New York’s Marijuana Regulation & Taxation Act (2021)

Estimated reading time: 8 minutes

Introduction

On March 31, 2021, Governor Andrew Cuomo signed legislation (S.854-A/A.1248-A) legalizing adult-use cannabis in New York resulting in the New York Marijuana Regulation and Taxation Act of 2021.

The law will establish the Office of Cannabis Management to implement a comprehensive regulatory framework that will cover medical, adult-use, and cannabinoid hemp. The law will also expand New York State’s existing medical marijuana and cannabinoid hemp programs.

Below is a summary of key provisions of the New York Marijuana Regulation and Taxation Act.

Legal Possession and Personal Liberty

• Personal possession limit of up to three ounces of cannabis and 24 grams of cannabis concentrate. Legal possession of up to three ounces is effective immediately.
• Home cultivation: A maximum of 12 plants can be grown per household with more than one adult.
  • Three mature plants and three immature plants for adults over 21
  • Six mature plants and six immature plants maximum per household
  • Home growing will not take effect until regulators set rules for it. Regulators have a maximum of six months to do so for medical patients and must do so for adult-use consumers no later than 18 months after the first retail adult-use sales begin.
• Police cannot use the odor of cannabis to justify searches.
• Legislation permits the sale of hemp flower in the cannabinoid hemp program and allows for smokeable forms only when adult-use retail stores are operational.

Expungement, Release, and Resentencing

• Legalized conduct will be automatically expunged.

Delivery 

• Retailers, microbusinesses, and delivery licensees are allowed to deliver to cannabis consumers.
• Cultivators are prohibited from holding delivery licenses.
• No entity may hold an interest in more than one delivery license.
• No more than 25 full-time employees per delivery licensee.
• The granting of delivery licenses shall promote social and economic equity applicants. 

Licensing and Regulatory Structure

• Legislation establishes the New York State Cannabis Control Board and the Office of Cannabis Management.
• The Office of Cannabis Management — a new independent agency operating as part of the New York State Liquor Authority — is responsible for regulating the adult-use cannabis market as well as the existing medical marijuana and hemp programs and will be overseen by a five-member Cannabis Control Board. The governor shall select three members, including the chairperson. The President of the Senate and Speaker of the Assembly shall select one member each.
• A goal is set of 50% of licenses going to social and economic equity applicants. Social equity applicants are defined as people from “communities disproportionately impacted by the enforcement of cannabis prohibition,” as well as minority- and women-owned businesses, disabled veterans, and financially distressed farmers.
• Regulators may allow existing medical cannabis businesses to convert no more than three of their existing storefronts to dual use if they pay a one-time “special licensing fee” to fund social and economic equity and incubator assistance.
• Social consumption sites and delivery services are permitted.

Taxation and Revenue Distribution

• Legislation imposes a hybrid tax, with both a potency-based tax on distributors and a point-of-sale tax:
  • levies a tax on distributors at 0.5 cents per milligram of THC for flower, 0.8 cents per milligram of THC for concentrates, and 3 cents per milligram of THC for edibles; and
  • imposes a point of sale retail tax of 9% state tax and a 4% local tax (75% of the local earnings would go to municipalities and 25% to counties).
• After regulatory and administrative costs, 40% of cannabis revenue will go to community grants reinvestment, 20% to schools, and 40% to drug treatment facilities and public education, including for a youth-focused public health education and prevention campaign, a statewide public health campaign on the health effects of cannabis, and for substance use disorder treatment.

Local Control

• Cities, towns, and villages may opt-out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses by passing a local law by December 31, 2021 or nine months after the effective date of the legislation.

Improving Medical Access

• The state’s existing medical cannabis program will be changed to expand the list of qualifying conditions and allow patients to smoke marijuana products.
• Patients can also obtain a 60-day, rather than a 30-day, supply.

Conclusion

The New York Marijuana Regulation and Taxation Act marks a pivotal shift in cannabis legislation, ushering in a comprehensive framework that supports adult-use legalization, expands medical access, and prioritizes social and economic equity. From legal home cultivation and automatic expungement to progressive licensing opportunities and targeted revenue reinvestment, this landmark legislation positions New York as a model for cannabis reform.

As the state continues to roll out regulations and licensing pathways, now is the time for entrepreneurs, operators, and advocates to prepare. Whether you’re exploring entry into the New York cannabis market, seeking guidance on compliance, or looking to understand how these changes affect your business or community — staying informed and engaged is key.

Looking to get licensed, expand your cannabis operations, or navigate regulatory requirements in New York? Contact Catalyst BC today for expert consulting, turnkey solutions, and hands-on support every step of the way. Let’s build a compliant, equitable, and thriving cannabis future together.

Learn more about our New York Cannabis Consulting Services or Book a Complimentary Consultation.

New York’s Marijuana Regulation & Taxation Act FAQs

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