ALBANY — The state Department of Health issued a report Friday supporting the legalization of marijuana for recreational use in New York state.
The potential positives of a legal, regulated marijuana market outweigh the potential negatives, the report concluded, and the negatives can be addressed effectively.
The report said legalization would create sales tax revenue and improve quality control in the product, and said it is widely used in New York already. It cautioned that education efforts would be needed if marijuana is legalized, so as to reduce health problems and potential legal problems such as driving while stoned.
It also noted that medical marijuana has not created problems in communities since it became legally available in New York in 2016.
In the Capital Region, there is one marijuana cultivation facility in operation in Perth and another under development in Glenville, both for medicinal products.
Ari Hoffnung, CEO of Vireo Health of New York, said the state’s medical marijuana program has been good for his company but has not reached its full potential. His company’s cultivation facility in Perth has been increasing its workforce — it’s up to two dozen people now — but it would expand much more if recreational marijuana was legalized in the state.
It’s a secure, high-tech grow facility totaling 40,000 square feet, or just shy of an acre. Vireo owns 19 more acres on which to expand.
“Certainly if New York was to allow for adult use of marijuana, the demand for products that we manufacture in our Fulton County facility would increase,” he told The Daily Gazette on Friday.
The facility was designed with potential expansion in mind, and the company is ready to expand if demand increases.
“We are committed to be in Fulton County for many, many years to come,” Hoffnung said.
He said processing marijuana for medical use involves many more steps than for recreational use, so Vireo likely would not need to change its processes in Perth, just add space and workers. Employees there are represented by the United Food & Commercial Workers, which also represents staff at Vireo’s Minnesota site and is negotiating to represent workers at the new Pennsylvania facility.
Vireo’s marijuana workers earn a family-sustainable wage, he said.
One risk of illegal marijuana cited in the Health Department report is contamination with mold, bacteria, heavy metals, pesticides, and growth enhancers. Hoffnung said Vireo's products benefit from close quality control.
“Our products are extraordinarily consistent,” he said. “That is a function of our capabilities and also New York’s regulations.”
The highly regulated medical marijuana program in New York got off to a slow start, thanks to very few medical providers being registered to certify that patients have a legal medical need for marijuana extracts, and can purchase it at one of the few dispensaries operating in the state.
The Department of Health said in the report there are nearly 17,000 registered providers and nearly 60,000 certified patients. But the state has nearly 20 million residents.
The market for recreational marijuana, by contrast, is large and well established: More than half of all Americans have tried it and 44 percent use it currently, the report noted, and one in 10 New Yorkers have used it in the last month.
The Department of Health report issued Friday noted:
- Numerous state agencies and experts in numerous fields helped develop the DOH assessment supporting regulated legal marijuana, and no insurmountable obstacles to effective regulation were found.
- Legalizing marijuana would allow producers to be regulated and licensed, and their product to be quality-tested and labeled. Also, age and quantity restrictions could be set.
- New York would be one of the largest potential legal marijuana markets in the nation, creating potential for substantial sales tax revenue.
- Marijuana criminalization has had a profound impact on minority communities and led to disproportionate targeting of certain populations for prosecution. “Legalization would address this important social justice issue,” the report states.
- The impact of regulation will depend on its implementation, which would need further study, should the state decide to consider legalization.
Gov. Andrew Cuomo, previously an opponent of legalized recreational marijuana use, has tempered his stance. In his January budget address, he ordered a study of the potential health, public safety and economic impact of legalization.
Cuomo’s position, the report said, is that impact of legalization in surrounding states (Vermont and Massachusetts, and possibly soon New Jersey, plus Canada) has brought the question to a head. “It has become less a question of whether to legalize but how to do so responsibly,” the report says.
Some other points in the report:
- Risks of recreational marijuana use, legal or illegal, include lung damage, low birth-weight babies, earlier onset of symptoms in people prone to psychosis, and driving while stoned.
- Benefits of legalization include potential reduction of opioid abuse, reduced risk from contaminated or substandard marijuana and lower costs to the criminal justice system.
- Misplaced concerns about legalization include increased use by youths (youths have no trouble getting illegal marijuana and now do so extensively but they would be barred from legal purchase); increased use by adults (shown to be minimal in other states after legalization); and crime (which has not increased near medical marijuana dispensaries).
- Recommended steps if legalization occurs include strategies to reduce youth marijuana use; an effort to eliminate synthetic marijuana-like substances from the market; and financial support for education and law enforcement.
- New York state’s marijuana arrest rate of 535 arrests per 100,000 people was the highest of any state in 2010 and double the national average; in 2010, there were 103,698 marijuana-possession arrests in New York state, 29,000 more than Texas, the state with the next highest total.
- Estimates of the size of the current illegal market for marijuana in New York range from $1.74 billion to $3.5 billion annually; it is estimated that 1.29 million consumers would access the legal market the first year after legalization of marijuana.
- The Tax Foundation recommends that the tax rate on legalized marijuana not be so high as to drive consumers back to the illegal market. Estimated potential total tax revenue in the first year from a legal price of $297 per ounce and illegal market consumption of 6.5 million ounces ranges from $248.1 million (with a 7 percent tax rate) to $340.6 million (15 percent tax). The estimated potential total tax revenue from a legal price of $374 per ounce and illegal market consumption of 10.2 million ounces ranges from $493.7 million (7 percent tax) to $677.7 million (15 percent tax).
- Marijuana sales generated nearly $200 million in state tax revenue and license fees in Colorado in 2016.