Gotham Gazette

The Place for New York Policy and politics

State

State

What Wasn't in Hochul's 2023 State of the State Agenda


Gov. Hochul delivers her 2023 State of the State (photo: Don Pollard/Governor's Office)


In her State of the State speech last week, Governor Kathy Hochul, a Democrat, outlined her agenda for the year ahead, pledging continued action on public safety, an ambitious housing plan, major investments in climate action, mental health care, child care, and more. But even as she outlined many planks in her policy agenda, further outlined in a 275-page booklet, there were several areas where she only provided a vague notion of something she plans to tackle and a number of prominent proposals she did not include – ideas that elected officials, advocacy groups, and think tanks are now pushing to be part of her coming executive budget for the next fiscal year or to be passed by the Legislature.

The governor’s State of the State set the stage for the policy, budget, and legislative battles ahead. It included many of the proposals that Governor Hochul and New York City Mayor Eric Adams jointly announced in December in the “Making New York Work for Everyone” action plan, which was developed by the ‘New’ New York panel of experts, planners, business and community leaders, and others. The plan, which received broad praise, detailed 40 different initiatives aimed at improving the future of New York City and its regional economy with measures to boost business districts, create jobs, transform public space, build housing, improve mass transit, and more.

The governor’s agenda will be fleshed out in more granular detail in legislative language and her executive budget proposal, which is not only a spending document but a vehicle for non-fiscal policy and legislation. In the weeks ahead, various stakeholders will advocate for their own priorities, some with competing interests and others that dovetail together. And those interests cover the gamut on everything from mental health policy to housing, transit, worker benefits, immigrant protections, criminal justice reforms, and climate policy, to name a few.

Here’s a look at some of the critiques of the governor’s 2023 State of the State agenda, prominent policies she did not include, or areas where she did not offer a concrete plan but pledged to take action in the future.

Republican Response
Former U.S. Rep. Lee Zeldin, a Long Island Republican who ran for governor against Hochul last year, issued the party’s response to her State of the State. “Hochul’s State of the State address was another small swing and a big miss,” he said in a video posted online.

He highlighted ten items on the Republican agenda for this year, most of which formed the core of his gubernatorial campaign platform and many of which are non-starters with Hochul, the Democratic Legislature, or both: term limits for statewide elected officials; a state of emergency over crime; rolling back a series of criminal justice reforms (including bail reforms, Raise the Age legislation, parole reforms in the Less is More Act, the HALT Act limited solitary confinement, and discovery law changes) and giving judges discretion to use a dangerousness standard when setting bail; lifting the state cap on charter schools; reversing the state ban on fracking and approving new gas pipeline applications; the “largest tax cut in the history of the state”; rehiring public sector employees who were fired for refusing to take the COVID vaccine; firing district attorneys “who refuse to enforce the law”; and refusing to meet with any campaign contributors soliciting business from the state.

State Senate Republicans, who remain in the minority versus a Democratic super-majority in the upper house of the State Legislature, also issued a “Rescue New York 2023” agenda this month that includes a long list of legislative priorities covering public safety, workforce development, education, mental health, infrastructure, taxes, business regulation, climate policy, and more.

Besides the proposals mentioned by Zeldin, it specifically calls for items including additional funding for law enforcement and harsher penalties for gun and drug offenses, increased funding for mental health programs and opioid overdose prevention, permanently capping state spending increases at 2% annually, and making more deposits in the Rainy Day Fund, $200 million in tax relief for working families by increasing the Earned Income Tax Credit, a $464 million tax cut for small businesses, and creating a Legislative Budget Office, to name a few.

NYCHA
The New York City Housing Authority’s fiscal woes were compounded by the pandemic. While it already has a $40 billion capital need because of decades of underinvestment, its operating finances have also been hobbled as more than 73,000 households owe about $454 million in back rent. In a budget presentation in December, NYCHA officials warned that without that revenue, it may not be able to make necessary repairs as required under a 2019 agreement with the U.S. Department of Housing and Urban Development (HUD).

Though some of that gap could be made up by the state’s pandemic-era Emergency Rental Assistance Program (ERAP), tenants at NYCHA remain at the low priority end of the list for payments. The program’s funding has dried up and applications will no longer be accepted after January 20.

Though Hochul mentioned NYCHA-related accomplishments from last year -- passage of the Preservation Trust program to raise funds for public housing repairs at many developments -- in her State of the State speech, she did not otherwise include any new proposals or make any mention of it in her accompanying State of the State policy book. Hochul and Mayor Adams did recently announce a plan to replace 335 elevators at 20 NYCHA developments, part of a $300 million funding agreement signed in April 2022 with the Dormitory Authority of the State of New York. 

Public housing was similarly absent from the recent $1.7 billion federal budget deal signed by President Joe Biden. NYCHA supporters hope that Hochul’s executive budget will include new funds for NYCHA repairs to the tune of at least several hundred million dollars in the next fiscal year.

Housing Legislation
While many housing advocates praised Hochul’s new “Housing Compact,” which commits to a sweeping plan to build more housing across the state, some expressed disappointment that she did not make mention two high-profile pieces of legislation to prevent evictions and ease access to housing for those living in homelessness or facing the threat of it.

Advocates are chiefly pressing for two bills: ‘good cause’ eviction and a new Housing Access Voucher Program.

Good cause eviction, sponsored by State Senator Julia Salazar and Assemblymember Pamela Hunter, is among the top priorities for progressives and advocates and has been gaining momentum in Albany. The bill would give tenants greater protections against both evictions and large annual rent increases. Landlords have been ardently opposed to the bill, while Hochul has only said it is something she is looking at without offering a position. The absence of any semblance of the bill in her agenda signaled to many that she does not support it.

The housing voucher program, proposed by State Senator Brian Kavanagh and former Assemblymember Steven Cymbrowitz, would allocate about $200 million in its first year for vouchers to help homeless families and those facing homelessness. It’s also high on the agenda for many legislators and advocates but Hochul has not supported it. Last year she expressed concerns about the cost of the program, disputing the Legislature’s estimates, but legislators pushed back saying that the cost of the program would be capped each year.

Cea Weaver, campaign coordinator for the Housing Justice for All coalition, issued a scathing critique of what she called a “gutless” housing plan. “Instead of investment in public housing, we got handouts for big developers. Instead of vouchers to help more New Yorkers afford homes, we got zoning changes. Instead of real tenant protections like Good Cause, we got more wishing and hoping that the private market will solve everything,” she said in a statement responding to Hochul’s State of the State. The coalition has proposed a five-point plan which, besides good cause eviction and the voucher program, includes other proposals that they believe will create equitable housing in the state.

Meanwhile, the Community Housing Improvement Program (CHIP), which represents owners and managers of tens of thousands of rent-stabilized buildings in New York City, is making a concerted effort for a “vacancy reset” that would give landlords the ability to reset rents on tens of thousands of vacant rent-stabilized units. The ‘reset’ would keep the apartments in the rent-regulation system but allow increases to bring rents level with neighboring rents, which they say is necessary for landlords to be willing to invest in renovations of dilapidated apartments.

MTA Finances
Among the glaring omissions from the State of the State was a plan to fill a structural hole in the MTA’s budget. The MTA’s finances were thrown into deeper disarray by the pandemic and it has gotten by on $16 billion in federal aid that will be spent through the 2026 fiscal year.

The agency’s annual operating budget for 2022 was about $19.4 billion – $7.2 billion from taxes and subsidies, $6.9 billion from fares and tolls; and $2.9 billion in federal aid.

Ridership on subways buses and commuter rails has not yet reached the same levels seen before the pandemic, and may never or not for years as commuting and work patterns have changed, affecting crucial fare revenue. The agency also has a recurring structural deficit of about $2.5 billion annually.

In November, the MTA released its latest budget presentation, proposing a 5.5% hike in fares and tolls. That is up from the usual 4% raise that went into effect every two years but wasn’t implemented in 2021 because of the pandemic. But despite revenue from higher fares and tolls, operational savings and other measures, the agency still needs another $600 million. MTA leadership, particularly Chair and CEO Janno Lieber, has repeatedly called for state and city leaders to rethink how the MTA is funded in order to more fully include transit as a core service in the state budget.

In the State of the State, Hochul punted on any solutions to the MTA’s dire straits. “We all know that the MTA is the lifeblood of the New York City metro region, and we will continue to invest in and ensure its long-term fiscal health,” she said without offering any specifics. Those could be offered in her executive budget, or simply pushed into coming months of negotiations with the Legislature.

The lack of a plan has already invited critics. “If Governor Hochul is as committed to a ‘reliable’ and ‘affordable’ MTA as she says, she must reject a fare increase to $3,” said Assemblymember Zohran Mamdani, a Queens Democrat and lead sponsor of the “Fix the MTA” legislative package that would raise revenue for the transit authority and increase service, in a statement. “And if she wants to continue characterizing the MTA as ‘world-class transportation’ – something that most New Yorkers would not agree with – she must fund greater frequency across the entire system, and make buses free.”

“The MTA is poised atop a financial precipice: it is our responsibility as State legislators to ensure it returns to sound financial health,” said State Senator Andrew Gounardes, a Brooklyn Democrat who is lead sponsor on two of the bills in the “Fix the MTA” package, in a statement. “This speech was a missed opportunity to adequately address its funding needs, and commit to a robust plan to ensure the MTA is able to fully realize its potential in the coming years. I was disappointed to not see more policy regarding our public transit, as well as disappointed to see that no mention was made of de-carbonization in the Governor’s plans for the MTA.”

Taxes
Citing predictions of a recession, Hochul said in her speech that she would not raise income taxes this year. She’s also previously expressed concern about out-migration from the state, which many blame on the state’s high tax rates though there is limited evidence of significant tax-related flight among the wealthy. The state last increased taxes on high-earners and corporations in 2021, to raise up to $4 billion in revenue, with those increases set to expire in 2027.

Hochul’s pledge not to further raise income taxes on the highest earners sparked a backlash from progressive legislators and groups that have long argued for additional tax increases on the wealthiest residents of the state to pay for social programs.

Eight democratic socialist legislators – State Senators Julia Salazar, Jabari Brisport, and Kristen Gonzalez, and Assemblymembers Zohran Mamdani, Phara Souffrant Forrest, Marcela Mitaynes, Emily Gallagher, and Sarahana Shrestha – spoke out after the speech in favor of higher taxes on the uber wealthy. “While Governor Hochul’s State of the State address commits to crucial investments for New Yorkers, it does not go nearly far enough,” they said in a joint statement. “Her remarks failed to acknowledge New York’s dire need for new revenue through increased taxes on the ultra-rich. Instead, she presented fiscal sleight-of-hand through unfunded half-measures and non-solutions.”

“Increasing revenue through fair taxes on the wealthiest New Yorkers is sound fiscal policy that will strengthen our economy and make New York a better place to live for working people,” said Nathan Gusdorf, executive director of the Fiscal Policy Institute, a nonprofit research group. Without new revenue, the state will be unable to make massive investments to achieve universal child care, high-quality public education, affordable housing and reliable public transit, all of which are on Hochul’s agenda. “Until the Governor supports new revenue, her plan to rebuild New York will not come to fruition,” he said. 

The Invest In our New York coalition has urged the governor to approve several new taxes to raise billions of dollars in new revenue and pay for education, universal child care, universal health care, affordable housing, climate action, mass transit infrastructure, and more. That includes a progressive income tax, an heirs tax, a capital gains tax, a billionaires tax, a restored corporate tax and a Wall Street tax. “Lawmakers must prioritize passing policies that guarantee extreme wealth is taxed and those dollars are reinvested in our neighborhoods, instead of protecting millionaires and billionaires benefiting from a rigged system,” said the Invest in Our New York campaign, in part, in a statement.

Republicans and some fiscal monitors have argued against higher taxes, insisting that they will drive wealthy New Yorkers, who make up the core of the state’s tax base, out of state.

“Fortunately, Governor Hochul highlighted the need to stem outmigration. She wisely committed to not raising the personal income tax this year,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit fiscal watchdog, in a statement. “New York’s competitiveness will be well served by restraining spending to ensure that the 2021 personal income tax increase sunsets on schedule.”

“Before it’s too late, New York’s governor and Legislature should embrace fiscal policies grounded in the three Rs of restraint, responsibility, and reform,” wrote E.J. McMahon, founding senior fellow at The Empire Center for Public Policy, a conservative think tank, in a policy brief. “Spending should be reined in, taxes reduced, and economic competitiveness restored as a top priority.” McMahon called on the governor to phase out the 2021 tax increases beginning in the 2023 fiscal year.

More broadly, The Empire Center released a detailed policy guide, dubbed “The Next New York: Renewing and Reforming the Empire State,” which contained 11 expert research papers with 63 reform priorities for the state to consider. The guide covers the state budget, public safety, public education, Medicaid and health care, mental health, the energy sector, transportation and transit, housing, the public-sector workforce, voting access and election integrity, and government transparency.

“We launched this ambitious research project to chart a path forward for our state, combining fresh ideas with proven approaches that can work again,” said Tim Hoefer, Empire Center’s president and CEO, in a statement. “In the wake of the pandemic disruption, the time is overdue to embrace new approaches to growing policy challenges—and to dust off some proven approaches that can work again. It’s time to shape the Next New York.”

Build Public Renewables Act
Hochul announced a series of green energy initiatives and climate-related bills in her State of the State. But she did not speak of the Build Public Renewables Act, which would allow the New York Power Authority (NYPA) to own and build new renewable energy projects, among other provisions. 

The BPRA garnered significant support last year and was approved by the State Senate but did not get a vote in the Assembly. Instead, amid significant criticism Assembly Speaker Carl Heasite convened a hearing on the bill after the legislative session had ended to examine it further. Climate activists argue that the bill is essential in meeting the state’s emissions-reduction targets set by the Climate Leadership and Community Protection Act of 2019, which would require reducing economy-wide greenhouse gas emissions by 40% by 2030 and by 85% by 2050 from 1990 levels.

Charter School Cap
In the lone debate of the general election for governor, Hochul said publicly for the first time that she supports raising the state’s cap on charter schools in New York City. Currently, there are  460 charter schools allowed across the state – including a cap of 290 in New York City, which was met in 2020.

Most Democratic legislators and the teachers union have opposed raising the cap, while charter school advocates and charter-friendly elected officials say more charter schools are needed to meet an outsized demand for them in the city and offer alternatives to failing traditional public schools. But Hochul did not mention charters in her speech or the policy book, leading to criticism from charter school proponents.

Overdose Prevention
In her speech, Hochul proposed several measures to stem overdose deaths, which skyrocketed during the pandemic even after increasing for years prior. They included a new interagency task force dedicated to the issue, greater access to drug testing technology, and continuing investment in life saving initiatives. But she did not include any support for the first two Overdose Prevention Centers that opened in New York City in November 2021 (and claim to have prevented more than 670 overdoses that could have been fatal) or additional such centers across the city and state. The two existing centers are seeking more funds to run around the clock, 24/7, instead of their current more limited hours.

“The Governor’s answer to the worst overdose crisis in New York’s history is to increase penalties for fentanyl and drug-induced homicide laws that only advance the War on Drugs, rather than the fight to save lives,” said Jawanza Williams, director of organizing for VOCAL-NY, an advocacy group. “Most egregious of all: Hochul’s complete omission of the leadership and support she could provide to the nation’s first Overdose Prevention Centers by utilizing executive action and Opioid Settlement funding.”

Criminal Justice Reform
In her State of the State Hochul pledged to increase resources for alternatives to incarceration and reentry services for those leaving state prisons. She also announced greater investments in law enforcement and proposed changes to the state’s controversial bail law to allow judges to jail more people pre-trial.

Criminal justice advocates responded with concern about further rollbacks to the bail reforms first passed in 2019 as well as the governor’s planned investments in police and prosecutors.

Additionally, there are several bills on the agenda for reformers that Hochul did not mention. They include the Clean Slate Act, sponsored by State Senator Zellnor Myrie and Assemblymember Catalina Cruz, which would automatically seal a person’s conviction record once they become eligible; the Treatment Not Jail Act, sponsored by State Senator Jessica Ramos and Assemblymember Phara Souffrant Forrest, which would ensure that people with substance use disorders, mental health issues, and other disabilities are given treatment instead of being incarcerated; and the Fair & Timely Parole and Elder Parole bills, which would make the parole process easier and make it easier for older inmates to be paroled.

There is also a package of sentencing reform bills that advocates are expected to pursue this year.

The Legal Aid Society pointed out that the governor proposed increasing funds to hire hundreds of more prosecutors across the state without commensurately offering more resources to public defenders. “Funding one side of the justice system without equal or greater investment in public defense addresses at best half the problem and exacerbates the deeply rooted inequalities at the root of the criminal legal system,” Legal Aid Society said in a statement.

Advocates are also urging the governor to support the Stop Violence in the Sex Trades Act, which would decriminalize sex work, among other measures to protect sex workers.

Education advocates are also pushing for the Solutions Not Suspensions Act, which would put in place restorative approaches to replace punitive school discipline practices which disproportionately harm students of color and those with disabilities.

Health Agenda
Last year, the governor pledged $20 billion to bolster the state’s health care system including funding retention bonuses for health care workers, increasing the minimum wage for home care workers, cost-of-living adjustments for human services workers, investments in health infrastructure, and aid to struggling hospitals.

This year, she promised more improvements including a “Future of Health Care” Commission to examine the system and make improvements, more capital investments, expanded Medicaid coverage for preventative health services, improving the state Essential Plan, protections against medical debt, expanded access to primary care, prescription drug price transparency, expanded flexibility for health care providers, expedited approvals for health care infrastructure projects, modernizing health data reporting, and more. But much of that agenda is not spelled out in her policy book, instead promising details to come, including fixes from the to-be-named commission.

Among advocates’ criticism of the governor’s health care agenda is that it fails to adequately address the state’s home care worker shortage, which is the worst in the entire country. Hochul allocated about $7.7 over four years to increase the home care worker minimum wage by $3 an hour.

“As New York’s population ages and home care workers continue to leave the sector, we are clear that a significant pay increase — 150% of minimum wage — is the only solution to stem the shortage,” said Ilana Berger, co-director of New York Caring Majority, an advocacy coalition, in a statement. “If she is truly committed to making New York the most age-friendly state in the nation and lifting up a workforce made up of women and people of color, the Governor must change course and invest in the home care system so that workers can receive the fair wages they deserve in the upcoming budget.”

Bill Hammond, senior fellow for health policy at the Empire Center for Public Policy, recommended several reforms to the state’s health care system that Hochul should undertake, chiefly reigning in Medicaid costs. The Medicaid budget is expected to be about $93 billion in 2023, a 76% increase over 10 years. The state’s share of that is about $33 billion, up 57% in that same period.

“The program’s broadening scope has magnified the effects of its pre-existing structural flaws,” Hammond wrote in a policy brief. “Its practice of paying substandard fees now compromises access and care quality for millions more of the state’s residents. Its vulnerability to inept management, fraud and political manipulation puts billions more of the public’s money at risk.”

Hammond urged the governor to implement a series of reforms, including tightening income-screening procedures for Medicaid recipients, among various other measures; making commercial coverage more affordable, including by eliminating taxes on health insurance under the Health Care Reform Act; establishing an independent pandemic review commission, rather than the outside consultant that the state has hired to assess its response to the COVID-19 pandemic; and rolling back or eliminating the state’s “certificate of need” law, which regulates the creation of health facilities, which he said is far too restrictive.

Immigrant Protections
Immigrant rights groups were left disappointed by the governor’s State of the State, which only proposed funding for an immigrant retraining program but not other benefits or protections specifically for the state’s immigrant population.

Advocates have been pushing for a $500 million Unemployment Bridge Program, modeled after the Excluded Workers Fund that the state created during the pandemic to provide relief to workers, mostly undocumented immigrants, who were ineligible for federal aid.

The program would provide workers with $1,200 a month if they lose their jobs, on par with the state’s unemployment insurance program that they are ineligible for. According to the Immigration Research Initiative, it could benefit up to 750,000 eligible workers, including 180,000 self-employed and freelance workers.

“The Governor’s speech fell far short of what’s needed for immigrants, communities of color, and working families across the state,” said Theo Oshiro, co-executive director of Make the Road New York, an immigrant advocacy group, in a statement. “While paying lip service to tackling the very real affordability crisis that New Yorkers face, the Governor again failed to mention and support crucial measures for which our communities have been clamoring.”

Oshiro also urged the governor to expand access to health coverage for immigrants, through her proposal to improve the state’s Essential Plan coverage and by approving the Coverage for All bill that would provide state-funded health coverage for New Yorkers, including the undocumented, that make up to 200% of the federal poverty line.

Advocates also called on the governor to support the Access to Representation Act, which would provide the right to legal representation to immigrants in immigration court at a cost of $100 million.

“While we are grateful for Governor Hochul’s commitments to some key programs, they are far from enough to ensure that all immigrant New Yorkers, including the over 30,000 newly arrived asylum seekers, have the support they need to integrate and thrive in New York State,” said Murad Awawdeh, executive director of New York Immigration Coalition,” in a statement. He also pushed for the New York for All Act, which would prohibit local and state law enforcement from working with Immigration and Customs Enforcement (ICE) and Customs and Border Patrol (CBP).

Penn Station Area Redevelopment
Though the State of the State included funding for various infrastructure projects, one that was conspicuously absent was the redevelopment of the Penn Station area in Midtown Manhattan.

The project, originally proposed in one form by former Governor Andrew Cuomo then adjusted somewhat under Hochul, would build about 10 towers around the transit hub, creating 18 million square feet of new building space with offices, housing, and retail space. The entire project is expected to cost about $22 billion, $7 billion of which would come from the state, which will also provide about $1.2 billion in tax breaks to real estate developers. The state is hoping to receive federal funding to cover at least half of the $7 billion.

The governor is forging ahead with the controversial project despite opposition from local groups, multiple lawsuits, uncertainty about its emphasis on new office space amid the work-from-home revolution, and questions from fiscal watchdogs about its financing structure. Even the developer for the project, Steven Roth, chief executive of Vornado Realty Trust, has expressed concerns about new development in the current economic climate, though he insisted that the company is committed to the Penn Station project. “I must say that the headwinds in the current environment are not at all conducive to ground-up development,” Roth told investors in an earnings call, according to NY1.

Freelancer Protections
At the end of last year, Hochul vetoed State Senator Andrew Gounardes’ and Assemblymember Harry Bronson’s Freelance Isn’t Free Act, which would give freelancers the right to written contracts, timely payments, a redressal process for nonpayments and penalties for employers who violate those rights. The legislation was modeled after a successful law that took effect in New York City in 2017 and has helped freelancers recover millions in payments.

Hochul, however, said the state law would be an undue financial burden on the state Department of Labor when she vetoed it — among several bills with some fiscal impact that she vetoed arguing they needed to be passed in order to be factored into the state budget, and part of a much longer list of the bills Hochul vetoed last year, many of which are likely to be taken up again by the Legislature this year. Hochul did not include the Freelance Isn’t Free Act in her State of the State agenda and has not otherwise proposed any other protections for freelance workers.

Voting Rights
In 2021, voters defeated ballot referendums that would have amended the state constitution to allow for same-day voter registration and universal absentee voting. As is required for all constitutional amendments, the two proposals were passed in two consecutive legislative sessions before heading to the ballot. But lawmakers did not reintroduce the proposals last year and Hochul did not do so in her State of the State. In fact, her policy agenda does not contain any election and voting-related proposals.

Aid-in-Dying Measure
Advocates are optimistic that this year the Legislature will approve the Medical Aid in Dying Act, which would allow terminally ill patients to request and use medication to end their lives. The bill, which has received increasing support from lawmakers over the years, is sponsored by Assemblymember Amy Paulin, who is the newly appointed chair of the Assembly's health committee, and State Senator Brad Hoylman. 

Behind the push for the legislation is the national advocacy group Death with Dignity, which launched its 2023 advocacy campaign earlier this month across the country, including in New York. “We are confident that our decades of work fighting for the right of everyone to have options in the face of terminal illness will bear fruit,” said Dr. Peg Sandeen, CEO of Death with Dignity, in a statement. “This is an issue that is widely supported by Americans across the political spectrum. We believe that every American has the right to safe, effective healthcare—on their own terms and with a full range of options available to them, including the option of medical aid in dying.”

***
by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Note - this article has been updated to include a section on the Medical Aid in Dying Act. 

Max Politics Podcast: A Pro-Housing Agenda for New York, with Annemarie Gray


A housing ground-breaking (photo: Kevin P. Coughlin/Governor's Office)


January 17, 2023 - Max Politics Podcast: A Pro-Housing Agenda for New York, with Annemarie Gray

Annemarie Gray, a planner and housing expert who is now Executive Director of pro-housing group Open New York, joined the show to discuss the group's 2023 housing agenda, the Governor's sweeping Housing Compact proposals, what Mayor Adams should do next on housing, and more.

Listen to the conversation and let us know what you think, on Twitter @TweetBenMax. You can listen to the show through the embedded audio below or download the episode wherever you get your podcasts at Max Politics.

Read more: Max Politics Podcast: A Pro-Housing Agenda for New York, with Annemarie Gray

Legal Marijuana Sales Have Begun in New York; What to Know About the Launch of the New Industry


NYS Office of Cannabis Management ED Chris Alexander, right (photo: @nys_cannabis)


Nearly two years after passage of the Marihuana Legalization and Taxation Act (MRTA), which legalized the once heavily-criminalized drug, the first legal retail sale of marijuana in New York occurred on Thursday, December 29.

"The first legal adult-use cannabis sales mark a historic milestone in New York's cannabis industry," Governor Hochul said in a celebratory press release that day. "Today is only the beginning, and I look forward to continuing our efforts to solidify New York as a national model for the safe, equitable and inclusive industry we are now building."

The dispensary that conducted the first legal sale of cannabis is located in Manhattan’s East Village and is operated by Housing Works, a non-profit supporting formerly incarcerated New Yorkers and one of the first 36 entities awarded an initial license by the state’s Office of Cannabis Management (OCM).

A long line of New Yorkers showed up to make a purchase as elected and appointed government officials celebrated the official legal launch of the new industry. OCM Executive Director Christopher Alexander, a key figure in standing up the legal marijuana industry in New York, made the first official purchase, followed by many others, including local City Council Member Carlina Rivera.

"We set a course just nine months ago to start New York's adult-use cannabis market off on the right foot by prioritizing equity, and now, we're fulfilling that goal," Hochul said in a December 21 press release announcing the impending first sale. "The industry will continue to grow from here, creating inclusive opportunities in every corner of New York State with revenues directed to our schools and revitalizing communities."

Lead legislative sponsors on the MRTA — State Senator Liz Krueger of Manhattan and Assembly Majority Leader Crystal Peoples-Stokes of Buffalo, both Democrats — also celebrated this historic milestone in New York’s cannabis history. 

"I am gratified to see the start of the adult retail cannabis sales, and that Housing Works has opened the first retail store,” said Krueger, who has been working to legalize marijuana for many years, in a December 29 statement. “Their decades of work with marginalized communities make them a perfect partner in the effort to ensure that New York's Cannabis market provides meaningful opportunities to those most impacted by the failed cannabis criminalization policies of the past.”

Peoples-Stokes, who has been particularly focused on racial equity and reparations for past over-criminalization in the legalization process, said, “I am so pleased to see the first legal sales of cannabis in New York occur today by a non-profit that's been dedicated to helping improve people's lives for decades.”

Mayor Eric Adams also applauded the first legal sale of cannabis in New York.

“Today marks a major milestone in our efforts to create the most equitable cannabis industry in the nation,” the Democratic mayor said in a statement. “The opening of the first legal dispensary in our state right here in New York City is more than just a promising step for this budding industry — it represents a new chapter for those most harmed by the failed policies of the past. The legal cannabis market has the potential to be a major boon to New York’s economic recovery — creating new jobs, building wealth in historically underserved communities, and increasing state and local tax revenue.”

The initial sales are the next major step in a process launched by the March 31, 2021 signing of the MRTA into law, which came after decades of advocacy. New York became the 15th state in the nation to legalize recreational use of marijuana for adults, setting up a complicated system of rules around growing, selling, possessing, smoking and otherwise using, and more. The law also included key provisions around racial justice and attempts to make amends for past racially-biased criminalization of marijuana that targeted Black and Latino communities.

There have been a number of bumps in the road to get to this point, and challenges remain — legal marijuana sales were expected to be more ubiquitous by this time, illegal retail sales have popped up all over New York City with limited law enforcement response, and many localities around the state have opted out of allowing legal retail sales at all.

The Office of Cannabis Management (OCM), created in the MRTA under the new Cannabis Control Board, was tasked with “but is not limited to production, licensing, packaging, marketing and the sale of cannabis,” per the OCM website. Additionally, OCM and the Cannabis Control Board took over New York’s previously existing medical marijuana program. 

As 2022 ended, New York State had over 200 cannabis farms that had cultivated $750 million worth of marijuana (nearly 300,000 pounds) just waiting to be sold in retail dispensaries, according to a Bloomberg report

In late November, OCM approved the first 36 Conditional Adult-Use Retail Dispensary (CAURD) licenses for the retail sale of cannabis in various forms, with many more licenses to come in 2023 and beyond.

In New York City, the Adams administration has launched Cannabis NYC within the Department of Small Business Services to help launch, boost, and regulate the industry.

As the name suggests, the Marihuana Legalization and Taxation Act was also focused on revenue for the state, and expectations are in the hundreds of millions of dollars per year of cannabis-generated tax revenue for the state and localities combined.  

As retail sales begin — delivery is also launching — timelines have been muddled and there are outstanding questions regarding licenses, enforcement, and more. Here’s what to know as this new legal industry gets going in New York:

Administration of the MRTA
In March 2021, the New York State Legislature passed and then-Governor Andrew Cuomo signed the MRTA into law. 

That immediately set in motion the process of establishing the state’s Cannabis Control Board and Office of Cannabis Management, though there were delays in getting them up and running, and then farming and sales. Amid all of the decision-making was the major focus in the law on racial equity and attempts to address past wrongs of the punitive War on Drugs by “ensuring the greatest possible participation by communities historically impacted by prohibition,” as stated on the OCM website. That includes requiring CAURD license applicants to have some ties to a past marijuana-related arrest. 

“You, or your parent, spouse, or child must have a conviction for a marijuana-related offense to be eligible for a CAURD license,” according to the CAURD application information page on the OCM’s website, though nonprofits working with the formerly incarcerated, like Housing Works, were also eligible for a small number of initial licenses.

The MRTA legalizes recreational adult use of cannabis in various forms (smoking, gummies, etc.), the cultivation of the needed plants, and commercial sale of marijuana in licensed small businesses as well as delivery. Along with generating tax revenue for the state and its localities from a new commodity in the economy, the law also seeks to decriminalize marijuana, help individuals and communities impacted by the criminalization of marijuana, and shrink the illegal drug market while providing safe, tested legal products.

But there have been many challenges in the overall effort to launch a new state agency and industry, crafting the details of the legalization process, issuing licenses, the overall societal adjustment, how localities have reacted, and more.

One of the bigger challenges we've faced this past year in moving the MRTA into action is not only starting from scratch to launch a regulatory structure from the MRTA for cannabis but simultaneously building an entirely new State agency as well,” said Aaron Ghitelman, a spokesperson for OCM, in a late December email in response to a Gotham Gazette inquiry with a series of questions.

“In the last 12 months, the Office of Cannabis Management has grown from 30 employees to around 150, and we expect to be fully staffed when we reach about 300 employees,” Ghitelman continued. “That means OCM staffers are wearing multiple hats, working nights, attending weekend events, and traveling across the State, educating New Yorkers about cannabis legalization and licensing opportunities. We're excited for next year because as our team grows, so does our capacity. OCM will be able to increase these efforts in 2023 and beyond.”

According to a spokesperson for the New York City Department of Small Business Services, home to the new Cannabis NYC office, “The biggest obstacle is the required mindset shift regarding cannabis, from government to business to community. This is a new legal industry, but we must overcome entrenched stigmas from past prohibition. Meanwhile, New York also has the largest, previously existing “legacy” industry which includes both entrepreneurs, consumers and their communities, many of which have been damaged from disproportionate criminalization and disinvestment.”

The spokesperson reiterated that this is why the MRTA was written to help previously convicted individuals with low-level marjuana charges on their records.

“There is a major gap in cannabis education, community resources, and government regulations available to support that immediate transition,” the spokesperson said by email. “Cannabis NYC, in collaboration with many NYC agencies, has been working rapidly to build a programmatic framework to support education and resource allocation for all New Yorkers interested in participating in the legal cannabis industry.”

Municipalities (cities, towns, and villages) in New York had the option to opt-out of retail marijuana dispensaries up until Dec. 21, 2021. Via local votes, a total of 759 out of 1,520 municipalities opted out of allowing dispensaries in their localities, according to an online tracker by the Rockefeller Institute of Government. That includes most of Long Island opting out of retail sales.

Asked for OCM’s reaction to the large number of opt-outs among localities, Ghitelman said the hope is that they will see the positives of implementation and eventually opt in.

Unlike other states that provided the option and a large majority opted out, New York will have widely accessible sales,” he wrote. “90% of cities in New York State will have cannabis sales, including New York City, Albany, and Buffalo, meaning an overwhelming majority of New York residents will have access to local dispensaries. As our consumer-oriented industry comes to life, the availability of safe, tested cannabis products will reduce harms currently threatening public safety allowing local economies to grow equitably; we believe localities will opt back in.”

On public education efforts, he said: “We're launching our next public health campaign that focuses on educating New Yorkers about all things legal for cannabis and hope those efforts will clear up confusion some New Yorkers may still have around legalization and help them understand their rights around the use of cannabis products throughout the State.”

Adult Use and ‘Personal Cultivation’
Upon being signed into law, the MRTA immediately allowed adults 21 years and older to partake in the recreational use of marijuana in places where smoking tobacco is allowed, which includes city sidewalks and designated smoking areas, but excludes restaurants, parks, and schools.

When moving about in the state, people 21 and older “may possess up to 3 ounces of cannabis and 24 grams of concentrated cannabis (like vaporization oil or an edible),” according to OCM’s Penal Law fact sheet about the MRTA. It is illegal to resell any marijuana products that an individual purchases legally.

The MRTA also permits adults to “have three mature and three [immature] cannabis plants within their private residence, with a limit of six mature and six immature plants per private residence,” according to the New York State Association of Counties’ April 2021 MRTA summary.

Adults are allowed to have up to five pounds of marijuana in their private home. In public, adults can carry up to three ounces of marijuana and up to 24 grams of concentrated cannabis, according to the New York State Courts website.

Retail Sales
Although the MRTA was signed into law on March 31, 2021, the first retail dispensary in New York did not open for 20 months after signing. Eventually, officials barely made their deadline of opening the first retail dispensary by the end of 2022, with only two days to spare, and with far fewer dispensaries in operation by that time than previously planned.

After some delay, OCM announced on November 21, 2022 the issuance of the first 36 Conditional Adult-Use Retail Dispensary (CAURD) licenses, with more to come in 2023. Governor Hochul subsequently announced that retail sales would begin at the one Manhattan location on December 29.

“Not only have we ended the prohibition in New York, but we're showing the nation, and the world, how to build a market that's truly equitable and inclusive, and works to undo the harms caused by the disproportionate enforcement of cannabis prohibition,” said OCM Executive Director Chris Alexander in a December 21 press release. “Every dollar spent in this growing industry will help support independent businesses, our schools, and our communities."

The 36 initial CAURDs approved by the Cannabis Control Board and issued by OCM include “28 licenses for business owners with a cannabis conviction or a family member with a cannabis conviction, [and] 8 approved for nonprofit organizations,” according to an OCM press release on November 21. “At least one CAURD license was granted in each available region of the state,” the release said. Licenses were allocated in regions that have allowed retail sales and are not currently embroiled in legal battles preventing cannabis licensing. There is ongoing litigation  preventing such licenses in, for example, the Bronx, Queens, and Long Island. 

The application windows for CAURD licenses closed in September of last year, and OCM received “over 900 applications” in the first application round.  

“I’m thrilled that we’ve approved the first adult-use retail licenses as part of the Seeding Opportunity Initiative, which sets our industry off on the right foot- with equity, justice, and sustainability at the forefront,” said Jen Metzger, Cannabis Control Board Member, in the November press release. “These entrepreneurs will be selling sun-grown cannabis cultivated with a minimal carbon footprint, and we must continue to ensure that New York’s industry remains on an equitable and climate-conscious path well into the future.” 

One unique aspect of the CAURD license is its qualifying business criteria, including: “at least thirty percent (30%) of the applicant must be owned by an individual who is/has: Justice involved, Qualifying business experience, Sole control of the applicant, and [a] Significant presence in New York State,” per OCM.

Justice-involved means someone who “was convicted of a marihuana - related offense in New York State before March 31, 2021.” The marijuana-related offenses that the MRTA aims to expunge or correct are lower-level offenses, such as possession of smaller amounts of marijuana or the criminal sale of smaller amounts of marijuana. Other offenses such as “possession of up to 16 ounces of marijuana, sale of up to 25 grams of marijuana,” etc. can also be expunged, but only within a two-year time frame starting from when the MRTA was passed. 

These licensing requirements were part of the MRTA’s goal of righting past wrongs related to the criminalization of marijuana, particularly for low-level offenses in communities of color. The law also expanded eligibility for record expungements regarding certain marijuana charges.

The announcement of the first adult-use retail dispensary licenses was a historic moment for New York, establishing an equity-centered backbone of the legal market’s seed-to-sale supply chain in just over a year from the appointment of the OCM’s Executive Director, Chris Alexander,” said the spokesperson for the New York City Department of Small Business Services (SBS), which houses the city’s new Cannabis NYC program.

Mayor Adams, who has repeatedly championed the legalization of marijuana, appointed Dasheeda Dawson, also known as TheWeedHead, as the founding director of Cannabis NYC when he launched it in August 2022.

“Leading Cannabis NYC is an incredible full circle moment,” Dawson said in a statement accompanying the mayor’s announcement of her hiring. “Growing up in East New York, I survived the height of cannabis prohibition and witnessed targeted enforcement derail the lives of my friends and family. I was stopped, searched, and treated like a criminal before I ever touched the plant, which shaped my initial perceptions.” 

“Now, as a cannabis patient, educator, and regulator, I get to support other consumers, small businesses, and local stakeholders in the growing industry so that cannabis — once used to suppress communities like mine — can be tapped as a tool for transformation,” Dawson continued. “I’m thrilled to be back home, helping to craft an equity-centered approach to the city’s cannabis industry framework that welcomes all New Yorkers to the table.”

Dawson has “hit the ground running,” according to the SBS spokesperson. “Since taking the reins she has focused on creating a plan forclosing the gap in cannabis competency and understanding, from policy to health equity, for City agencies, media, and community-at-large. One of her main goals is to avoid the pitfalls other jurisdictions have fallen into while dispelling myths and stereotypes. She has also worked to advance Mayor Adams’ equity-centered agenda in the public representing the administration at several key cannabis industry events in this city.”

“Since launch, we have worked closely with the State’s Office of Cannabis Management (OCM) to support the initial Conditional Adult-Use Retail Dispensary (CAURD) license application,” the spokesperson continued. “During the 30-day CAURD application window, Cannabis NYC engaged with over 1,000 New Yorkers across the suite of services made available through SBS, including a hotline, webinars and providing direct services to applicants through our Business Solution Centers.”

CAURDs are just one of several marijuana licenses the Control Board and OCM are establishing.

Although we are very excited about the nearly 300 conditional licenses that have been State-approved across cultivation, processing, and retail, we understand that there are 9 license types within the MRTA that will represent most of the licensed cannabis business in the New York market,” said the spokesperson from NYC SBS. “To that end, on 11/21/22 OCM also released their proposed adult-use regulations which covered 7 of the 9 license types included in the MRTA.”

The MRTA outlines nine marijuana licenses: Cultivator License, Processor License, Cooperative License, Distributor License, Retail Dispensary License, Microbusiness License, Delivery License, Nursery License, and On-site Consumption License. 

The SBS spokesperson continued, “Now the real work begins! There will be a 60-day public comment period followed by amendments to the regulations. Cannabis NYC will be hosting a regulatory policy review workshop series for external stakeholders to discuss the regulations, aggregate feedback and submit comments to the State in coalition. Whether you are interested in entrepreneurship, economic development or enforcement, we want to be an advocate on behalf of the City’s needs as the State continues to develop an equitable, inclusive and safe industry.”

Taxation of and Revenue from Legal Cannabis in New York  
“New York State expects to receive $20 million in revenue from licensing fees,” within the first year of legalization, according to the New York State Counties Association MRTA summary. When legal retail dispensaries start to generate sales, “the State projects $360 million in annual state revenue and $75 million for local governments” to proceed via what is expected to be a multi-billion-dollar industry. 

Per the Counties Association summary, details of some of the sales taxes include: “cannabis flower is taxed at a rate of $0.005 per milligram, cannabis concentrate is taxed at $0.008 per milligram, and edible cannabis products are taxed at $0.03 per milligram. There is also a 9% tax on retail sales that goes to the State and an additional 4% tax that goes to the localities where the dispensary is located.”

The tax revenue will go to numerous state drug treatment programs as well as disproportionately affected communities: 20% of tax revenue will go to drug treatment programs and the public education fund; 40% will be allocated to the community grants reinvestment fund which will be used for job placements, adult education, mental health treatment, etc., according to OCM’s website

In the ongoing process of implementing the MRTA, over the last several months, the Cannabis Control Board has also approved new “home-grow regulations for medical patients and designated caregivers,” the OCM “previewed new adult-use cannabis regulations,” and the New York Social Equity Cannabis Investment Fund announced that it has selected firms to oversee the design and construction of New York’s first retail cannabis dispensaries. 

“This is just the very beginning stages of implementation, and we are not likely to see applications open for the MRTA licenses until April 2023,” said the spokesperson from the city’s Small Business Services and Cannabis NYC. “In the meantime, we must continue working diligently to build the infrastructure to support this anticipated multibillion-dollar industry.”

Illegal Sales, MRTA Obstacles
Essential to the state and localities achieving tax revenue goals and the success of the new legal cannabis industry in New York will be some significant degree of elimination of illegal marijuana sales.

A recent boom of smoke shops illegally selling marijuana after legalization, and the lack of enforcement to close them down or ensure they stop selling marijuana itself, has created significant headaches and obstacles.

“More recently, we are seeing a proliferation of new players exploiting the intentions of New York’s landmark bill, opening unlicensed smoke shops, and putting public health and equity at risk,” said the spokesperson for the city’s Department of Small Business Services and its Cannabis NYC. 

Of illegal sales, Ghitelman from OCM said, “The illicit market directly undercuts the hard work of entrepreneurs reinvesting in their communities. Across New York, OCM works alongside law enforcement to remove illicit cannabis trucks, shut down illegal stores, seize these untested products, and coordinate efforts to protect the legal market. New York's legal, regulated cannabis market will continue to thrive as we remain committed to ceasing operations in the illicit market and working toward closing unsanctioned stores across the State.”   

Amid major uproar and just ahead of the launch of legal marijuana sales, Mayor Adams announced in mid-December “the results of a two-week interagency pilot conducting enforcement against unlicensed establishments selling cannabis, cannabis-infused edibles, illegal vaping products, illegal cigarettes, and other illegal tobacco products. The pilot program…resulted in the seizure of more than $4 million worth of products being sold illegally and the issuance of 566 civil and criminal summonses.”

At the same time, we will continue our efforts to educate unlicensed operators about the law and hold bad actors accountable,” Mayor Adams said at the time.

Meanwhile, on Wednesday January 18, the New York City Council is set to hold an oversight hearing on “the proliferation of unlicensed smoke shops in New York City.” The hearing will be held jointly by three Council committees on health, consumer protection, and oversight and investigations.

Legislation to fight illegal cannabis sales has also been drafted by State Assembly Member Amy Paulin. Her bill, announced in December, would make any business selling cannabis without a license subject to a penalty of at least $2,500 for the first violation, $5,000 for a second, and potential seizure of the business on a third. The current fine for a business is just $250, according to Paulin’s office.

The bill would also “add language to New York State penal law to clarify that unlicensed cannabis retailers are subject to current laws relating to the unlawful sale of cannabis. Current ambiguity in the law has in some instances impeded police crackdowns on illegal sales at shops, which has allowed them to continue illicitly selling,” the Assembly Member’s press release states.

“Individuals applying for the appropriate licensure and complying with the law are at an immense disadvantage when other individuals are evading licensing fees, product regulations, and rules set out by the OCM,” Paulin said in announcing the legislation. “To ensure the legitimacy of the adult-use cannabis industry, we must penalize bad actors in the same manner as we do for other legitimate industries in our state who operate without a required license.”



Print Friendly and PDF

Editor's Choice


Gotham Gazette: New York Voters Approve $4.2 Billion Environmental Bond Act
New York Voters Approve $4.2 Billion Environmental Bond Act
Gotham Gazette: 
New York City Voters Approve Racial Justice Ballot Measures
New York City Voters Approve Racial Justice Ballot Measures
Gotham Gazette: 
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Gotham Gazette: 
City Council Examines Low Voter Turnout, Moving Local Elections to Even Years City Council Examines Low Voter Turnout, Moving Local Elections to Even Years