Dear New York City

Advice for the Big Apple on how to avoid California’s legalization blunders.

From hip-hop to pizza to who has the highest rents, California vs. New York is a never-ending argument. 

Headlining the bill are New York City and San Francisco — two cities revered as bastions of culture. Though Manhattan and its surrounding boroughs clearly have the advantage on some counts (museums, live theater), San Francisco has always enjoyed a comfortable edge when it comes to cannabis.

Now it appears New York Gov. Andrew Cuomo is finally ready to close the gap.

Though Cuomo previously included cannabis legalization in his 2019 budget proposal for the state, there is reason to believe his decision to do so once more may lead to more promising results this time. Last year’s attempt was stalled when New York lawmakers failed to find consensus on the finer details of legalization, ultimately leading Cuomo to drop the plan, but he’s ready to give it another shot. 

On Jan. 21, Cuomo once again included adult use cannabis in his budget proposal for 2020. In an accompanying speech, he advocated for using the budget as a means of securing legalization, calling it “[an] opportunity, frankly, to make some tough decisions and work through tough issues.” Indeed, Gov. Cuomo and his administration are about to embark on a challenge that’s difficult to quantify.

Despite assurances to the contrary, it’s clear now that California — the first state to allow medical cannabis and easily the largest adult-use economy of any state operating today — was not ready for the consequences of Proposition 64 passing in 2016. As the state of New York and its namesake city now also prepare to navigate the numerous, often tumultuous, challenges that legalized cannabis presents, here are a few lessons worth remembering.

For starters, California has had quite a difficult time comprehending the concept of not raising taxes until the illicit market is eradicated. Ask just about any licensed operator in the state what the biggest issue is for California’s cannabis industry and they’ll inevitably tell you it’s taxes. 

“The hardest thing is actually getting legislators to understand the consequences,” Flow Kana CEO Michael Steinmetz  told SF Weekly in December.

Flow Kana is one of several California companies to announce layoffs in recent months, with taxes and lack of access to traditional banking methods often cited as the cause. While it was somewhat inevitable that the “green rush” would eventually lead to a culling as the market continues to define itself, many of the businesses being forced to reduce their workforce or pause plans for expansion (WeedMaps, CannaCraft) are among the industry’s most successful. How does something like that happen?

For New York to succeed where California has failed, the recipe calls for a gradually rising tax rate and an influx of resources devoted to routing out illegal operators. If legal weed costs too much, people will just buy it somewhere else, so ideally a state would start with low tax rates (which itself can be subsidized by permitting fees), get customers to make the switch to legal channels, force illicit operations out of business, and then bring the taxes up a bit as the market stabilizes — and once there isn’t a cheaper alternative readily available.

Another area of immense importance is social equity. Sure, being able to buy weed without fear of arrest is awesome, but that doesn’t inherently help those already incarcerated or adversely affected by decades of drug policies that overwhelmingly targeted minority communities. Thus, restorative justice cannot be viewed merely as one arm of the legalization octopus but instead must be seen as an imperative precursor to establishing a regulated cannabis market.

San Francisco and Oakland have both attempted to prioritize equity, but the results are mixed at best. For example, it took just shy of two years before the first equity-operated dispensary in San Francisco, Berner’s on Haight,  opened its doors this past December. That’s quite a large lead for outfits that opened on Jan. 1, 2018 — all medical dispensaries given the opportunity to convert to retail — to garner customer loyalty and brand recognition.

Ideally, equity programs will provide a pathway for qualified candidates to gain priority access to permitting and resources in the legal cannabis space. In order for that concept to truly take hold, however, it requires a system that does not license  nearly 40 retail operators — as San Francisco has — before its first equity candidate can open their doors. 

Furthermore, New York should look to mimic the efforts of former SF District Attorney George Gascón, who  partnered with the non-profit Code for America to automatically expunge eligible criminal records of cannabis-related convictions.

In short, New York must take accountability for its past and plan appropriately for its future if it wishes to see the state’s legal cannabis market to thrive. Perhaps the best thing California’s legalization struggles can yield is a better blueprint that the next crop of states to legalize can follow. 

Just don’t ever tell us your weed is better.

Related Stories