New York Governor Signs Bills To Resume Marijuana Farmers Markets And Classify Cannabis As Agricultural Product
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New York Gov. Kathy Hochul (D) signed two new cannabis-related bills into law over the weekend—one to revive the Cannabis Growers Showcase program, where producers sell products directly to consumers at farmers market-style events, and another clarifying that cannabis is categorized as an agricultural crop in the state.
Hochul vetoed a separate measure, however, that would have given marijuana businesses more leeway in how they pay taxes.
Legislative leaders cheered the two new laws, which they said will support cannabis farmers and help build a more robust legal marijuana market.
“These two new laws create lasting business opportunities for New York’s cannabis growers and offer the same financial relief already in place for other farmers,” Sen. Michelle Hinchey (D), chair of the Senate Agriculture Committee, said in a statement. “Those who are stepping up to build our cannabis industry—literally from the ground up—shouldn’t face unnecessary hurdles to growing their product and getting it to market.”
The sales bill, A10398/S9679, renews an earlier program that was launched by New York regulators as the state’s regulated retail market was just getting off the ground. It gives the state Office of Cannabis Management (OCM) authorization to grant permits for Cannabis Showcase Events, essentially pop-ups where marijuana cultivators and processors can sell products to consumers directly.
New York has struggled to open shops in a timely fashion following the legalization of cannabis in the state, and the showcases were intended as a stopgap to expand access to legal products among consumers while at the same time giving farmers and manufacturers a way to offload product without waiting for more retailers to open their doors. The first iteration of the program, however, sunsetted on January 1, 2024.
“The roll-out of the adult-use cannabis market has been rocky to say the least for NY’s cannabis farmers,” Assemblymember Donna Lupardo, chair of the Assembly Agriculture Committee, said in a joint press release with Hinchey. Bringing back the cannabis showcase program, Lupardo continued, “will expand market opportunities to smaller farmers and provide sales opportunities in areas where legal stores have yet to open.”
“By all accounts,” the House and Senate agricultural committee chairs added in a press release, “the CSG program was a success, bringing cultivators, processors, and retail licensees together where they could directly interact with and educate consumers, build brand recognition, and orient consumers to the legal market’s offerings.”
Event permits under the newly signed law will be valid for up to 14 days, the lawmakers said.
As for the agriculture bill, A1234/S1752, the new law clarifies existing policies around cannabis. “Ambiguity in the law resulted in some localities questioning whether cannabis was an agricultural crop in relation to tax assessments and zoning rules,” the press release says. “Without the important protections this law provides, cannabis farmers were at risk of losing their agricultural tax assessments.”
Agricultural assessments typically allow landowners to pay lower tax rates on property used for farming compared to, for example, commercially zoned property.
“Farmers who converted land from growing an agricultural product currently receiving an agricultural assessment to cannabis, could have lost their agricultural assessment on the portion of land they converted, resulting in an unforeseen real property tax increase and possible penalty for conversion,” the release continues. “Cannabis will now be considered an agricultural crop and treated as such, the same as grapes grown for wine production, hops and malting barley, along with grains used by distillers.”
Assembly Agriculture Committee Chair Lupardo said the change “will provide statewide uniformity to the way legally grown crops are viewed by local tax assessors.”
Meanwhile Hochul shot down a separate proposal approved by the legislature that would have allowed marijuana growers and processors to pay excise taxes on an annual basis rather than quarterly, as they’re currently required to do. The change would have extended the same treatment to the cannabis industry as the state already offers the alcohol sector.
Nicholas Guarino, the founder and CEO of cannabis business Jaunty, wrote in a recent op-ed for Marijuana Moment that the shift to an annual tax-filing system “would allow businesses to better manage cash flow, invest in growth initiatives and adapt more effectively to market demands as more stores open and more potential customers have access to a range of products.”
Backers had said the bill would have created a “financial lifeline” to struggling businesses.
“The slow rollout of the adult-use cannabis retail market created a backlog of products waiting to be sold,” lawmakers said of the bill in a June press release. “This has created a financial strain on farmers and processors who owe taxes on products before they are sold to consumers. This legislation will allow for flexibility in the market as it matures and could provide a financial lifeline.”
At the time, trade groups lauded lawmakers’ efforts.
“We’re deeply thankful to Assemblywoman Lupardo and Senators Hinchey and Cooney for their steadfast support of this industry, and in particular, the hardworking New York farmers who have risked and lost so much to get this industry off the ground,” said Damien Cornwell, president of the Cannabis Association of New York. “This industry will be stronger for these changes in law that will protect cannabis farms from over taxation and provide financial responsibility, and we look forward to continuing to work with lawmakers to meet this growing industry’s many needs.”
Added Mack Hueber, president of the Empire Cannabis Manufacturers Association: “Assemblywoman Lupardo and Senators Hinchey and Cooney have led the way for this industry in the Legislature and we couldn’t be more thankful for the action they’ve taken to strengthen the entire cannabis supply chain by supporting the New York farmers who opened this market and are now facing hardship due to a slower than expected roll out.”
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Separately in New York, Assembly Majority Leader Crystal Peoples-Stokes (D) is calling to extend financial assistance to retail operators struggling under high-cost social equity fund loan program.
The state is expected to surpass $1 billion in cannabis sales by the end of the year, regulators said last month. Meanwhile, regulators are also reiterating their call for cannabis consumers to buy local as the holidays get underway, as they similarly did last year.
After a slow rollout in its first year marked by lawsuits and other delays, legal marijuana sales in New York have picked up significantly in the past several months. Regulators say that’s the result of more licensed businesses opening as well as what they describe as a successful crackdown on unlicensed shops.
This spring, for example, officials in New York City launched Operation Padlock, an enforcement initiative meant to shutter illegal storefronts. Since then, licensed shops that were open before the operation began have since seen sales climb 105 percent, according to an OCM survey.
Gov. Kathy Hochul (D) argued in June that there’s a direct correlation between the stepped-up enforcement and “dramatically” increased legal sales. A report by state officials earlier this year found both “growing pains” and “successful efforts” in New York’s marijuana market launch.
In August, Hochul lauding what she called the state’s “smokin’ hot” marijuana market, as the retailers in state passed the half-billion-dollar mark in legal sales since the market’s launch.
The governor also said in June that the state’s escalated enforcement actions against illicit marijuana shops is resulting in a significant increase in legal sales at licensed retailers.
She made the comments amid criticism from equity-focused activists over what they see as a “corporate takeover” of the cannabis market, citing reporting about the administration dismissing concerns from state officials about a “predatory” private equity loan deal the state approved to provide funding for startup cannabis retailers.
Certain advocates say Hochul has “falsely” blamed the legalization law itself for the state’s troubles with the illicit market, without taking responsibility for the administration’s role. To that end, there has been criticism of the governor’s ousting of Chris Alexander as executive director of OCM earlier this year.
New Jersey Marijuana Sales Top $1 Billion Mark For 2024, State Officials Announce
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