Marijuana sales: New York's local governments can opt out, but they're on the clock

Jon Campbell Chris Potter
New York State Team

ALBANY – First, New York legalized marijuana for recreational use. Then it put its cities, towns and villages on the clock.

The state's new recreational marijuana law, approved by Gov. Andrew Cuomo and lawmakers in late March, immediately allowed those over the age of 21 to possess up to three ounces of cannabis and consume it nearly anywhere cigarettes can be legally consumed.

Local governments have no way of blocking that. But the law does let them make another crucial decision: Whether to allow for legal marijuana sales within their borders.

Under the law, local governments have until Dec. 31 to pass a local measure blocking any dispensaries or lounges. If they miss the deadline, they forfeit their right to opt out.

But there's a major catch: Opting out would mean forfeiting potential revenue, since the only way local governments can get tax money from marijuana is from legal sales within their jurisdiction.

"I think they're all waiting things out and seeing how things go," said Gerry Geist, executive director of the state Association of Towns, which represents town governments. 

"They're waiting for federal money, they're waiting for everything. It's sort of like no one wants to jump in on this thing yet."

Retail sales will be taxed at 13%

Members of the New York Assembly debate in the Assembly Chamber at the New York State Capitol, Tuesday, March 30, 2021, in Albany, N.Y. (AP Photo/Hans Pennink)

Under the new state law, legal marijuana sales — which remain at least a year away — can occur at state-licensed dispensaries and "on-premises consumption sites," which will essentially be lounges where people can consume cannabis on site.

Retail sales will be taxed at 13%, with 9% going to the state. The remaining 4% goes to the local governments where the sale took place — 3% to the city, town or village, and 1% to the county.

Once the legal marijuana program is fully up and running, the state is anticipating about $350 million a year in revenue, which includes taxes at the distributor level. That means the local share would be an amount less than $150 million split among many governments.

In order to block marijuana sales, a city, town or village board would simply have to pass a local law by Dec. 31. 

But even if that's the case, residents within the locality could circulate petitions to force a referendum, in which case residents would get to vote on the matter. (Villages and towns could also choose to put the issue to a public referendum on their own.) 

If a local government doesn't act before the end of the year, it forfeits its right to block marijuana sales, according to the state law.

More:New York legalized recreational marijuana. Here's how much you can now possess

Will local governments opt out?

Elmira Mayor Dan Mandell said it's too soon to say whether the city will allow marijuana sales within its borders.

In the city of Elmira, Mayor Dan Mandell said there have been "very preliminary discussions" to date. He expects the conversation to pick up steam over the next several months. 

"There’s a bunch of questions that need to be answered, so we really haven’t made up our mind as of yet," Mandell said in an interview last month. "I truly don’t know which way the council is going to go with it at this point in time. We need more information and feedback from other communities."

It is a similar story an hour west, where Hornell Mayor John Buckley said the matter will be discussed at the committee level in the coming months and then come before the city council for debate. 

“While some state officials look at marijuana legalization strictly as a revenue stream, I want to make sure the health, safety and quality of life of our residents is not compromised as there will almost certainly be unintended consequences of this legislation," Buckley said.

More:Will Westchester become Weed-chester? Communities have choice to opt out by Dec. 31

More:NY lawmakers legalize recreational marijuana. What to know, what happens next

Some cities say they're all in

Rochester Mayor Lovely Warren during a press conference at City Hall in Rochester Thursday, Jan. 14, 2021.

Other mayors and town supervisors on the local level are playing to legalize sales.

In Rochester, Mayor Lovely Warren, a Democrat, raised the idea of using marijuana revenue to fund a reparations program for Black and Brown residents. Across the state and nation, minorities have been arrested under prior marijuana laws at disproportionate rates.

In the Southern Tier, the city of Binghamton has no plans of opting out, according to Mayor Richard David, a Republican.

“My thought is several states that border New York are also in the process of legalizing marijuana, and as other municipalities that are in close proximity to the City of Binghamton opt in, it really doesn’t make sense for the city to opt out when you could purchase legal items within a very short drive of Binghamton,” David said.

David said his city is still going to have to address the issues associated with marijuana legalization regardless of whether the city opts out.

"As long as we’re still going to be dealing with the impact, I think it’s important we also receive the accompanying revenue that is generated from the sale," he said.

Geist, the Association of Towns executive director, and Peter Baynes, executive director of the state Conference of Mayors, both said local governments are pleased state lawmakers are giving the them the ability to opt out of sales.

But the one-time-only provision means some town boards and city councils may get creative: Some may opt out as a placeholder of sorts, since they can opt back in at any time after Dec. 31.

"By the number of calls we're getting from our members with questions on how the process works, I think there will be a large number of municipalities that opt out even if only on a temporary basis," Baynes said.

More:Rochester Mayor Lovely Warren exploring reparations program

Jon Campbell is the New York State Team editor for the USA TODAY Network. He can be reached at JCAMPBELL1@Gannett.com or on Twitter at @JonCampbellGAN.

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