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Cuomo Embraces New Sin Taxes to Replace Some COVID-19 Fiscal Shortfalls; Full Legalization of On-Line Betting and Adult Cannabis Use to Feature in 2021 State of the State Proposals

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Cuomo Embraces New Sin Taxes to Replace Some COVID-19 Fiscal Shortfalls; Full Legalization of On-Line Betting and Adult Cannabis Use to Feature in 2021 State of the State Proposals

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By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

New York governor announced last week that New York would be the latest state to join the sin tax party and will propose legislation to allow on-line sports betting and fully legalize cannabis for adult use.

These measures are expected to bring in revenues to replace some of the shortfalls in the state’s coffers depleted by the COVID-19 pandemic. New York found itself increasingly alone in its prohibitionist policies.

On-Line Betting

Cuomo has previously resisted allowing on-line betting in New York snd his statement announcing the proposed on-line betting change represents a reversal in policy, made in response to policies already implemented by the adjacent states of New Jersey and Pennsylvania:

Governor Andrew M. Cuomo today announced legislation to authorize mobile sports wagering as part of the 2021 State of the State. Under Governor Cuomo’s proposal, the New York State Gaming Commission will issue a request for proposals to select and license a sports operator or platform to offer mobile sports wagering in New York. This operator or platform must have a partnership with one of the existing licensed commercial casinos. The Commission will also require any entity operating mobile wagering apps include safeguards against abuses and addiction.

“At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets,” Governor Cuomo said. “New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis.”

The sports gambling market is evolving rapidly. In 2018, the U.S. Supreme Court in Murphy v. NCAA overturned a federal law prohibiting most states from authorizing sports wagering. Sports wagering is now legal online in 14 states, including the bordering states of New Jersey and Pennsylvania, while it is only legal in New York at the four Upstate commercial gaming facilities and Native American gaming facilities.  An industry study found that nearly 20 percent of New Jersey’s sports wagering revenue comes from New York residents, costing the State millions of dollars in lost tax revenue.

Full State Legalization of Cannabis:

As for cannabis, recent years have seen the state move cautiously towards decriminalzation, while other states – such as Colorado – had opted for full legalization. By taking the final step, New York too will be able to earn tax revenues by taxing sales of legalized cannabis. To be fair, Cuomo has been unable to win enough legislative votes  to approve cannabis measures he made in earlier budget proposals, according to a report in Marijuana Moment,  New York Launches Process For Destroying Marijuana Conviction Records.

Cuomo has not been deterred and and will again pursue full cannabis legalization as part of his latest budget proposal:

Governor Andrew M. Cuomo today announced a proposal to legalize and create a comprehensive system to oversee and regulate cannabis in New York as part of the 2021 State of the State. Under the Governor’s proposal, a new Office of Cannabis Management would be created to oversee the new adult-use program, as well as the State’s existing medical and cannabinoid hemp programs. Additionally, an equitable structure for the adult-use market will be created by offering licensing opportunities and assistance to entrepreneurs in communities of color who have been disproportionately impacted by the war on drugs. Once fully implemented, legalization is expected to generate more than $300 million in tax revenue.

“Despite the many challenges New York has faced amidst the COVID-19 pandemic, it has also created a number of opportunities to correct longstanding wrongs and build New York back better than ever before,” Governor Cuomo said. “Not only will legalizing and regulating the adult-use cannabis market provide the opportunity to generate much-needed revenue, but it also allows us to directly support the individuals and communities that have been most harmed by decades of cannabis prohibition.”

The Governor’s proposal builds on years of work to understand and decriminalize cannabis for adult use. In 2018, the Department of Health, under Governor Cuomo’s direction, conducted a multi-agency study which concluded that the positive impacts of legalizing adult-use cannabis far outweighed the negatives. It also found that decades of cannabis prohibition have failed to achieve public health and safety goals and have led to unjust arrests and convictions particularly in communities of color.

The governor – or perhaps one of his aides, could not resist taking a victory lap for the baby steps the state had made so far:

In 2019, Governor Cuomo signed legislation to decriminalize the penalties for unlawful possession of marijuana. The legislation also put forth a process to expunge records for certain marijuana convictions. Later that year, the Governor spearheaded a multi-state summit to discuss paths towards legalization of adult-use cannabis that would ensure public health and safety and coordinate programs regionally to minimize the cross-border movement of cannabis products.

Building on that important work, the proposal reflects national standards and emerging best practices to promote responsible use, limiting the sale of cannabis products to adults 21 and over and establishing stringent quality and safety controls including strict regulation of the packaging, labeling, advertising, and testing of all cannabis products. Cannabis regulation also offers the opportunity to invest in research and direct resources to communities that have been most impacted by cannabis prohibition.

Ross’s Gold

I suppose I should be rejoicing that the state will finally abandon its holdout policy on trying to police (albeit at a notional level) these two sins. But as someone who has since the mid-90s resided in a community of color – where my husband and I own a house – I’m well aware of how New York’s cannabis laws allowed cops to put the hammer on locals for engaging in a vice that even our new VP – prosecutor in chief? – Kamala Harris admitted she’s indulged.

I should mention that for some, the policing was more than notional. One friend of mine, a psychoanalyst, once had a gig
counselling young people who’d been convicted of (or pleaded out to) minor drug offenses and were therefore subject to state-mandated drug testing. And the way cannabis lingers in body tissues – as compared to alcohol, for instance – meant that it was all-too-easy to get nailed for recidivism for that casual toke. She soon realized that the best thing she could do when offering advice was to concede although the system was unfair – if the unfortunate “addict” she counselled hoped to escape its tender mercies, forgoing even a puff was a necessary step.

I don’t recall whether any of them ever tried to use Ross Rebagliati’s excuse – that his positive cannabis drug test after he nailed the first snowboarding gold at the 1998 Nagano Olympics was not due to partaking, but the came from secondhand smoke he inhaled at a party in Whistler. (See this somewhat dated 2013 account, which I think you’ll find is well worth your time, Controversial Snowboarder Ross Rebagliati Opens Weed Dispensary, Embraces Past; note that the Grey Lady’s editors can’t resist virtue signalling in this 2018 headline, Disgraced at Olympics Over Marijuana, Canadian Snowboarder Hopes to Ride to Cannabis Success. Canada became the second country, after Uruguay, to legalize marijuana in 2018.)

The International Olympic Committee first withdrew but ultimately let Ross keep his snowboarding gold, as it turned out that cannabis wasn’t actually on its list of banned substances, but not before he was interrogated by Japanese authorities and endured hours in a Japanese jail. As for those parties, I spent several years as a ski bum in Whistler, where I too breathed that very same secondhand smoke – perhaps at the very same parties – as did Ross (although I was never aware that our paths had indeed crossed).

Need for Expungement

Back to the state of New York. Far more important than Cuomo’s efforts to goose tax revenues and encourage entrepreneurship in communities of color are the measures undertaken to expunge marijuana convictions from the public record. According to Marijuana Moment:

More than 150,000 people’s marijuana possession convictions in New York state were automatically expunged last summer, effectively sealing them from public view. Now, individuals can go a step further by requesting that conviction-related records—including arrest reports, prosecution records and criminal history—be completely destroyed.

The New York State Unified Court System announced the new process in a press release on Friday, outlining the steps people must take in order to request their case records be destroyed. Unlike expungements, which required no action from people with past convictions, requesting the destruction of records means filing an official form with the court where the conviction occurred.

The one-page form, available online or at courthouses, is free to file and requires only basic information about the case, including the individual’s name, the county and court where the conviction took place, the case number and current contact information. Completed forms can be filed in person at the court with official identification or sent by mail if first notarized by a notary public.

For most, sealing public records will suffice to “undo” a person’s cannabis conviction(s). But those sealed records may still be accessed when one  applies for a gun permit, or to join the police force. For people making such applications, nothing less than full records destruction will do, and as the law now stands, record destruction is not automatic, and must be requested in order to be carried out as a non-discretionary matter:

“If you decide to apply for destruction, the arrest, prosecution and criminal history records related to your expunged marihuana conviction are destroyed, and there will be no record of your arrest or conviction for these charges. In other words, it will be like it never happened,” an explanatory page about the new process says.

The Marijuana Moment piece makes clear that so far, New York’s legislature has failed to go as far as Cuomo requested in previous budget requests. Whether the upcoming one will prove the charm isn’t clear; perhaps the need to find new sources of tax revenue will finally motivate Albany to push it across the line and enact it into law.

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