Marijuana in New York: Here's how Andrew Cuomo plans to legalize, tax it

ALBANY – Gov. Andrew Cuomo on Tuesday unveiled his plan to legalize and tax marijuana for adult use, vowing to wipe records clean for those previously convicted of possessing the drug.

Cuomo's long-awaited marijuana proposal calls for three separate taxes on the drug, all of which would be imposed at the cultivation or wholesale stage in most cases, not at retail.

The Democratic governor also proposed creating a new state office — the Office of Cannabis Management — to regulate the drug and create a program to review and seal past marijuana convictions, which have disproportionately affected communities of color.

But marijuana wouldn't be permitted overnight: Legal sales wouldn't begin until April 1, 2020, at the earliest, according to Cuomo's proposal.

Among the things Cuomo's plan would do:

• Establish separate licensing programs for marijuana growers, distributors and retailers, with a ban on growers also opening retail shops.
• Impose a 20 percent state tax and 2 percent local tax on the sale of the drug from wholesalers to retailers, plus a per-gram tax on growers. When the wholesaler is also the retailer, then the retail customer would have to pay.
• Allow counties and large cities to ban marijuana sales within their boundaries.
• Ban marijuana sales to anyone under the age of 21.

Cuomo included the recreational marijuana plan in his $175 billion state budget proposal, which he detailed in his State of the State address Tuesday.

Already legal in border states

The long-awaited plan would allow recreational use of the drug for the first time in New York and is expected to receive active consideration from the state Legislature.

It comes as two bordering states — Vermont and Massachusetts — and Canada have legalized the drug in some form, with New Jersey also working toward that goal. 

The Democratic governor had long been opposed to legalizing marijuana before embracing it late last year, accepting a state Department of Health study that found the benefits of legalization outweigh the drawbacks. 

Cuomo had previously said he supports ensuring the "wealth" that legal marijuana would generate is directed to poorer communities who have been adversely impacted by the state's current marijuana laws.

Priority for minorities, women

His proposal would require the Office of Cannabis Management to prioritize businesses owned by minorities, women and struggling farmers when deciding who to award marijuana business licenses to.

"We have to do it in a way that creates an economic opportunity for poor communities and people who paid the price and not for rich corporations who are going to come in to make a buck," Cuomo said in his speech. 

Cuomo said he anticipates legal marijuana to generate about $300 million in annual revenue once the program is fully phased in.

The state anticipates receiving its first legal marijuana revenue -- about $83 million -- in the 2020-21 fiscal year, should Cuomo's plan be approved.

His budget proposal flags that money for a variety of programs, including regulation costs, data gathering, boosting traffic-safety measures, substance-abuse programs and a small-business development fund.

Fears of overtaxing

Last week, Cuomo said he was looking to neighboring states to help determine the tax rate.

Price the drug too high and you risk sending people back to the illegal markets, he said.

"The how is something that we're talking about right now," Cuomo said. "I think you have to look at New Jersey and you have to look at Massachusetts. They are natural competitors in the marketplace."

New Jersey has not yet legalized marijuana but is working toward it.

Massachusetts charges 17 percent in state excise and sales taxes, plus local governments have the option to tack on a tax of up to 3 percent.

Legislature is up next

Any marijuana plan would need to be approved by the state Legislature, which is controlled by Democrats who have signaled support for legalization.

Cuomo's plan is included in his state budget proposal. A final budget is due to be approved before April 1, when the state's new fiscal year begins. 

Next, lawmakers will have a chance to parse Cuomo's proposal and determine whether they believe it needs any changes.

Two powerful Democratic lawmakers — Senate Finance Chair Liz Krueger of Manhattan and Assembly Majority Leader Crystal Peoples-Stokes of Buffalo — have their own marijuana legislation that is different from Cuomo's but rooted in the same principles.

Democrats control both houses of the Legislature, and many of them are on board with legalization. Others are undecided.

"I'm not sure where I'm going to come out on the issue," said Assemblyman Steve Otis, D-Rye, Westchester County. "I'm really weighing all of the arguments."

Legalization advocates, meanwhile, were awaiting the full text of Cuomo's proposal before taking a stand for it or against it.

But they said they're hopeful that it would provide grants or other funding to poor communities that were disproportionately affected by marijuana convictions. 

"We want to see a policy that is responsive to the lives of New Yorkers, not solely business interests," said Kassandra Frederique, state director of the Drug Policy Alliance.

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JCAMPBELL1@gannett.com

Jon Campbell is a correspondent for the USA TODAY Network's Albany Bureau.