New York’s Cannabis Law Legalizes Adult Recreational Use but Permits Local Governments to Ban Retail Sales and On-Site Consumption

Farrell Fritz, P.C.
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After several stalled attempts, New York State became the 16th state to legalize recreational cannabis (marijuana) use.  This occurred on March 31, 2021, when Governor Andrew Cuomo signed the “Marijuana Regulation and Taxation Act” (S.854-A/A.1248-A) that was passed by the legislature the night before.  The stated intent of the law is to regulate, control, and tax cannabis in order to generate significant new revenue, increase employment, create new industries and strengthen New York’s agriculture sector.  The legislation creates a Cannabis Control Board that will be responsible for regulating New York’s cannabis industry.

Under the new law, it is legal for individuals 21 and older to purchase and possess up to three ounces of cannabis.  When at their private residence, individuals are legally permitted to possess up to five pounds of the drug.  Among other things, the law requires a State-issued license for the cultivation, processing, distribution and delivery of cannabis, and the licensure of premises for retail sales or on-site consumption.  The law takes effect immediately, but certain portions of the law will not become effective until the Cannabis Control Board is created and promulgates regulations.

While local municipalities cannot ban possession of cannabis, the law allows them to prohibit retail sales and on-site consumption within their borders by opting out of the law on or before December 31, 2021.  Almost immediately after the law was enacted, a number of Long Island town supervisors and village mayors said they would ban retail sales and on-site consumption of marijuana, and in doing so would forego receiving a portion of the $350 million in annual revenue that State officials estimate will be generated by legalizing recreational cannabis use.  Cannabis sales will be taxed at about 13% and local municipalities stand to receive 3% of that revenue.

On the day after the Governor signed the law, ABC7NY reported that the mayors of the villages of Rockville Centre, Freeport, Atlantic Beach and Island Park will opt out.  Since then, other supervisors and mayors have said that their communities will also opt out.  The Town of Hempstead released a statement saying that “[t]he town board is united in its opposition to the sale of recreational marijuana and also stands firmly against ‘on premises’ consumption of marijuana at facilities within the Town of Hempstead.”  Babylon’s town supervisor, Rich Schaffer, originally called for all towns and villages on Long Island to opt out of the law and pass legislation banning the sale of marijuana.  However, his positioned softened when it became evident that some communities were unlikely to do so.  His efforts to achieve an Island-wide ban were also undermined by an announcement by the Shinnecock Indian Nation that they would be selling recreational marijuana in Southampton.

A municipality may exercise its right to opt of the portion of the legislation that permits retail sales and on-site consumption sites prior to December 31, 2021, by adopting a local law, subject to a permissive referendum, requesting the Cannabis Control Board prohibit the issuance of licenses for retail sales and on-site consumption within their jurisdictional boundaries.  Residents opposed to such law can request that the issue be placed on a ballot for a vote by the local electorate by collecting signatures from at least 5% of the total votes cast in the municipality for governor in the last election.  While municipalities have until December 31, 2021 to opt out, they may opt back in at any time.

Many people have strong opinions about recreational marijuana use.  And, the varied reactions by local elected officials are reflective of the differing societal views on this issue.  However, given the widespread budgetary concerns facing local governments today, and the law’s potential to create a windfall of new revenue from recreational marijuana sales, local officials would be wise to set aside their own personal views and instead gauge the sentiment of their constituents prior to opting out.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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