued under Bloomberg’s stop-and-frisk policies. Few of those nabbed with buds spent more than a few nights in jail, but it became an “entry-level bust” that gave them criminal records — with collateral consequences that could include getting barred from public housing, losing student loans or being deported.

Those arrests, says Moore, also undermined the argument for decriminalization, the traditional middle ground for legalization opponents who don’t want to see people go to jail for pot. New York State has had decriminalization since 1977, but that didn’t prevent more than 800,000 arrests for possession in the last 20 years, she says.

That Colorado, Washington and other states have legalized cannabis sales without disaster has also helped. Cuomo was likely pushed to the left on the issue by Cynthia Nixon’s primary challenge last year. And with the first pot shops opening in Massachusetts, and New Jersey seriously considering legalization, New Yorkers might soon be able to evade any continued prohibition with a short road trip.

There is tension between the racial-equity and business-oriented sides of the legalization movement, says Stroup, but after spending most of his 50 years as an activist working against long odds, “it’s wonderful to have the luxury of having that internal debate.”

Peoples-Stokes is more pessimistic. “Sadly, I think it’s the money,” she says. People who formerly supported prohibition, she says, are now seeing cannabis as a lucrative market, and they have more financial resources than the people who traditionally used, sold or grew it.

She sees her purpose as repairing the damage done by prohibition and mass incarceration.

“I’m not an advocate of people smoking it, but whatever people have been doing with it, they’ve been doing it since I was born,” she says. “It shouldn’t be criminalized. It should be regulated.”

Illustration by Rob LaQuinta.