Giuliano Stefanutti

Associate Editor

Loyola University School of Law, J.D. 2023

Earlier this month Tremaine Wright, the woman in charge of New York’s cannabis regulation revealed a plan to promote social equity through conscientious licensing and tax revenue policies. New York legalized cannabis recently, so its regulations for it are still in a fledgling stage. As a result, the policies being made now will shape the cannabis industry for years to come.

The office of regulation

The state of New York passed the Marihuana Regulation and Taxation Act (MRTA) on March 31, 2021. This legislation legalized recreational cannabis use for adults and established the Office of Cannabis Management (OCM) to issue licenses and develop more specific regulations on cannabis businesses. The OCM is an independent office that governs the production, sales, and other logistical aspects of medical and recreational cannabis in the state of New York. The chair of the OCM is Tremaine Wright, a Democrat who has previously supported the legalization of cannabis. On its website, the OCM has identified social justice as one of its institutional goals.

Social justice-driven allocation policies

At the 2021 Cannabis World Congress & Business Exposition (CWCBExpo), Wright demonstrated that the OCM’s pursuit of social justice is not hollow rhetoric, but rather a driving force behind its policies. She announced that New York’s  cannabis licenses will be allocated in order to promote social equity. The OCM will assign half of the cannabis licenses it grants to local small business owners instead of large corporate entities. Similarly, half of the revenue generated through cannabis taxes will be invested into local communities. Wright seeks to “level the playing field,” halting corporations from further repressing already-burdened communities. Legalizing cannabis has provided the state of New York with an emerging new source of tax revenue, which is now available for allocation. Additionally, instead of attempting to supplant the pre-existing cannabis market, Wright seems to prefer to integrate the legacy (pre-legal) business into the now-developing legal business. Wright’s policy decisions are sound from an economic perspective, and seem like promising ways to avoid the trouble that California has encountered in its legalization process. California’s regulation policies have made it difficult for small business owners to compete with larger companies in the legal cannabis business, forcing them back into illegal cannabis sales. A recent report found that as much as 90% of the cannabis sales in California are illegal, which causes a substantial loss in tax revenue in addition to endangering public health by spreading products with unregulated ingredients. By eschewing competition in favor of integration, the OCM’s new policies aim to avoid these difficulties and promote public wellbeing. New York’s social justice aims echo similar efforts in Illinois’ cannabis legalization, which have received mostly positive feedback. Illinois has invested cannabis tax revenue into the Restore, Reinvest and Renew (R3) program, which offers grants to promote “economic development, violence prevention services, reentry services, youth development, and civil legal aid” in marginalized communities. This program has generally received positive feedback, though some grant applicants have found the program difficult to navigate.  Therefore, looking to the steps that Illinois has taken may offer some guidance for New York’s implementation of similar measures, thereby helping to implement them successfully. Not only is the OCM’s policy pragmatic, but more importantly, it also addresses a long history of discrimination and aims to begin to make things right.

Why it matters

The policy considerations by Wright, as well as the OCM at large, considers the often-overlooked history of American drug laws. The “War on Drugs” has primarily been used to disproportionately target low-income communities and communities of color, and even now that cannabis is being legalized, many people remain incarcerated for possessing or selling it. Wright is conscious of this unfortunate history and seeks to directly address it. In her description of the allocation policy, she specified that half of New York’s cannabis licenses will go to the communities that have been most prosecuted by the War on Drugs. Most drug arrests in New York affect African-American or Hispanic individuals, so equity demands that local entrepreneurs from those neighborhoods be included in the growth of the legal cannabis business. According to MarketWatch, experts have estimated that the inclusion of people from the neighborhoods most strongly affected by drug arrests could estimate roughly $3 billion worth of business. Bringing in this amount of revenue would make it possible to make substantial investments in local communities, serving numerous important interests. Alternatively, failing to include these communities would perpetuate the history of discrimination and allow large companies to profit from activities that have led local entrepreneurs to be criminalized. Fortunately, the OCM has elected to pursue the better option and bring legacy businesses into the state’s growing legal cannabis industry. This is sound business policy and furthers social equity goals, so Wright’s direction has set an admirable precedent for future