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Cannabis Social Equity Program is a Possible Game Changer in New York



New York recently enacted an adult-use cannabis law that many industry experts believe will have the most robust provisions for people of color, women, war veterans and struggling farmers in the state’s newest industry. 

However, when the recreational cannabis market launches in 12-18 months, will New York be on the path toward becoming the industry’s new gold standard for social equity, or will it fall short of its lofty aspirations as so many other social equity programs across the country have?

“This is really the strongest bill we’ve seen among all the states taking social equity into consideration,” Brandon Kurtzman, a partner in Vicente Sederberg’s Boston law office, said during a VS webinar discussing the new law. 

Marijuana Policy Project Steve Hawkins agreed. He noted key provisions such as social equity licensing goals and community reinvestment go further than Illinois, previously recognized as the gold standard but now bogged down in legal challenges. 

The state’s adult-use cannabis market is projected to reach $2.5 billion in annual sales within five years of operation. 

In the meantime, experts caution that new market entrants must wait to see how New York’s provisions are implemented through regulations and rules, and how the licensing process plays out. 

Some of the key elements of New York’s Marijuana Regulation and Taxation Act include: 

  • The law states a goal to award 50 percent of all adult-use cannabis licenses to social and economic equity applicants. Experts predict that priority could be given for microbusiness and delivery licenses.
  • Forty percent of the tax revenues generated by adult-use sales would be funneled into communities disadvantaged by the war on drugs.
  • Existing medical marijuana operators would be required to pay a one-time “special licensing fee” to convert three of their MMJ dispensaries to dual medical-recreational stores. That fee, though not specified in the law, would help fund social equity programs.
  • Financial support would be provided to social equity applicants including low- or no-interest loans, fee reductions or waives, and assistance in preparing applications and operating a business. 
  • Micro-businesses would be allowed to form vertical operations, helping them achieve economies of scale. Other businesses, except for existing MMJ operators, would be prohibited from vertical integration. 
  • Social equity licensees would be prohibited from selling or transferring their licenses within the first three years after they are used.