On March 31, 2021, Governor Cuomo signed the “Marijuana Regulation and Taxation Act” (the “Legislation” or “MRTA”), making New York the 15th state in the U.S. to legalize recreational cannabis. The Legislation will consolidate an adult-use cannabis program with New York State’s existing medical marijuana program and cannabinoid hemp program. The consolidated programs will be under the control of the Cannabis Control Board (the “Board”) and the Office of Cannabis Management (“OCM”). The MRTA also establishes a licensing and taxation system for recreational marijuana sales and immediately legalizes personal possession of “up to three ounces of cannabis for recreational purposes or 24 grams of concentrated forms of the drug, such as oils.” It further creates a social and economic program to encourage individuals disproportionately impacted by cannabis enforcement to participate in the industry and will eventually allow recreational cannabis sales to people over the age of 21. The text of the Legislation, which is 128 pages, can be found here.
There is no denying the fact that the legalization of adult-use cannabis will have a direct impact upon local municipalities. For this reason, the MRTA grants municipalities a degree of local control over adult-use legalization to tackle some local issues and concerns. This Legal Alert summarizes these local controls and local revenue benefits.
In addition to this Legal Alert, Keane & Beane, P.C. will be holding a zoom webinar to discuss the Legislation, and the questions and concerns of local governments.The zoom webinar will be held on May 20, 2021 from 12:00 p.m. to 1:30 p.m. Registration is required by emailing edevito@kblaw.com.
1. Opt-Out Authorization
MRTA § 131(1)
The Legislation gives cities, towns and villages the ability to opt-out of allowing adult-use dispensaries and/or adult-use social consumption sites to operate within their boundaries. The licensure and establishment of a retail dispensary and/or on-site consumption operation (authorizing the retail sale of adult-use cannabis to consumers) shall not apply to a city, town or village that adopts a local law prohibiting the granting of such retail dispensary licenses and/or on-site consumption licenses within their respective jurisdictions. Any law enacted by a town shall apply only to the area of the town outside of any village situated within such town. The right to opt-out does not apply to cultivation of cannabis within a municipality’s boundaries.
An opt-out local law must be adopted by December 31, 2021 and is subject to a permissive referendum under Municipal Home Rule Law §24. Municipalities may not opt-out after December 31, 2021. However, a local law repealing such prohibition may be adopted at any time. Such repeal would also be subject to a permissive referendum.
2. Time, Place, and Manner Restrictions for the Operation of Licensed Adult-Use Cannabis Retail Dispensaries and/or On-Site Consumption Sites
MRTA § 131(2)
Cities, towns and villages that do not-opt out of allowing retail dispensaries or on-site consumption sites within their boundaries may adopt local laws establishing reasonable time(s), place(s) and operational restrictions on these facilities. Municipalities may incorporate these local controls within their zoning codes. However, 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 Board.
Zoning limitations cannot make the legal operation of a licensed retail dispensary or on-site consumption site so difficult that the activity becomes impractical and, therefore, effectively operate as a ban on such uses. Local governments may not use a zoning code to effectively eliminate cannabis businesses in their communities by, for example, “finding zones in which it is very difficult to site these businesses, or putting them on the edge of town where nobody wants to go, or in some other way making it so difficult for these businesses to be sited that the businesses won’t site in their communities.” Diesel v. Jackson County, 284 Or. App. 301 (Court of Appeals of Oregon 2017) (The Oregon court concluded that Jackson County’s zoning restrictions were not unreasonable, given both the petitioner’s concession that the land within the zones where cannabis cultivation was allowed was suitable for such use and the lack of evidence that inadequate land was available within those zones.)
Municipalities may, however, regulate retail dispensaries or on-site consumption establishments by specifying a particular distance from residentially zoned areas and facilities in which families and children congregate. Such restrictions may also include restrictions on the hours of operation. Moreover, zoning regulations may be used to prohibit such facilities from operating within a specified distance of another retail dispensary or on-site consumption establishment to avoid the impacts associated with the concentration of such uses in one place. However, municipalities need to ensure that after the law is adopted, reasonable alternative locations remain available for licensed retail dispensaries and on-site consumption establishments and that such restrictions are not considered “unreasonably impractical”. Pursuant to Section 131(2) of the Legislation, the Board determines whether local zoning restrictions are “unreasonably impracticable”. In making this determination, the Board will likely consider whether the potential locations are accessible to the general public, the surrounding infrastructure and the likelihood that the alternate locations will ever realistically become available for use.
3. Location Restrictions for Cannabis Retail Facilities
MRTA § 72(6) and § 77(4)
The Legislation includes a provision that no cannabis retail licensee shall locate a storefront within 500 feet of a school grounds or within 200 feet of a house of worship. For these purposes, a “school” is defined as any “public or private elementary, parochial, intermediate, junior high, vocational, or high school.” School grounds include any building, structure, athletic playing field, playground or land contained within the real property boundary line” of such a school. Municipalities may increase this separation distance requirement pursuant to locally enacted time, place and manner requirements.
4. Personal Cultivation
New York Penal Law § 222.10
While the Legislation allows the cultivation of cannabis for personal use and limits the number of plants that may be grown, municipalities may enact laws to “reasonably regulate the actions and conduct of [personal cultivation].” However, no county, town, city or village may enact or enforce any regulation that essentially prohibits a person from engaging in personal cultivation. Violations of the personal cultivation restrictions are limited to a civil penalty of up to $200.00. It should be noted that no more than six (6) mature and six (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. The personal cultivation of cannabis is only permitted within, or on the grounds of, a person’s private residence.
5. Smoking Regulations
MRTA § 2 and New York Penal Law 222.05(1)
Adults 21 and older can generally smoke cannabis anywhere it is currently legal to use tobacco. However, smoking is prohibited in schools, workplaces, or in cars. Municipalities can also adopt regulations to allow the smoking of cannabis in locations where smoking tobacco is prohibited.
6. Preemption
MRTA § 131(2)
All counties, cities, towns and villages are preempted from adopting any law, rule, ordinance or regulation pertaining to the operation or licensure of registered organizations, adult-use cannabis licenses or cannabinoid hemp licenses.
7. Notification to Municipalities
MRTA § 76
Not less than 30 days nor more than 270 days before filing an application with the state for licensure as an adult-use retail dispensary or an on-site consumption establishment, an applicant must notify the municipality where the premises are located of the applicant’s intent to file such an application. Such notification must be made to the clerk of the city, town or village in which the designated premises are located by certified mail, return receipt requested, overnight delivery or personal service. The notice shall be on a standardized form and will include information such as the name of the applicant, trade name of the establishment, address of the establishment, and a statement indicating what the application is for (i.e. new establishment, transfer, renewal or alteration).
The city, town or village 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 Board 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.
8. Local Revenue
New York Tax Law § 493(3) and § 496-b
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 a seed-to-sale system. Where a retail dispensary is located in a village within a town that also permits cannabis retail sales, the county shall distribute the monies attributable to such retail dispensary to the town and village in such proportion as agreed upon by the governing body of such town and village or, in the absence of such an agreement, the money shall be evenly divided between the town and the village. The county must distribute money no later than 30 days after receiving it from the State Comptroller.
Consult Counsel Regarding Specific Questions: If you have any questions or concerns regarding the Legislation, this Legal Alert or require further assistance with this topic, please contact Eric L. Gordon or one of our Municipal Law attorneys.
SAVE THE DATE!
Thursday, May 20, 2021
Keane & Beane, P.C. Spring Webinar Series: Part III – New York Adult Use Marijuana: What You Need to Know
To register, email edevito@kblaw.com
