It was anticipated that once New Jersey legalized recreational marijuana that New York would soon follow suit, and that is indeed the case. On Thursday, New York State lawmakers reached a deal to legalize recreational marijuana in the state for adults 21 years of age and older. Like New Jersey, New York is forming a control board, to establish the rules needed to regulate and oversee the industry. The five member board will address the regulation of wholesalers and dispensaries, as well as the allocation of cultivation and retail licenses.
Taxes on the retail sale of marijuana are expected to be levied at 9% at the state level and 4% at the local level, and it is anticipated that revenue from marijuana sales could be as high as $350 million per year. As a result of the anticipated tax revenue, it is likely that state legislature will approve a bill in the near future that Governor Cuomo will sign into law.
As you likely know, Federal law treats marijuana related businesses as criminal enterprises, and as a result, banks (which are federally regulated) cannot legally operate in the space. The Secure and Fair Enforcement (SAFE) Banking Act looks to change that. The purpose of the act is, “…to increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses.” The public safety concern is an issue as states such as Oregon and Colorado have seen an increase in crimes associated with cannabis entities because they must operate as a cash only business.
The SAFE Act is far-reaching. In part, Federal regulators may not:
In addition, the SAFE Act allows insurers to legally provide insurance for legitimate cannabis-related businesses and service providers.
It will be interesting to see if the Federal bill passes, especially considering that 25 Republican senators represent states where marijuana is already legal for recreational or medical use.
The following east-coast states considering adult-use cannabis legalization includes; Connecticut, Maryland, Rhode Island, Virginia and Florida.