2023 Legislative Agenda
CANY Official Communication
We actively advocate for laws and regulations that support the vision of a New York cannabis industry that is restorative, sustainable, and inclusive.
1. Removal of the THC-Based Excise Tax (The Potency Tax)
Through the passage of the Marihuana Regulation and Taxation Act (MRTA), New York State became the first state government to tax cannabis by calculating a product’s THC content. This is a novel, but highly flawed approach that will increase the burden on producers in terms of compliance and potentially result in hundreds of millions of dollars in miscalculated taxes. This tax scheme will also result in an uneven pricing for the various product categories, which will likely limit the ability of producers to develop innovative products, especially for consumables. Creating a THC tax also has the potential of providing an incentive to laboratories to underreport THC content in a bid for larger market share. Overall, taxation based on THC levels is an unproven method creating an unnecessary risk to the stability of the industry and that will most certainly have its most significant negative consequences on small businesses.
We urge the legislature to remove the THC-based excise tax before the CCB issues licenses. CANY supports the position that taxes should be levied at the point of sale, as proposed in the original versions of the MRTA. We recommend the removal of the so-called ‘Potency Tax’ and replacing it with a revenue-neutral register tax of 20%.
2. Defining Cannabis as an Agricultural Crop
A.1234 – Lupardo
S.1752 – Hinchey
New York State’s Agriculture & Markets Law affords numerous protections for farmers in relation to land use, taxes, and zoning. As cannabis begins to play an increasingly important role in New York’s agricultural sector, sustainability will become a factor. Thus, it is critically important that cannabis cultivators are provided the same protections as the rest of the agricultural sector to ensure not the longevity of craft cultivation, but also the ability for legal cannabis to compete with the illicit market. Cannabis consumers are highly price-sensitive, especially when they have many different purchasing options. Creating a flourishing legal retail market relies predominantly on converting existing consumers from the illicit to the legal market. Ensuring that prices are competitive is paramount to the success of the legal market.
CANY supports legislation that would amend subdivision 2 of section 301 of the Agriculture & Markets Law to include cannabis in the definition of a crop. Further, the CANY supports amending Paragraph 6 of subdivision (a) of section 1115 of the Tax Law to allow for cannabis cultivators to use the same standard tax exemptions that already apply to other types of farming when purchasing materials and vehicles used in the cultivation process.
3. Patient Empowerment
We support increasing patient access to NY’s Medical Cannabis Program by (1) removing (or reducing) the Excise Tax to reduce patient costs for medical cannabis products and (2) increasing the medical cannabis supply chain by allowing Registered Organizations to purchase cannabis and cannabis products from other cultivators, processors, and manufacturers. These actions will help increase access by reducing costs and will improve outcomes by introducing a wider array of products for patients.
4. Creation of Cannabis Business Receivership Program
The lack of bankruptcy protection for cannabis businesses limits creditor remedies. The effect is that terms for commercial debt and equity financing are more rigorous and are more likely to inhibit cannabis business startups. In New York, the issue is exacerbated due to the fact that this is a brand new adult-use marketplace with little-to-no track record for new cannabis business applicants to rely on. Existing capital-raising issues faced by small-to-medium-sized cannabis businesses in a new adult-use market are already broad. Without the availability of a state-level remedy that replaces the unavailable bankruptcy system, small-to-medium-sized plant-touching cannabis businesses are at a substantial disadvantage in an already disadvantaged market for non-Multi-State Operators (MSOs).
We support the creation of a receivership section within the MRTA to authorize the inclusion of a section on receivership within the currently proposed General Adult Use Regulations in the same format as the liquor law. (Liquor Law Receivership Section: NY Alcoh Bev Ctrl L § 122 (2020))
5. Lift the Ban on Billboard Advertising
The ban on billboard advertising is an unfair restriction on a legal industry still in its infancy. This is a burgeoning industry that needs nurturing and support rather than arbitrary roadblocks that threaten to do harm to these fledgling businesses. This is particularly true for social equity operations.
We support eliminating § 129.3(4) (Adult-Use Marketing and Advertising Prohibition) and allowing cannabis access to the same marketing tools as are available to the alcohol industry.
6. Ensure Cannabis Remains a Sustainable Industry
We support the creation of guidelines and incentives for organizations to incorporate sustainable business practices along with the design and build out of facilities and operations. Ideally, this would be a blend of mandatory and incentivized goals and regulations.
To that end, we support the following:
- Tax credits for sustainable infrastructure
- Carbon credits for sustainable infrastructure
- Establishment of a carbon insetting program and creation of Sustainability fund
As opposed to a nebulous and ineffective carbon offset program, an insetting program holds larger operators accountable for their carbon footprint. Cannabis businesses could purchase carbon credits from the state, with the proceeds deposited into a fund dedicated to making sustainable infrastructure more accessible to licensed Small-Medium Businesses (SMBs)/social equity licensees.
The fund could:
- Award grants to offset the cost of solar panels, geothermal heating, and other renewable energy build-outs that ultimately help NYS reach the goals outlined in the 2019 climate action bill (Chapter 106, Laws of 2019)
- Contribute to the development of a sustainable packaging incubator
- Offset costs of sustainable packaging and/or reuse programs through rebates
- Purchase stock sustainable packaging (e.g. biodegradable pre-roll tubes) at high volume discounts, and allow for social-and-economic-equity-qualifying processors to purchase those products at a lower volume and lower cost than they’d be able to access otherwise
7. Support Civil Penalties Against Illegal Cannabis Operations
The greatest negative impact from weak enforcement will be felt by our social equity operators, who are generally set up in areas with robust and established illicit markets.
An unchecked illicit market will only undermine legitimate retail dispensaries and all the other businesses involved in the legal adult-use industry. Without the strict and sustained enforcement of NY’s existing laws, the illicit market will continue to flourish at the expense of the industry, and ultimately New York State.
Therefore, CANY is in support of increased civil penalties for those who operate illicit cannabis operations.