This article serves to report on Legislation (S.854-A/A.1248-A) legalization of cannabis in New York State. This report will explore opportunities for municipalities and businesses through the lens of urban and regional planning.
This document is to be used for educational purposes only and should not be construed as legal advice. Individuals should seek legal counsel or professional advice to evaluate their specific set of facts and circumstances. The views expressed herein are those of the authors and not of Saratoga Associates.
On March 31, 2021, New York State Governor Andrew Cuomo signed legislation legalizing the adult-use of cannabis, including consumption, growth, and sale. While recreational use and possession (up to 3 ounces of cannabis or 24 grams of concentrates) has been immediately legalized, marijuana facilities and dispensaries will have to wait until mid- to late-2022 for complete regulations from the Office of Cannabis Management and Cannabis Control Board.
What You Need to Know
Under the Marijuana Regulation and Taxation Act, the Office of Cannabis Management was created to regulate the recreational and existing medical marijuana programs.
“The Marijuana Regulation and Taxation Act creates a first in the nation comprehensive regulatory structure to oversee the licensure, cultivation, production, distribution, sale and taxation of medical, adult-use and cannabinoid hemp within New York State.”
The Office of Cannabis Management will be overseen by a Cannabis Control Board made up of five members: three members (including the chair) are appointed by the Governor with one appointee each by the Senate and Assembly. The Governor’s appointment for chair must be approved by the Senate. Additionally, an advisory board will be made up of 13 members: six members will be appointed by the legislature and seven by the Governor. The Office will operate as part of the New York State Liquor Authority. Why this is important: Under the SLA, alcoholic beverages will not be able to be served or purchased at consumption lounges and dispensaries.
The legislation creates a two-tier licensing system that differentiates between producers and retail operators, by creating “licenses for producers and distributors, among other entities, and the legislation will implement strict quality control, public health and consumer protections”. Additionally, the social and economic equity program will create opportunities for minority-owned business enterprises, woman-owned business enterprises, distressed farmers, and service-disabled veterans. This goal (50% of licenses) will encourage diversity in the program.
Under the Bill, a new tax structure will be based on the per milligram of THC at the distribution level and will include different rates depending on the final product. The Governor released, “the wholesale excise tax will be moved to the retail level with a 9 percent state excise tax. The local excise tax rate will be 4 percent of the retail price”. What this means for local communities: of the local retail tax revenue, 25% will go to the county and 75% will go directly to the municipality.
- Dispensary – similar to retail storefronts, dispensaries are typically small businesses that sell Adult-Use Cannabis and Cannabinoid Hemp.
- Lounge – similar to cigar lounges, these sites allow for products to be purchased as well as consumed.
- Grow Facility – these greenhouse facilities cultivate and extract products. They also house and distribute products to retail operations from these locations.
Federal law still classifies it as a Schedule I drug – on par with heroin, LSD, and ecstasy – which means that it is not legal in any form. Thus, marijuana cannot be legally transported over state lines.
A New Market: Gro’n in New York
As stated, although New York State has passed legislation for recreational-use, due to federal prohibition, marijuana cannot be transported across state lines. Thus, New York brands and products can capitalize on their local presence without fears of out-of-state competition.
“The development of an adult-use cannabis industry in New York State under this legislation has the potential to create significant economic opportunities for New Yorkers and the State. Tax collections from the adult-use cannabis program are projected to reach $350 million annually. Additionally, there is the potential for this new industry to create 30,000 to 60,000 new jobs across the State.”
This new market can learn from some of the State’s fastest growing sectors: “the state ranks first in the U.S. for the number of hard cider producers, second in craft distillers, third in breweries, and fourth for the total number of wineries”.
In 2013, Taste NY was launched, highlighting the “quality, diversity, and economic impact of food and beverages grown, produced, or processed in New York State”. New Yorkers are encouraged to take advantage of its farmland and homegrown products. With this mindset, marijuana producers have an opportunity to host events, promote retail locations, and create partnerships.
Cities, towns, and villages may “opt-out,” which will prohibit adult-use cannabis retail dispensaries or on-site consumption. This is done by passing a local law to deny licensing within the municipality. Communities have until December 31, 2021 to pass such laws, however these are subject to referendum and may be overturned by residents. There is a distinction that municipalities cannot opt-out of adult-use legalization or recreational use.
Zoning and Planning
Local planning and zoning boards will have the authority to decide where marijuana facilities and dispensaries will be located in their communities. They can choose to limit visibility and enforce zoning restrictions similar to adult entertainment, or allow for high visibility in commercial zones similar to liquor stores.
A study from Consensus Strategies, a research and strategy firm with extensive experience in the siting of cannabis facilities, states, “The majority of New Yorkers (53%) believe that marijuana retail should keep a low profile and locate outside of high visibility retail areas”.
“Legalization is only the beginning of the battle,” said Patrick Fox, CEO of Consensus Strategies, “The fight to find viable sites will be intense. We often hear from cannabis entrepreneurs who think that the level of support for legalization will translate into support for siting a retail or cultivation facility. It often does not.”
Additional considerations include a “canopy cap” and square footage limits. The Cannabis Control Board, on the recommendation of the Office of Cannabis Management, shall have the authority to limit, by canopy, plant count, square footage or other means, the amount of cannabis allowed to be grown, processed, distributed or sold by a licensee. These regulations are forthcoming.
Why the Public Matters
As start-ups and entrepreneurs look to the future in New York’s farmlands while municipalities gear up to learn about opportunities, it is important to listen to the community. Public buy-in is not just about getting a project approved from a municipal standpoint, it is also about knowing your consumer base. For communities and developers, public outreach and community engagement should be a top priority for getting your project approved and located in the best area to meet business needs.
Saratoga Associates has over 40 years of experience working with municipalities and stakeholders across New York State. We understand our communities and know how to communicate with them. As a planning and design firm, our team is perfectly positioned to aid communities and developers with future projects. We know the potential impact of retail and grow facilities can range from positive such as, increased revenue from public spending, job creation for local residents, and redevelopment of industrial areas, to negative including common nuisance, increased utility demands (electric and water), and worker/facility risks.
We have the experience to properly position our clients’ projects to meet their needs while addressing zoning, community concerns, and facility design to limit risks and increase public acceptance.
In our next article, we will explore the winery experience, brew-pub architecture, cigar lounge design, and farm to table mindset to make the case for the future of “Gro-House” Architecture.
Saratoga Associates Landscape Architects, Architects, Engineers, and Planners P.C. provides professional design and planning services that could assist in zoning and regulation, opportunity area assessments, architectural and landscape architectural design, along with public outreach and community engagement!