The deadline for municipalities in New York to opt-out of the licensing of adult-use marijuana dispensaries and on-site consumption sites is right around the corner, Dec. 31.
The new Marijuana Regulation and Taxation Act, or MRTA, which passed in March, offers municipalities across New York the opportunity to opt-out of licensing. But if no decision is made, cities, towns and villages will be automatically opted-in to the retail marijuana marketplace.
Municipalities that opt-out will receive no revenue. But in an analysis of municipal opt-outs written by Heather Trela, director of operations and fellow at the Rockefeller Institute of Government, a lot of cities, towns and villages are opting out preemptively because of a lack of guidance from the state.
“There is not a lot of information because of delays with the Office of Cannabis Management,” Trela explained. “They don’t know what all of the regulations are going to be right now. So, they are choosing to opt-out because they don’t have the choice after December 31 to do so.”
One reason to opt-in to the state’s MRTA, is revenues.
Under the new law, there will be a 13% tax on every sale. Of that 13%, 9% will go to the state and 4% will go to counties and municipalities.
Breaking that down even further, of the 4% that will go to counties and municipalities, 75% will go to municipalities based on their adult use sales, and 25% of those sales will go to counties.
Municipalities may only opt-out of on-site user locations and dispensaries. They cannot opt-out of allowing individuals to use marijuana.
According to Trela, many municipal leaders she’s spoken with say they are waiting for more guidance when it comes to on-site consumption locations.
“As for dispensaries, there are some broad strokes in the legislation – like, it can’t be by a school or other particular businesses, but there are other concerns as well,” Trela said. “How many licenses will be distributed? Are there costs associated with a dispensary being present in your town?”
Another issue? Cities, towns and villages want to wait and see how it plays out in municipalities that choose to opt-in, something that Trela said has been seen before in other states where marijuana has been legalized.
“You could opt-out of more things in New Jersey including manufacturing and other commercial licenses. They had about a 70% opt-out rate,” Trela said. “Going back to Colorado, that’s similar. They also had a very high number opting out.”
In Colorado, after the first few years, more municipalities did opt-in, mostly larger cities.
If a municipality decides to opt-out, it will need to pass a law by Dec. 31. If a town, city or village decides to opt-in, they may control where cannabis lounges and retail sales operations are located through zoning.