2024 Budget Bill Makes New York Dispensary License Mandatory for Cannabis Retailers
As part of the state budget for the 2024 fiscal year, New York recently passed legislation aimed at cracking down on unlicensed sales of marijuana, which have thrived since the legalization of adult recreational cannabis two years ago. The primary goal of these measures is to regulate the cannabis industry and protect licensed dispensaries, which are currently outnumbered by nearly 2,000 unlicensed retailers in New York City alone. Supporters argue that these laws are necessary to bring order to the market and ensure consumer safety and tax compliance.
The legislation grants powers to the Office of Cannabis Management (OCM) and the Department of Taxation and Finance (DTF) to impose civil penalties on unlicensed cannabis businesses. For the most egregious offenders, fines of up to $20,000 per day may be assessed. The DTF will also be empowered to conduct regulatory inspections to ensure that proper taxes are being paid by businesses selling cannabis products and those involved in indirect sales, such as “sticker shops” or gifting schemes that give cannabis with the purchase of inexpensive merchandise.
The budget bill establishes that selling or giving away cannabis products without the necessary license, permit, or registration will be classified as a class A misdemeanor, punishable by up to one year in jail. While the Hochul administration claims that the focus will be on civil enforcement, some reformers fear the legislation could signal a potential return to criminalization, which has long been criticized as a failed strategy. Critics also worry that this could, in turn, disproportionately impact minority communities, which have historically faced greater enforcement and harsher penalties for drug offenses.
These provisions have sparked debates among state lawmakers, including members of the Black, Puerto Rican, Hispanic & Asian Caucus, who played a significant role in the passage of the previous Marihuana Regulation and Taxation Act (MRTA). The MRTA aimed to end incarceration for cannabis offenses and promote social equity by allowing individuals with past marijuana offenses to participate in the regulated cannabis market.
The key challenge moving forward will be finding a balance between curbing illegal sales and avoiding the re-criminalization of cannabis, while ensuring the success of the regulated cannabis economy in New York. This delicate balance will be critical to achieving the intended goals of the legislation and preventing further harm to marginalized communities disproportionately impacted by past drug enforcement policies. Review New York State’s 2024 fiscal year budget in its entirety, here.
The legalization of adult-use recreational cannabis has the potential to be a significant revenue driver for New York State and its municipalities. Bleakley Platt & Schmidt will continue to follow and provide updates on changes to State policy regarding this subject. Stay current on the latest legal news and insights by checking our blog page regularly.