Assembly Member Gottfried: Debate on Legal Cannabis in NYS No Longer About 'Whether' But 'How'

By:
Chris Gaetano
Published Date:
Dec 11, 2018
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New York State Assembly Member Richard N .Gottfried, the chair of the Assembly Committee on Health and the author of the state's medical marijuana bill, said the debate around the cannabis industry has moved on from whether to allow it to how the industry should be structured and regulated.

Speaking at the Foundation for Accounting Education's Cannabis Industry Conference on Dec. 11, Gottfried said this development represents a sea change in attitudes towards cannabis products within both major political parties. One reason is that people realized that "civilization did not end" when small amounts of the drug were decriminalized in 1977, nor did it end when the state passed the medical marijuana law in 2014. The other reason for this sea change, he said, is simple capitalism. 

"The big factor certainly in Republican attitudes was certainly capitalism: Once the marijuana business was not a matter of hippies but hedge funds and major corporations, the attitude in the state senate [which has historically been dominated by Republicans] changed considerably," he said. 

Gottfried said that over the many hearings the Assembly has held on this topic, and the numerous listening sessions the governor has held throughout the state, "there is virtually zero substantive opposition for adult use [of cannabis] in New York." The state of cannabis discourse being what it is, Gottfried said that the debate of whether to allow a legal marijuana industry for both medical and non-medical needs is "pretty much over." In fact, he said, Governor Cuomo plans to include a measure legalizing cannabis in his next budget in January, only a short time after he had previously demonstrated heavy resistance to allowing even just medical use.

Right now, he said, the discussion is almost entirely around how the industry should be structured. 

One option is to model it after the alcohol industry, which is highly fragmented. He said that alcohol producers in New York cannot have an ownership stake in alcohol distribution, such as restaurants and supermarkets (with some exceptions for things like craft breweries and vineyards). This, he said, is why Budweiser can be found at nearly any bar but does not, itself, open bars. Modeling the cannabis industry after alcohol, then, would mean having next to no vertical integration. Such an approach, he said, could lead to smaller businesses playing a bigger role, versus large corporate players. 

At the opposite end, others are advocating that the industry be run similarly to how the medical cannabis industry works today in New York. As opposed to the alcohol industry, Gottfried said that the medical cannabis industry, by law, must have complete vertical integration, meaning it needs to own every aspect of the business from production to transportation to distribution. So, for example, medical marijuana companies must use their own production facilities to make their own product which must then be transported using their own drivers who transport it to their own stores. The company would not, for example, be able to hire an outside trucker. He admitted it was "weird" and that there is no other sector of the economy that demands such a degree of vertical integration, especially since in many other industries such a structure would not be tolerated by regulatory authorities. 

"Try to own a car company and a car dealership and see what happens," he said. 

He said that organized labor actually favors this approach, explaining that the statute authorizing medical marijuana had mandated the use of union labor. He also said it appears that unions believe it easier to organize one big company versus many smaller ones. 

There's also the question of who gets to be in the industry. He said that there has been substantial advocacy from communities of color saying that the people who had been damaged by years of marijuana criminalization should have the opportunity to get into the business, which Gottfried thought was reasonable. The current statute provides, "Registered organizations shall not be managed by or  employ  anyone who  has  been  convicted  of any felony of sale or possession of drugs, narcotics, or controlled substances." 

Finally, he said, there are questions about how the medical marijuana program would interact with full legalization. Companies in the medical world, he said, are concerned that they will not be able to survive in a full-use world. There is also a debate on the degree to which marijuana sold as a medical product should be produced in a medical environment and be distributed only by health care providers. In contrast, he said that his doctor had told him that red wine would be good for him, but that doesn't mean he needed a prescription to buy a bottle. This question, in turn, plays into another question about what insurance will or will not cover, with Gottfried saying Medicaid likely would not pay for his bottle of wine. 

Throughout it all, though, Gottfried pointed to the importance of motivation when it came to thinking about the cannabis industry in New York, saying it's about more than just having fun. This was why he tended to use the term "adult use" instead of "recreational use."

"I say adult use, not recreational use, because the whole legislative enterprise is not about helping people have a better time at parties," he said." It really is about getting rid of the criminal superstructure disrupting thousands of lives every year."

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