1st retail cannabis licenses in NY will go to people with marijuana convictions: 'Social equity'

The state of New York is planning to grant its first batch of cannabis retail licenses to residents who have had previous marijuana convictions.

This reported "social equity" plan comes from the New York Governor’s Press Office and intends to provide a pathway for cannabis business ownership for people who have been directly impacted by prior convictions in light of the state’s legalization of recreational marijuana, according to the Associated Press.

A spokesperson for the New York State Office of Cannabis Management told FOX Business that the initial cannabis dispensary license fee is $2,000.

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In a five-page cannabis management fact sheet, the control board notes the legalization of recreational marijuana in 2021 led to the passing of the Marijuana Regulation & Taxation Act (MRTA), which has a "major focus" in promoting "social and economic equity."

The fact sheet’s overview states, "The MRTA incentivizes participation in the new industry for individuals disproportionally impacted by cannabis prohibition, automatically expunges an individual’s past marijuana convictions, and invests 40% of the adult use cannabis tax revenue toward rebuilding communities harmed by the War on Drugs." 

Cannabis dispensary license applicants will reportedly receive "extra priority" if they demonstrate they’re a member of a community that was disproportionately impacted by the enforcement of marijuana prohibition, which includes individuals convicted of a marijuana offense before its legalization on March 31, 2021, and the relatives of convicted individuals (parents, guardians, children, spouses and dependents).

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Priority will also be given to applicants that have an income that's lower than 80% of the median income in the county they live in.

Kassandra Frederique, the executive director at Drug Policy Alliance, an NYC-based nonprofit that aims to reduce the harms of drug use and drug prohibition, told FOX Business that low-level marijuana possession is the most arrested drug offense in the U.S. and the state of New York was the "marijuana arrest capital of the country with more than 800,000 arrests" in the last two decades.

"It is encouraging to see that New York regulators are attempting to innovate by building adult-use implementation around the people who should benefit the most," Frederique wrote in an email. "The scale of damage in New York is so vast that NY must now be intentional about comprehensively addressing the massive toll of criminalization for individuals and communities – priority licensing is one avenue to do that."

Frederique noted that New York's Office of Cannabis Management has not set application fees "at an onerous level" compared to other states that have legalized the substance for recreational use. And since the licensing process will be state-run, it has eliminated roadblocks that inflate costs, including local licensing fees and pre-qualifying commercial leases.

"In other states, people have had to rent a location in advance of applying and essentially hemorrhage that money while waiting to hear if they will receive a license – NY will not make applicants absorb that cost," Frederique wrote.

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Aside from leveling the playing field for New York residents with prior marijuana convictions, the MRTA shall "prioritize and provide resources" to other groups that face barriers to entry into the state’s new cannabis industry.

Minority- and women-owned businesses, distressed farmers and service-disabled veterans will be encouraged to participate, according to the cannabis management fact sheet.

The Cannabis Control board held a virtual press conference on the topic in conjunction with the New York Governor’s Office on Thursday, March 10 at 1 p.m. EST.

The event revealed the state is launching a "Seeding Opportunity Initiative" that'll "position individuals with prior cannabis-related criminal offenses to make the first adult-use cannabis sales with [hemp] products grown by New York farmers," according to a news release issued by the governor's office.

FOX Business reached out to the New York Governor’s Press Office for comment.

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The Associated Press reports that 100 to 200 100 to 200 retail cannabis licenses will be given to applicants with prior marijuana convictions and nonprofit organizations or businesses who have a leader that’s linked to a prior conviction.

During the signing of the recreational marijuana bill in March 2021, the governor’s office estimated the legalization of marijuana could create up to 60,000 jobs and generate up to $350 million in annual tax revenue.

The governor’s office has since established a fund that will help New Yorkers, especially those who are a part of a "marginalized" group, enter the cannabis industry. 

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"[Gov. Kathy Hochul] will create a $200 million public-private fund to support social equity applicants as they plan for and build out their businesses," a 2022 New York State of the State document says, which was published at the start of the year. "Licensing fees and tax revenue will seed the fund and leverage significant private investment."