Cannabis Legalization and Emerging States – New York, Texas, New Jersey, and Mississippi
Lawmakers and policy advocates have been facing tremendous obstacles related to the COVID-19 epidemic and the resulting government closures. Facing budget shortfalls in connection to these public health measures many states and municipalities are exploring their options for additional revenue sources, including establishing or expanding existing cannabis markets. This report addresses the emerging cannabis markets in Texas, Mississippi, New Jersey, and New York.
New York – An Emerging Cannabis Market
New York lawmakers were set to consider expanding access to Adult-use cannabis in the Governor’s budget bill 1617-C early on in 2020 until COVID-19 necessitated the closure of government offices and a stay at home order that effectively ended the legislative session early. However, legalization of cannabis for Adult-use in 2020 is not entirely off the table. As the state is now facing a revenue shortfall it may see lawmakers return for a special session to address budgetary shortfalls and the means to address them. As cannabis business licenses and businesses provide additional revenue for the state it is possible to see the legalization issue pop up in these discussions. 1617-C goes into great detail about the framework and requirements for establishing an Adult-use market in the state and whether it is picked up in an emergency session or in the next legislative session, the bill showcases the priorities for the framework for an adult-use market.
Assuming New York keeps most of the language of the bill that deals with cannabis, New York will be establishing the Cannabis Control Board and Compliance Council.
The following cannabis license types would be available if the legislation passes:
- Cultivation, Processor, Dispensary, Distribution (designed for existing Medical Cannabis Dispensaries)
- Cultivator Processor
- Small Business Adult-use Cooperative Adult-use Distributor
- Adult-use Retail Dispensary Microbusiness
- Delivery Nursery
- Adult-use On-site Consumption
Priorities for Processing Privileged License Applications:
- Is the applicant a social equity applicant?
- Will the applicant be able to maintain effective control against illegal diversion of cannabis?
- Will the applicant be able to comply with applicable state laws and regulations?
- Will the applicant be ready, willing, and able to properly carry on the activities for which the license is sought (including with help from the social and economic equity and incubator program)?
- The applicant possesses or has the right to use sufficient land, buildings, and equipment to properly carry on the activity the license is for or has a plan to do so if applying as a social or economic equity applicant
- The applicant qualifies as a social and economic equity applicant or sets out a plan for benefitting communities and people disproportionately impacted by enforcement of cannabis laws
- Good moral character
- Labor peace agreement (25 or more employees)
- Contribute to communities disproportionately harmed by enforcement of cannabis laws
- Environmental and energy impact of the facility Follows all other regulations drafted by the Board
- Is a registered organization with the state of New York?
An examination of the language of the proposed bill clearly outlines the importance New York is placing on social and economic equity in its cannabis market.
Texas – Growing Support to Legalize Cannabis
Texas lawmakers are seeing increasing pressure to consider cannabis legalization from groups like Texans for Responsible Marijuana Policy. Texas officials, now facing budget shortfalls, are gradually considering options for decriminalization and potential legalization. That is not to say that 2020 holds much promise for significant movement toward legalization beyond greater potential interest. Current CBD retailers still face raids from officials even with CBD being a legal product.
New Jersey – Looking to Legalize Adult-Use Cannabis in 2020
New Jersey lawmakers placed SCR 183, a ballot initiative to amend the state’s constitution to legalize adult-use cannabis. If passed it requires the state to establish a Cannabis Regulatory Commission and would mandate that the tax on retail sales of cannabis not exceed the state’s standard sales tax of 6.625% with municipalities being afforded the option of imposing a 1-2% sales tax. In a healthy economy, the state could potentially see tax revenue of $95 million per year according to projections from Bridge West CPAs, who also note that if the state were to follow in the footsteps of states that expanded access to adult-use before and imposed an additional 10 % excise tax the tax revenues in a healthy economy could potentially be as high as $143.6 million per year.
Mississippi – 2 Deceptively Similar Medical Marijuana Initiatives On the 2020 Ballot
Policy advocates successfully collected enough signatures to get Initiative 65 onto the ballot which would legalize medical cannabis in Mississippi. State lawmakers voted to include Initiate 65A on the ballot which would also legalize cannabis for medical use for significantly fewer qualifying conditions than Initiative 65 while affording the state greater control over the potential medical cannabis industry market the Initiative would establish. Concerns have been raised that Initiative 65A has been added to the ballot to potentially split the vote and defeat both measures by confusing voters, which it has the potential to do. If Initiative 65 passes it is likely to establish a medical cannabis market similar to its predecessors with an opportunity of social equity applicants.
Conclusion – Emerging Cannabis States and Markets in 2020 and 2021
Though 2020 has been a rough year for cannabis legalization efforts it has none-the-less shown that even states that have previously been reluctant to consider legalization are now entertaining the idea. Mississippi could signal a positive shift in the legalization movement and provide opportunities for established multi-state operators to expand if Initiative 65 is successful. New York, though somewhat of a long shot at this point, does indicate with the language of 1617-C that this progressive state is making a concerted effort toward social and economic equity at a time when the call for it has never been louder.