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Rematch 2021: CRTA vs. MRTA

One day after Senator Liz-Krueger and Assembly Majority Leader Crystal People-Stokes refiled their legislative plans for marijuana legalization, Governor Andrew Cuomo announced his intention to file his proposal in the FY2022 budget. Once again, New York enters its legislative session with two competing legalization bills, building on efforts which failed last year largely due to a re-focus of legislative priorities amid the initial Coronavirus outbreak in the state. These two bills will look similar to their respective iterations last year, leading to an adult-use legalization rematch: the CRTA versus the MRTA.

Sen. Liz Krueger filed the Marijuana Regulation and Taxation Act (MRTA) on January 5, making it the fifth version of the bill championed by the senator since 2013. This version is identical to the version proposed in 2020. The MRTA has been immensely popular within the legislature and amongst activist groups. Its strong social equity measures and tax revenue allocations make promises of restorative justice and “righting-the-wrongs” of the war on drugs, a chief motivating factor behind much of the support for legalization. It also features a much lower tax rate than the 2020 CRTA, with a total 21% tax versus Cuomo’s effective 45% rate.

State Senator Liz Krueger (D - 28) ... From: CannaGather

According to Sen. Krueger, “It is long past time for New York State to catch up with our neighbors and legalize, tax, and regulate adult-use marijuana. To my mind the most compelling reason for doing so has always been to end the unnecessary and destructive impact of the so-called ‘War on Drugs’ on communities of color.”

“But now, faced with the impacts of the pandemic, the potential for legalization to create new jobs, economic growth, and out-year tax revenue for the state is more important than ever.”

The following day, January 6, Gov. Cuomo publicly announced his intentions to introduce the Cannabis Regulation and Taxation Act (CRTA) in the budget negotiations this year. The CRTA came very close to success last year, but ultimately failed to be included in the budget as negotiations broke down amid the Coronavirus outbreak. This year, however, Cuomo hopes to finally push his bill through, especially with its promises of economic opportunities to help the state recover from the pandemic.

The CRTA would create the Office of Cannabis Management to oversee the cannabis industry in New York, with all of its members and its executive director personally appointed by the Governor himself. In an attempt to maximize tax revenue, the 2020 version featured a weight-based tax structure which would result in an effective rate of around 45%. Compared to the MRTA, its social equity provisions were less concrete, which many MRTA supporters heavily criticized during negotiations last year.

While Gov. Cuomo has yet to release the 2021 CRTA, it is expected to look similar to last year’s iteration. There have been discussions regarding a revised tax structure, potentially based on THC percentages rather than dry weight, but no concrete information has been released.

According to Cuomo, “For years I’ve tried to pass it, but this is a year where we do need the funding and a lot of New Yorkers are struggling, so I think this year will give us the momentum to get it over the goal line. As everyone knows, Massachusetts has legalized marijuana. New Jersey is going to legalize marijuana. So, what are we really talking about at this point?”

Advocacy and opposition groups are gearing up to make their voices heard in the establishment of a marketplace potentially worth billions. After the Governor announced his proposal on Tuesday, New York Cannabis Growers & Processors Assocation (NYCGPA) President Allan Gandelman stated that “Now is the time to establish an equitable, diverse and sustainable cannabis marketplace that prioritizes New York farmers, small businesses and communities impacted by the war on drugs.” Medical cannabis companies in New York are also relying on the adult-use marketplace to boost their revenue and access to consumers, releasing a statement in support on Tuesday also. The only real opposition to legalization broadly is from Smart Approaches to Marijuana (SAM), a well-funded prohibitionist group that was successful in pressuring senate democrats in 2019 into opposing the bill. It is unclear what effect their efforts will have in face of wide public and legislative support, but they have nonetheless vowed to fight both proposals.

As legalization efforts ramp up in the next few months, we can expect much of the discussion to focus on the differences between these two bills and the opportunities for compromise. With increased support and a Democrat supermajority in the Senate, a legislative push for the MRTA could override a veto from Cuomo himself. Cuomo, on the other hand, will surely stand steadfast behind his bill, and will likely fight fiercely to include it in the final budget.

Ultimately, it will take a compromise between legislative leaders and the Governor on the issue leading up to the April 1st budget deadline. The stage is set for 2021, and New York is readier than ever.

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