- Advocate for the immediate release of funds designated to support social and economic equity applicants and communities. Funds must be released before the marijuana market is saturated and multi-million dollar companies dominate the market.
The marijuana legislation requires the creation of a social and economic equity plan. The plan must be designed to give social service and economic priority to individuals and communities adversely impacted by the marijuana drug laws. Part of the social and economic equity plan must include monetary support to individuals and communities adversely impacted by the marijuana drug laws. To provide monetary support to adverse communities, the legislation created three (3) funds: the New York State Drug Treatment Public Education Fund, the New York State Community Grant Reinvestment Fund and the New York State Lottery Fund.
The money for each of these funds will come from tax revenue collected from the sale of recreational marijuana by licensed companies. Twenty percent (20%) of the tax revenue will go to the New York State Drug Treatment Public Education Fund, forty percent (40%) will go to the New York State Community Grant Reinvestment Fund and the remaining forty percent (40%) of the tax revenue will go to the New York State Lottery Fund.
These funds are designed to support communities adversely impacted by the marijuana drug laws. To monetarily support individuals adversely impacted by the marijuana drug laws, the legislation requires that the social and economic equity plan give low-interest and zero-interest loans to social and economic equity applicants who are awarded a license from one of the nine (9) license categories. The legislation also requires the creation of an incubator program to provide social and economic equity applicants with counseling support, small business coaching, financial planning and regulatory compliance assistance.
According to the legislation, to fund the low-interest and zero-interest loans and the incubator program the Cannabis Control Board, which oversees the implementation of the marijuana legislation, has the authority to assess registered organizations with a one-time special licensing fee to sell recreational marijuana as a cultivator, processor, distributor and retail dispensary. Such fee shall be assessed at an amount to adequately fund low-interest and zero-interest loans and incubator assistance.
The Cannabis Social Equity Coalition Position
The Cannabis Social Equity Coalition is of the view that both the support to communities and individuals adversely impacted by the marijuana drug laws put forward by the legislation is clearly an improvement over support provided by other states to impacted communities and individuals. However, without adequate funding and the timely release of funds, New York will fail to reach its goal of creating social service and economic opportunities that redress the harm done to impacted communities and individuals, as did other states.
The cannabis social equity coalition takes the position that the one-time licensing fee that will be imposed on registered organizations will fall far short of the funds social and economic equity applicants will need. There are only 10 registered organizations in New York State. Any reasonable licensing fee requested would not be enough to support 50% of the licenses given to social and economic equity applicants (a requirement of the legislation), particularly if they are seeking the more lucrative cultivation, processing or distribution license.
In addition, the money for the Community Grants Reinvestment Fund, the Drug Treatment Public Education Fund and the Lottery Fund will come from taxes paid by licensed organizations. As a result, the money provided by these funds will not be available for years, i.e., after the taxes have been collected and dispersed according to legislative priority. What we know from other states that legalized recreational marijuana is that after approximately two and a half (2.5) to three (3) years, the market becomes saturated with marijuana, pushing prices down and putting small licensees out of business. Therefore, it is only within the first two (2) to three (3) years that opportunities exist for social and economic equity licensees to make a large enough profit to effectively compete with the multi-million dollar companies in the market. If the funds and other resources are not available until three (3) years after the multi-million dollar companies have been up and running, it is unlikely social and economic equity companies will be able to effectively compete in the market.
Finally, US Senate Majority Leader Chuck Schumer and Senators Cory Booker and Ron Wyden recently submitted a bill to congress for legalizing marijuana. If the democrats continue to control the two houses of congress and the executive branch, it is likely this bill will pass within the next couple of years. With its passage, the current prohibition on cross border sales of marijuana will be lifted, making it possible for big cultivators and processors from any state to sell their product in any other state. Once that happens, it will be extremely difficult for small marijuana producers in New York to compete in the market.
Based on these findings, the cannabis social equity coalition is asking that the cannabis control board, the cannabis advisory board and the executive director of the office of cannabis management request that the state budget include funds that support the social and economic equity plan and that can be released immediately to social and economic equity applicants. Alternatively, we are asking the office of cannabis management in collaboration with the cannabis control board and the cannabis advisory board to issue state bonds that can sufficiently and immediately support the social and economic equity program or access funds from the Tobacco Master Settlement Agreement for this purpose.
