A key component to The Marihuana Regulation and Taxation Act (the “Act”) is the implementation of a Social and Economic Equity and Incubator Program (the “Program”), which is the most progressive social equity program among the states that have legalized adult-use marijuana so far. New York seems to have taken the best aspects of other state’s programs – like those of California, Massachusetts and Illinois – in creating its Program to ensure that people and communities disproportionately harmed by marijuana prohibition and discriminatory law enforcement are included in its cannabis industry. The Program sets licensing goals, gives qualifying applicants priority access to licenses and creates a new incubator program to assist eligible applicants and licensees. However, the specific features of the Program are left to the Cannabis Control Board (“Board”) to determine through promulgated regulations. We anticipate that Board appointments will be made public in the coming weeks.
Under the Act, the Board will “create and implement a social and economic equity plan and actively promote applicants from communities disproportionately impacted by cannabis prohibition, and promote racial, ethnic, and gender diversity when issuing licenses for adult-use cannabis related activities.” It has also set a goal to award 50% of adult-use cannabis licenses to social and economic equity applicants. As a result, social and economic equity applicants will be given “extra priority” in the application process. To qualify as a “social and economic equity applicant,” the individual or entity must:
(a) be a member of a community disproportionately impacted by the enforcement of cannabis prohibition;
(b) have an income lower than 80% of the median income of the county in which the applicant resides; and
(c) have been convicted of a marijuana-related offense prior to the effective date of the Act, or had a parent, guardian, child, spouse, or dependent, or was a dependent of an individual who, prior to the Act’s effective date of the new laws, was convicted of a marijuana-related offense.
It is unknown at this time which communities will be deemed to be disproportionately impacted or how the Board will assess if someone is a member of a community disproportionately impacted, but the Board is required to issue guidance on this in the final regulations.
Eligible applicants will also be able to obtain business and financial support through the Program including counseling services, education, small business coaching, financial planning, compliance assistance, and low interest loans. These support services will provide authorized applicants with a legitimate seat at the table in New York’s cannabis industry.
The Act further states that individuals or entities who qualify as a minority- or women-owned business, distressed farmers, or service-disabled veterans will also get priority consideration in the license application process. But the legislation does not specify how much weight will be given to these groups. Compare Cannabis Law § 87(1), (2) (including minority-owned businesses, women-owned businesses, distressed farmers and service-disabled veterans in the groups that will get “some priority”) with Cannabis Law § 87(3) (excluding minority-owned businesses, women-owned businesses, distressed farmers and service-disabled veterans in the groups that will get “extra priority”).
Nevertheless, New York, through the Program, has made a concerted effort to provide all individuals, entities and communities an opportunity to participate in its emerging cannabis industry. As a result, there will many new participants in this industry. For those applicants who may not currently meet the outlined social equity or preferential criteria, there are a host of actions that can be employed to ensure that your final license application best addresses New York’s goals under the Program. The steps you take today will ensure you have the best opportunity to secure your license under the Act.
Please contact The Wagoner Firm PLLC if you have any questions about New York’s legalization of adult-use marijuana or pursuing an adult-use marijuana license.