Since New York State legalized the use of recreational marijuana this spring, there is already a major rush to get in on what has the potential to be a $4+ billion industry. Entrepreneurs, brokers, and investors are already discussing storefront leases for marijuana dispensaries, and the board that will oversee recreational marijuana in the Empire State has not yet even been officially appointed. As a marijuana business owner, and when time is of the essence with so much up in the air, gaining as much information as possible about cannabis business operations is critical. Here Weed Ross, we have more than just the perfect name to serve marijuana businesses from an insurance standpoint—we also are here to provide you with essential insights into the details of the New York cannabis industry.
In this article, we will cover:
- The Legalization of Recreational Marijuana in New York
- Recreational Marijuana Businesses in New York State
- Insurance for New York Marijuana Businesses
The Legalization of Recreational Marijuana in New York
Governor Andrew Cuomo signed legislation S.854-A/A.1248-A, which legalized adult-use cannabis in the state of New York on March 31, 2021. This bill establishes the Office of Cannabis Management, a program designed to implement and oversee a regulated medical marijuana and adult-use marijuana system. Also included in the legislation were provisions that developed licensing for marijuana producers, distributors, retailers, and other key players in the cannabis industry. And lastly, the bill created a social and economic equity program that will expunge previously convicted individuals who were disproportionately impacted by previous cannabis law enforcement.
The passage of this legislation not only legalizes marijuana, but also revitalizes the cannabis community in New York State, which will result in the creation of many businesses, jobs, and taxable revenue. Let’s briefly summarize the key components of this progressive bill—the legislation:
- Establishes the Office of Cannabis Management
- Adds more qualifying medical conditions for medical marijuana treatments
- Creates a two-tier licensing infrastructure for marijuana processors, growers, distributors, and retailers
- Develops a social and economic equity program to assist those negatively impacted by previous cannabis laws
- Implements a new cannabis tax structure with a 9% wholesale excise tax and 4% retail excise tax
- Permits the sale of hemp flower and smokable cannabis when retail businesses become operations
- Dictates that 40% of tax revenue is deposited to Education, 40% to Community Grants Reinvestment Fund, and 20% to Drug Treatment and Public Education Fund
- Legalizes personal possession outside of the home up to 3 ounces of cannabis
- Legalizes home growing subject to possession limits
Recreational Marijuana Businesses in New York State
So what does all of this mean for marijuana businesses in New York? What does the future look like for cannabis business entrepreneurs, and what types of scenarios should you be prepared for?
Firstly, even though the actual sale of legal marijuana in New York is still a year in the future, brokers and entrepreneurs are already fighting over land and retail space. Expect the demand for commercial real estate and these types of locations and facilities to dramatically increase. Agricultural properties, for instance, are already being labeled and marketed as being “in the green zone” for cannabis and hemp farming or cultivating.
This buzz and excitement is continuing to augment, despite the fact that mariijuana remains a federally illegal substance, and despite the fact that banks are still skittish around the idea of loaning money to cannabis-related businesses. Even some landlords remain skeptical, and hesitate to lease to marijuana businesses, whether it’s because of the risk from a legal standpoint or simply due to the negative connotation that still floats around “weed.”
The pandemic and the events of 2020, however, may have helped sway officials’ minds. This new legislation has the potential to bring over $350 million in annual revenue and create up to 60,000 jobs. Hopefully, landlords, lenders, and investors will continue to follow suit. Some experts estimate that there may be 700 to 900 marijuana dispensaries in New York, as well as over 4 million square feet of cultivation space. As banking and real estate collaboration and cooperation with the New York marijuana industry becomes increasingly normalized, the competition will only get more fierce.
Insurance for New York Marijuana Businesses
With the anticipated competitiveness of the New York State marijuana industry, it’s important that you, as a cannabis business owner, protect yourself and your livelihood. Marijuana business insurance will be absolutely critical in your endeavors, as basic business insurance or farm insurance just won’t quite cut it. Because of some legal ambiguity due to the federal and state discrepancies, marijuana businesses need to be extremely careful. General liability coverage, product liability coverage, property coverage, and workers’ compensation coverage are just a few of the many recommended coverages for your cannabis business insurance package. But it’s important to note: each marijuana business is different.
The experts at Weed Ross work with dozens of insurance carriers, and as such, we can provide you with the most comprehensive marijuana business coverage possible. As the New York cannabis market continues to expand, we’re here to help you make the most of it. Talk with one of our experts today so see what types of coverages and packages are right for your marijuana businesses.
Weed Ross is a local insurance agency that offers an abundance of coverages and insurance packages tailored to fit your specific requirements. We work with dozens of carriers, so you don’t have to spend hours researching, comparing, and waiting on hold. Our experience and expertise includes home insurance, business insurance, brewery insurance, renters insurance, cannabis business insurance and much, much more. If you still have questions regarding insurance for your New York marijuana business, give us a shout—we’re happy and ready to help.
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