Legalization Update: New York, Virginia, New Mexico

Happenings • June 15, 2021

2021 cannabis legalization news from New York, Virginia, and New Mexico plus what's next for cannabis legislation.

Cannabis Legalization

Following the 2020 election, we published a blog post about the cannabis legalization milestones passed across six states. Now, we’re seeing a second wave of cannabis reform - and this time, it’s being led by state legislators.

This spring, three new states joined the 17 other recreational cannabis markets across the country in just a few days through direct legislative action. New York, Virginia, and New Mexico governors each passed sweeping legislation that both legalized recreational cannabis and prioritized an equitable redistribution of tax dollars to communities hit hardest by the war on drugs. All three bills explicitly featured social equity provisions and cannabis-related criminal justice reform.

New York Cannabis Laws

On March 30th, the New York legislators passed a bill to legalize recreational cannabis in New York, effective immediately. The New York market has been projected to become one of the biggest in the country, putting a spotlight on how it would approach taxing recreational cannabis revenue. New York’s proposed cannabis retail tax will be set at 13% (9% to the state, 4% to localities), which is above the average when compared with states across the country but not the highest (a title held by Washington state currently).

It has also been lauded as one of the most socially equitable pieces of cannabis legislation the country has seen yet. Once recreational sales begin in 2022, 40% of the tax revenue will be directed towards communities most affected by the war on drugs and up to 50% of licenses will be reserved for social equity applicants. In addition, anyone with cannabis-related offenses will see their records automatically expunged.

New York’s new legislation includes significant changes for medical cannabis as well. In the past, patients in the state only had access to cartridges and ingestibles. Under the new legislation, both medical patients and adult-use consumers will eventually be able to purchase Flower products, as well as grow plants in their homes.

Virginia Cannabis Laws

In February, Virginia’s House and Senate approved an adult legalization bill. The Virginia Legislature passed the bill on April 7th, making it the first Southern state to legalize recreational cannabis. There will be some time before the market can fully operate; the state will accept applications for retail licenses starting on July 1, 2023 and allow retail sales to begin on Jan. 1, 2024 – subject to a reenactment of the bill in 2022.

The legislation includes specific provisions focused on social equity and cannabis-related criminal reform, echoing 68% of the registered voters in Virginia who had previously expressed support for criminal justice proposals to legalize cannabis. Stipulations include early distribution of social equity licenses, which guarantee recipients a 66% ownership stake in the business and provide low-interest loans to raise capital. The law also mandates the removal of past cannabis-related charges and convictions and promises to set aside 30% of funds in restorative justice for the affected communities.

New Mexico Cannabis Laws

Within days of the New York and Virginia legalizations, New Mexico held a special legislative session, officially legalizing recreational cannabis on April 12. New Mexico expects to see legal sales ramp up by April 1, 2022. The New Mexico ruling also eliminated all taxes on medical cannabis sales, and residents are able to legally grow their own cannabis as well.

Unlike in New York and Virginia, the legalization bill in New Mexico (House Bill 2) separated social justice aspects of the ruling including cannabis-related criminal record expungement into a separate act (Senate Bill 2). Senate Bill 2 includes immediate eligibility for record expungement and sentence dismissal.

What’s next for cannabis legalization?

As support for legalization builds across the country, many emerging markets will likely have a significant impact on their neighboring states. For example, many cannabis operators expect to see great shifts in other East Coast regulations as both New York and New Jersey launch recreational sales.

We could end up seeing several more states legalize recreational cannabis by the year’s end. Minnesota, Rhode Island, Delaware, and Connecticut are all at various advanced stages of bill assessment and approval, and these states should be close to crossing the legalization finish line by the end of 2021.

Update: On Tuesday, June 22nd, Connecticut became the 19th state to legalize cannabis for recreational use. The legislation sets aside 50% of licenses for social equity applicants and up to 75% of revenue will be dedicated toward efforts in social equity and reinvesting in the community. Retail sales in Connecticut are not anticipated to begin until the summer of 2022.

Bonus: Alabama

Alabama has become the latest state to legalize medical cannabis, with Governor Kay Ivey signing a legalization bill into law on May 17. This makes Alabama the 38th state to legalize cannabis for medical use and just the second state from the Deep South to take the step. Alabama will begin accepting business licenses on Sept 1. 2022, and the move highlights a growing acceptance for legal cannabis, both medical and recreational, in states across the country.


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