Pursuing social equity. New York State Senator Jeremy Cooney has introduced a bill that would classify individuals who identify as transgender and non-binary as “social equity applicants” under the Marihuana Regulation and Taxation Act (MRTA). Currently, minority- and women-owned businesses, distressed farmers, service-disabled veterans and individuals from communities disproportionally impacted by cannabis criminalization are included in this category. The goal of the Cannabis Control Board is to award 50 percent of its adult-use licenses to social equity applicants.
Deducting business expenses. Under a New York Senate bill, also sponsored by Senator Cooney, licensed cannabis companies could deduct certain business expenses on their state tax returns. Again, the focus is on equity: allowing NY licensed cannabis business to deduct ordinary and necessary business expenses lowers a financial barrier to entry that otherwise may not deter larger multi-state operators. The proposed legislation would decouple the state tax code from the federal policy. “This bill will provide tax equity to the emerging cannabis industry by allowing licensed cannabis businesses to make ordinary and necessary deductions on their New York state taxes,” Senator Cooney says.
Prioritizing hemp packaging. Arguing that hemp is a more eco-friendly choice than plastic, New York State Senator Michelle Hinchey’s bill would require the Cannabis Control Board to promote industrial hemp use in packaging. The legislation also calls for the state to establish a “Sustainable Cannabis Packaging Incubator Program” to incentivize businesses to create “compostable and biodegradable cannabis packaging materials.” Participants would be required to produce packaging containing a minimum 30 percent hemp. “There is no other natural resource that offers the same environmental, agricultural and economic potential as hemp,” Hinchey says, adding the bill would benefit cannabis business while addressing climate change.
Extending Opt-Out Dates for Municipalities. As the deadline looms for municipalities to opt out of allowing retail dispensaries and cannabis lounges in their territory, many towns and villages are overwhelmed by the pros and cons of opt-out. Some New York state lawmakers argue the significant delay in regulations from the Cannabis Control Board and the related lack of guidance for municipalities warrants an extension of the opt-out deadline to December 31, 2022.
Increased Banking Access. Senate Bill S1055 creates a New York Public bank that would provide funds and access to credit and capital to economically disadvantaged communities, and/or those underserved by banks. The bill would mandate an unspecified percentage of the cannabis revenue fund to be deposited in the bank. Through prioritizing loans to the poorest communities in New York State, this bill could provide a robust financing source for the social equity applicants that are low on capital and to which 50 percent of the licenses are to be allocated.
The Cannabis Industry Team will continue to monitor New York state legislation and its impact on the cannabis industry.
This alert does not purport to be a substitute for advice of counsel on specific matters.
Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.