New York’s MRTA: A New Standard for Social Equity

On March 31, 2021 Governor Cuomo signed the Marijuana Regulation and Taxation Act (the “MRTA”), officially legalizing adult-use cannabis in New York State. This historic moment is the culmination of decades of advocacy work from tireless champions, some of whom were unfortunately unable to experience this moment. A huge thank you to everyone who worked to achieve this goal. 

As a New Yorker, a major aspect of the MRTA that I am very proud of, and that advocates worked hard to ensure were included, is the strong social equity, restorative justice and decriminalization measures. To be clear, there are still a lot of details to come and a lot of work to be done to restore the harms caused by the ongoing and misguided war on drugs, but the MRTA is a step in the right direction and can hopefully provide a model for other states to follow and ultimately improve upon.

For those looking to enter the legal cannabis industry, the MRTA places heavy importance on prioritizing social and economic equity applicants, including a stated goal of issuing 50% of licenses to these applicants. All adult-use license applicants (including non-social and economic equity applicants) will need to “contribute to communities and people disproportionately harmed by enforcement of cannabis laws” in some form as part of the criteria for licensure. Certain license types (i.e., microbusiness, delivery and nursey licenses) will also promote social and economic equity applicants. Other benefits for social and economic equity applicants include priority application consideration, access to an incubator program and low or zero-interest loans.

Under the MRTA, social and economic applicants will include (i) members of communities disproportionately impacted by the enforcement of cannabis prohibition, (ii) minority-owned businesses, (iii) women-owned businesses, (iv) minority and women-owned businesses, (v) distressed farmers and (vi) service-disabled veterans. 

Extra priority will be given to those applicants that (a) are member of a community disproportionately impacted by the enforcement of cannabis prohibition; (b) has an income lower than eighty percent of the median income of the county in which the applicant resides; and (c) was convicted of a cannabis-related offense, or had a parent, guardian, child, spouse, or   dependent, or was a dependent of an individual who was convicted of a cannabis-related offense.

The MRTA does not stop there and also provides benefits to those not wishing to participate in the legal cannabis industry. Under the MRTA, 40% of cannabis tax revenues will be used for a community grants reinvestment fund. Grants from this fund are required to be used to support job placement, job skills services, adult education, mental health treatment, substance use disorder treatment, housing, financial literacy, community banking, nutrition services, services to address adverse childhood experiences, afterschool and child care services, system navigation services, legal services to address barriers to reentry, and linkages to medical care, women's health services and other community-based supportive services.

The above only summarizes the MRTA with respect to social equity. Additional posts will summarize the restorative justice and decriminalization aspects of the MRTA and subsequent posts will summarize the licensing and other cannabis industry provisions.

Elliot Y. Choi is corporate counsel at Vicente Sederberg LLP, a national law firm that focuses on the cannabis industry.