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New York State became the 15th state in the nation to legalize adult-use cannabis (also known as marijuana, or recreational marijuana). It did so after a long delay due to many disagreements, including debates on home cultivation (reportedly rebuffed by large marijuana businesses), and reluctance from police and educators. Governor Andrew Cuomo signed the Marijuana Regulation & Taxation Act (MRTA) on March 31, 2021 legalizing adult-use cannabis (also known as marijuana, or recreational marijuana) in New York State, and is undergoing review on how to handle records for those previously convicted. Effective immediately, smoking cannabis where tobacco is legally allowed is acceptable, and the selling and cultivation of the plant is being worked out by municipalities and the state now.

The legislation creates a new Office of Cannabis Management (OCM) governed by a Cannabis Control Board to oversee and implement the law. This board has no members yet, as pointed out by the City of Beacon’s legal counsel, Drew Victoria Gamils, Esq. of Keane and Beane during her MRTA presentation to the City Council during a 6/14/2021 Workshop meeting discussing Beacon’s options. The OCM will issue licenses and develop regulations outlining how and when business can participate in the new industry.

Regulatory Framework Created In Name Of Social Justice

As stated on the OCM’s website, part of the reason the plant has been legalized is to balance equity in the profit and enjoyment of cannabis. Three frameworks are noted to be the core to the regulation:

Social Justice
Establishes a robust social and economic equity program to actively encourage members from communities disproportionally impacted by the policies of prohibition to participate in the new industry.

Public Health & Safety
Administers a sophisticated quality assurance regulatory structure including standards for production and manufacturing, strict product testing, labeling, packaging and advertising to ensure products are safe for consumers and not targeted to youth.

Economic Development
Encourages small business and farmers to participate in the cannabis industry with the creation of microbusiness, cooperative and delivery license types.

Cities And Towns Can Opt-Out Of Sales, But Not Growing At Home

According to Attorney Drew’s presentation, “the MRTA gives cities the ability to opt-out of allowing adult-use dispensaries and/or adult-use social consumption sites to operate within their boundaries.” If a municipality already had law banning the retail sale of recreational marijuana, such local law is not valid. The municipality would need to adopt a new local law to opt-out, and must do so by December 31, 2021 and is subject to a permissive referendum under Municipal Home Rule Law §24.

The right to opt-out does not apply to cultivating or processing cannabis within the city’s boundaries. People growing cannabis on their own can do so at their private residence (in about 2023, not now). A person can grow up to 3 mature and 3 immature cannabis plants. If a person has roommates at their residence, 6 mature and 6 immature cannabis plants “may be cultivated, harvested, dried or possessed within any private residence or on the grounds of a person’s private residence.”

As for the security of the plant(s): “The person must take reasonable steps designed to ensure that such cannabis is in a secured place not accessible to any person under the age of 21,” according to Attorney Drew’s presentation, where she suggested different ways Beacon’s City Council could craft their legislation on securing the plant, such as a greenhouse. A requirement of that magnitude, however which would add considerable expense to the grower. No county, town, city or village may enact or enforce any regulation that essentially prohibits a person from engaging in personal cultivation, and violations of the personal cultivation restrictions are limited to a civil penalty of up to $200.

The right to grow at home will not come until 2023, Attorney Drew explained during the meeting. She advised the Council that they do have time to create regulations, but recommended waiting until the Board makes its recommendations first. “Nobody go buy seeds yet, bc that's against the law,” she said with a laugh.

What Cannabis Licenses Are In Play For Beacon To Regulate

According to Attorney Drew’s presentation, the following license were created for the legalization of marijuana in New York State, but only 2 of them can be regulated in zoning laws in Beacon at this time: Adult-use on-site consumption license and Adult-use retail dispensary license.

The MRTA created the following categories of licenses:

Adult-use cultivator license
Registered organization adult-use cultivator, processor, distributor, retail dispensary license.
Registered organization adult-use cultivator, processor and distributor license.
Adult-use processor license
Adult-use cooperative license
Adult-use distributor license
Adult-use retail dispensary license
Microbusiness license
Delivery license
Nursery License
Adult-use on-site consumption license

Businesses applying for a Adult-use retail dispensary license license or Adult-use on-site consumption license must apply for approval from the city. According to Attorney Drew: “The city shall have the option to submit an opinion in favor of or against a license. When the municipality expresses an opinion in favor of or against the granting of such license or permit application, any such opinion shall be deemed part of the record. The Cannabis Control Board (CCB) shall respond in writing to such city, town, village or community board with an explanation of how such opinion was considered in the granting or denial of an application.”

Beacon Would Get 1% Sales Tax Directly - Going Around Dutchess County’s Sales Tax Collection

Sales tax from Beacon stores is not sent directly to Beacon. For the past few decades, Beacon and other municipalities have agreed to funnel all sales tax to Dutchess County, and in turn gets paid a flat rate that does not change if the sales tax goes up or down. During the pandemic, Beacon’s pre-negotiated sales tax payments from Dutchess County did not change. However, Beacon did not receive a bonus payment during the pandemic, the previous City Administrator Anthony Ruggiero confirmed to A Little Beacon Blog.

That said, neither the New York State Department of Finance nor Dutchess County will tell anyone what the actual sales tax is that is generated from Beacon, as A Little Beacon Blog reported in 2020 after beginning research in 2019. If Beacon decides not to continue this agreement, which expires before 2024, somehow, that dollar amount will need to be revealed, if Beacon begins collecting its own sales tax

For retail cannabis sales, the tax revenue will calculated in a particular way called a seed-to-sale system, said Attorney Drew when Mayor Lee Kyriacou asked her how the distribution would work based on Beacon’s sales tax arrangement with Dutchess County. She confirmed that Beacon’s portion of the tax revenue will go directly to Beacon, and that the Cannabis Control Board will be part of the overseeing entity to ensure that happens.

How The Tax Revenue Will Be Distributed

According to Attorney Drew, the New York State Comptroller will collect the money, then distribute it to Dutchess County, who then distributes it to Beacon.

From the presentation:

Cannabis products will be subject to a 13% sales tax in New York, 9% of which will be directed to state coffers and 4% to localities.
The 4% cannabis excise tax for local government purposes would be imposed on the retail sale of adult-use cannabis products from retail dispensaries to consumers.
The revenue from the tax will be distributed quarterly to each county.
Counties will receive 25% of the local retail tax revenue and 75% of the revenue would be distributed quarterly by the counties to the cities, towns and villages within such county in which a retail dispensary is located.
The revenue will be distributed in proportion to the sales of adult-use cannabis products by the retail dispensaries in such municipalities as reported by the seed-to-sale system.
The county must distribute money no later than 30 days after receiving it from the State Comptroller.

One should ask if the public will have access to the quarterly audit of seed-to-sale system the exact amount per municipality without the need for a FOIA, since the regular retail sales tax for Beacon has been impossible to get, despite FOIAs being filed.

Opting In, But Making Business Impossible

The law states that municipalities that do not opt-out in order to collect the sales tax revenue and welcome new types of businesses into its borders, cannot do so in a way that effectively makes it impossible to do business. From the presentation: “A municipality that does not opt-out cannot adopt regulations that make the operation of licensed retail dispensaries or on-site consumption sites 'unreasonably impracticable’ as determined by the CCB.”

Councilmember Dan Aymar-Blair asked if Beacon could limit the number of a business type opening up shop within its borders. Attorney Drew answered “Currently the MRTA has a requirement that it must be located at least 500 feet away from school grounds, and 200 away from place of worship. Right of the bat with MRTA itself.” She recommended that Beacon could adopt requirements in the city code to make that requirement larger, or add additional requirements, such as being 500 feet from any park. Or the reverse - being located near a park where there is ample open air and circulation. Or no additional requirements.

Other regulatory controls, she said, can include: