Marijuana prohibition in New York ended in 2021, but it is a bit of a misnomer to say that the state has "legalized marijuana." The Marijuana Regulation and Taxation Act of 2021 (MRTA) did not legalize all marijuana distribution under New York law; rather, it legalized only licensed distribution. The state plans to tightly regulate that licensed market, and cannabis companies will face stiff penalties for unlicensed distribution. To avoid those penalties, they have a strong incentive to create comprehensive compliance programs. But potential penalties aside, cannabis companies vying for highly competitive New York licenses will want to prove their compliance readiness during the application process; and if they want to stay in the market, they will need to demonstrate their commitment to compliance once in operation. Prospective licensees thus should be taking steps now to ensure they are ready to compete for licenses in 2022.

The MRTA

On March 31, 2021, then-Gov. Andrew Cuomo signed the MRTA, passing sweeping legislation that ended cannabis prohibition in New York and laid out the framework for its legal cannabis market. But Governor Cuomo did little to implement the legislation during the subsequent six months. Cuomo's successor, Gov. Kathy Hochul, however, has made implementing the MRTA a priority, since assuming office in August 2021. She and the legislature have appointed the members of New York's Office of Cannabis Management Control Board (Board)—a critical first step, as the Board has authority to craft regulations and grant licenses. The Board's first meeting took place on October 5.