The Marijuana Regulation and Taxation Act

The Marijuana Regulation and Taxation Act


Governor Cuomo has signed into law the Marijuana[1] Regulation and Taxation Act (“the Act”). Through its enactment, New York State legalized the recreational use of cannabis[2] products by adults who are 21 years of age or older and made changes to the existing medical marijuana program (including increasing access to medical marijuana). Among other things, the Act creates the New York State Cannabis Control Board (“CCB”)[3] and the Office of Cannabis Management (“OCM”)[4] to establish and implement a comprehensive regulatory framework.

This memorandum provides an overview of certain provisions of the Act and addresses the following topics: (1) Legalization of the Use and Possession of Cannabis; (2) Personal Cultivation and Home Possession; (3) State Licensing Requirements; (4) Driving While Impaired; (5) Local Control and Regulation by Municipalities; (6) Protections for Employee Off-Duty Cannabis Use; (7) Impact on the Existing Medical Marijuana Program; (8) Restrictions on the Use of Cannabis Products in Schools; and (9) Tax Structure and Revenue for Recreational Use.

Legalization of the Use and Possession of Cannabis

Effective immediately, the Act amends the Penal Law to make it lawful for persons 21 years of age and older to use, smoke, ingest or consume cannabis products unless otherwise prohibited by State law. Also legalized is the possession, transportation and purchase of up to three ounces of cannabis and up to 24 grams of concentrated cannabis (e.g., oils) and the possession of cannabis paraphernalia in public. The Act establishes a new range of criminal penalties for unlawful possession beyond the legal limits and the illegal sale of cannabis (e.g., by unlicensed individuals).

The Penal Law, however, now prohibits smoking, vaping or ingesting cannabis products in a location where tobacco smoking or vaping was already restricted by the Public Health Law (e.g., bars, restaurants, places of employment, public transportation). Violations of this provision are punishable by a civil penalty of up to $25 or community service not exceeding twenty hours.

Personal Cultivation and Home Possession

The Act will permit adults who are 21 years of age or older:

(1)  To grow up to three mature and three immature cannabis plants in or on the grounds of the person’s private residence (regardless of how many adults live in a private residence, each residence will be limited to a total of six mature and six immature cannabis plants); and

(2)  To possess up to five pounds of cannabis n or on the grounds of their private residence.[5]

Anyone in possession of and/or cultivating cannabis must take reasonable steps to ensure that the cannabis is in a secured place that is not accessible to any person under the age of 21.

The changes set forth in this section regarding personal cultivation and home possession will take effect once the OCM issues regulations governing the home cultivation of cannabis. The Act provides that the OCM will issue rules and regulations governing the home cultivation of cannabis by certified patients (card-carrying medical marijuana users) no later than six months after the effective date of the Act and will issue rules and regulations governing the home cultivation of cannabis for consumers no later than 18 months following the first authorized retail sale of adult-use cannabis products.

State Licensing Requirements

The Act establishes a licensing structure for the cultivation, processing, distribution and sale of cannabis products to adults 21 years of age and older. It also provides for licenses for onsite consumption by adult-users and delivery services. The licensure process will be overseen by OCM, which will issue all adult-use cannabis licenses, including for cultivators, nurseries, processors, distributors, retail dispensaries, microbusinesses (permitted to cultivate, process and sell their own product to consumers with annual caps set by OCM), adult-cooperatives, delivery services and on-site consumption. However, like New York’s Alcoholic Beverage Control Law, vertical integration is limited across certain license categories (a limitation on holding multiple licenses). For example, a single licensee may apply for separate licenses to cultivate, process and distribute cannabis products, but a cultivator, processor or distributor may not also be licensed as a retail licensee or hold any interest in a retail dispensary. In addition, individuals or entities with retail licenses may not have direct or indirect ownership in more than three retail locations (each of which must have a separate license).

Driving While Impaired

It remains illegal to drive while under the influence of cannabis, and odors of cannabis may still be used as a reason to suspect that a driver is intoxicated. However, the Act prohibits using odor as a justification for searching a car for contraband.

The State Department of Health is now tasked with overseeing a research study of methodologies and technologies for detecting cannabis-impaired driving. After the study is complete and a report issued, the Department of Health may approve the use of a test for detecting cannabis-related impairment.

Local Control and Regulation by Municipalities

The Act provides for some control by counties, cities, towns and villages. A city, town or village (not a county): (1) may pass a local law to “opt-out” and prevent the issuance of retail dispensary and on-site consumption licenses within the municipality; (2) may impose certain time, place and manner restrictions on the operation of licensed adult-use retail dispensaries and on-site consumption sites; and (3) will receive notification of applications for licensed adult-use retail dispensaries and on-site consumption sites. A county, city, town or village can enact and enforce certain restrictions regarding personal cultivation and home possession of cannabis.

Local Opt-Out

The Act provides that cities, towns and villages may adopt a local law, subject to permissive referendum, on or before December 31, 2021, that requests the CCB to prohibit the establishment of retail dispensary licenses and/or on-site consumption licenses authorizing the retail sale of adult-use cannabis to consumers within the municipality’s jurisdiction. Any town law to opt-out will only apply to the area of the town that is outside of any village within the town. If a municipality opts out by local law, it may, at any time in the future, repeal that local law and, thereafter, permit retail dispensaries and/or on-site consumption establishments within its borders.

Time, Place and Manner Restrictions

Cities, towns and villages may enact local laws and regulations governing “the time, place and manner” of the operation of licensed adult-use cannabis retail dispensaries and/or on-site consumption establishments, provided that the laws or regulations do not make the operation of those facilities “unreasonably impracticable” as determined by the CCB. In addition, other cannabis-related operations would still be subject to local zoning regulations.

Notification to Municipalities Concerning the Filing of License Applications

Whenever an individual or entity intends on filing an application for a license to operate an adult-use retail dispensary or an on-site consumption establishment, the applicant must provide notification of its intent to the municipality in which the proposed premises are located by utilizing a form notice to be developed by the CCB. This notice (which must be made to the clerk of the city, town or village) must be provided not less than 30 days and no more than 270 days before the application is filed. Should the city, town or village express an opinion for, or against, the granting of the license, its opinion will become part of the record upon which a decision is made on the application. The CCB will subsequently provide the municipality with an explanation as to how its opinion was considered in reaching a decision on the application.

Regulation of Personal Cultivation and Home Possession

Counties, cities, towns and villages are permitted to “enact and enforce regulations to reasonably regulate” the personal cultivation and home possession of cannabis, provided that: (1) the regulations do not completely or essentially prohibit adults from growing cannabis plants on their property; and (2) a violation of the regulations constitutes no more than an infraction punishable by a discretionary civil penalty of $200 or less.

Protections for Employee Off-Duty Cannabis Use

The Act provides that it is not “intended to limit the authority of any district, government agency or office or employers to enact and enforce policies pertaining to cannabis in the workplace.” Subject to applicable collective bargaining agreement provisions, employers may, therefore, continue to prohibit the possession and/or use of marijuana during work time, including on paid or unpaid breaks and meal periods.

Employers may also continue to take action against an employee who is “impaired” by cannabis while working. For these purposes, “impaired” means that the employee “manifests specific articulable symptoms while working that decrease or lessen the employee’s performance of the duties or tasks of the employee’s job position, or such specific articulable symptoms interfere with an employer’s obligation to provide a safe and healthy workplace, free from recognized hazards, as required by state and federal occupational safety and health law.” Quite simply, an employee who reports to work “stoned” can still be disciplined.

However, the Act amends New York Labor Law § 201-d to make its treatment of marijuana consistent with its treatment of smoking tobacco or drinking alcohol outside of work. The Labor Law has long protected employees’ lawful off-duty conduct, including the lawful use of consumable products. As amended by the Act, § 201-d now specifically prohibits an employer from discharging, refusing to hire or otherwise discriminating against an individual based on the “legal use of consumable products, including cannabis in accordance with state law” (emphasis added). However, this protection only extends to legal use that is: (a) outside of work hours; (b) off the employer’s premise; and (c) without the use of the employer’s equipment or other property. Employers cannot take action for employees simply having marijuana in their systems (except in the limited circumstances described below).

The Act also contains limited exceptions for specific circumstances. Thus, an employer does not violate § 201-d when:

• The employer’s actions were “required” by State or federal statute, regulation, ordinance, or other State or federal government mandate; or
• Complying with the Act would require the employer to commit any act that would cause the employer to be in violation of federal law or would result in the loss of a federal contract or federal funding.

Employers should review any workplace policies that address employee use of cannabis products, as well as inquiries into cannabis use in the hiring process. Employers should also review their drug-testing procedures (both pre-hire and during employment) if any are in place. Marijuana can be detected through testing long after an individual is no longer impaired. Thus, where drug testing is not required by law or a federal contract, a positive cannabis test alone will not justify a refusal to hire or an adverse employment action. Therefore, employers should train their supervisors on recognizing and documenting the “specific articulable symptoms” that are associated with employees being impaired by marijuana in the workplace.

Please let us know if we can be of assistance in reviewing or amending your policies.

Impact on the Existing Medical Marijuana Program

The new law also builds upon New York’s existing medical marijuana program, originally enacted in 2014, by: (1) significantly expanding the list of medical conditions for which marijuana can now be prescribed; (2) allowing a patient to smoke or vape medical marijuana (which was previously prohibited); and (3) permitting a patient to receive a 60-day supply of marijuana, an increase from the prior 30-day cap.

The Act also continues the workplace protections for certified medical marijuana users that were included in the previously enacted medical marijuana law. Patients certified to use medical marijuana are deemed to have a disability pursuant to State anti-discrimination laws. This means that employers must accommodate an employee who is a “certified patient” where reasonably possible. Further, as with recreational cannabis users, certified patients cannot be the subject of a disciplinary action by their employer based solely on their use of medical marijuana. Simply stated, an employer may be subject to a discrimination claim if it fires or disciplines an employee for lawfully using medical marijuana outside of the workplace. An employer, however, may still prohibit employees who are certified patients from performing their job duties while impaired. The Act also does not require an employer to take any action in compliance with the medical marijuana provisions that would violate federal law or result in the employer’s loss of a federal contract or federal funding.

Certified patients are now entitled to the same rights, procedures and protections available and applicable to injured workers under workers’ compensation law or rules when injured workers are prescribed medications that prohibit, restrict, or require modification of the performance of their duties. This means that employers must treat employees who are prescribed medical marijuana as a result of a workplace injury the same way that it treats employees who were injured in the workplace and prescribed other medications that impact their ability to work or perform certain tasks.

Restrictions on the Use of Cannabis Products in Schools

Effective immediately, the Act amends the Penal Law to make it unlawful, regardless of age, to smoke, vape or ingest cannabis on school grounds or in a school bus, unless it is permissible pursuant to Article 3 of the Act, which addresses the lawful medical use of cannabis. Violations are punishable by a civil penalty of up to $25 or community service not to exceed twenty hours. It remains illegal for those under the age of 21 to possess or sell marijuana, including on school grounds.

We recommend that schools review their Codes of Conduct and other relevant policies to ensure that the policies comply with the recent amendments to State law and address the possession and use of cannabis (including medical cannabis). Please contact us if you have any questions regarding these policies.

Tax Structure and Revenue for Recreational Use

Pursuant to the Act, adult-use cannabis products will be subject to a two-tier tax structure: (1) tax on the sale from the distributor to the retail dispensary; and (2) an excise tax on the sale from the dispensary to the adult-user. The tax to be paid by distributors is to be based on the THC concentration in the product being sold, with a different “per milligram of the amount of total THC” rate depending on whether the product consists of cannabis flowers (.5 cents per milligram), concentrated cannabis (.8 cents per milligram) or edibles (.3 cents per milligram).

All retail sales will be subject to a 9% State excise tax and a local excise tax of 4%. The revenue from the 4% local tax will be distributed quarterly to each county, with each county entitled to retain 25% of the generated revenue. The remaining 75% will be distributed to the cities, villages and towns in each county that have retail dispensaries within their borders, in proportion to the sales of adult-use cannabis products by the retail dispensaries in each city, village or town. Where a retail dispensary is located in a village that is within a town that also permits cannabis retail sales, the county is to distribute the tax revenue attributable to such retail dispensaries in the proportion agreed to by the town and village. In the absence of an agreement, the monies will be evenly divided between the town and the village.

If you have any questions regarding the requirements of the Marijuana Regulation and Taxation Act or need assistance reviewing and updating your policies and procedures, please contact Lindsay Crocker, Lauren Schnitzer, Adam Ross, Joshua Sprague or one of our other attorneys by calling (631) 694-2300.


[1] The new law spells “marihuana” with an “h” and the title of the act is the “Marihuana Regulation and Taxation Act.” In this memorandum, however, we used the more common spelling of “marijuana” with a “j.”

[2] “Cannabis” and “marijuana” are used interchangeably in this memorandum.

[3] The CCB will consist of a chairperson (nominated by the Governor with the advice and consent of the Senate) and four other board members (two appointed by the Governor, one appointed by the Temporary President of the Senate, and one appointed by the Speaker of the Assembly).

[4] The website for the OCM is

[5] There are certain exceptions for designated caregivers growing medical marijuana for certified patients.

© Lamb & Barnosky, LLP 2021
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