State Sen. George Borello

New York isn’t the first state to legalize recreational marijuana – but it may become the first to have to bail out marijuana farmers.

Included in the state Senate’s one-house budget approved earlier this week is $128 million to support the state’s legal cannabis market. The money includes $60 million for cannabis farmer loans, $40 million for grants through a newly created Cannabis Farmer Relief Fund and $28 million for cannabis farmer refundable tax credits to help offset money lost by farmers due to the state’s slow creation of a legal recreational marijuana market.

The Senate is also proposing modifications to a proposal by Gov. Kathy Hochul to repeal and replace the cannabis potency tax with language that phases in a permanent rate for the new wholesale tax over a multi-year period and to repeal the excise tax on medical cannabis.

“We are now three years into where we have passed the legalization of recreational marijuana in New york state – three years now this month,” said state Sen. George Borrello, R-Sunset Bay, on the Senate floor. “We are now proposing a bailout for pot farmers of $128 million. We all, I think, would agree this has been an abject failure. It’s been said on both sides of the aisle. Somehow New York state has managed to screw up pot. I don’t know how that happens, but we did.”

Borrello asked state Sen. Michelle Hinchey, D-Kingston and Senate Agriculture Committee chairwoman, if other states have had to spend money on a bailout for marijuana farmers, with Hinchey replying that she isn’t aware of other states that have had to take such steps. Borrello said he has farms in the 57th Senate District that are struggling financially because there was no legal marijuana market on which to sell their crops.

One reason the bailout is necessary is Hochul’s veto last year of legislation (S.7295/A.7375) authorizing conditional adult-use cultivator and processor licensees to sell tested, packaged, and sealed cannabis products and cannabis to a cannabis dispensing facility licensed by a tribal nation for retail. That bill, which Hinchey sponsored and which Borrello voted for and advocated for in a letter to Hochul last summer, would have opened up a market for marijuana farmers. The Senate’s proposed $128 million bailout would be limited to adult-use cultivator license holders – one of the groups the legislature tried to help last year. Hinchey said the program will also require farmers to show proof of financial loss – including proof of missed loan payments.

“I don’t right now have any numbers on the broader spectrum of cannabis across the state, but I think it’s incredibly important to recognize and acknowledge that these are growers who we asked to grow the product for the market and so the $128 million here is to cover the losses they would have seen since the rollout was delayed and making sure they have the funds to be able to stay in business until the next growing cycle,” Hinchey said.

Borrello was also critical of the Office of Cannabis Management, which he said is filled with employees earning more than $100,000 a year, and what he said is a lack of enforcement of shops selling cannabis illegally while the state struggles to set up its legal markets.

Hochul’s executive budget includes a plan to broaden the authority of the Office of Cannabis Management and local government agencies to padlock stores selling cannabis without a license. Borrello said that plan doesn’t go far enough.

“So I realize now we’ve got to dedicate even more funding,” Borrello said. “But this was sold to the people of New York state as a panacea. There was going to be this amazing new market, this amazing new industry, and it was going to create hundreds of millions of dollars a year in new tax revenue and we were going to have all these potpreneurs all over New York state and they were going to be making money. Look where we are now. The only people making money are the people who are doing it illegally. Those are the only folks making money right now. This has been a sad rollout and we need to fix it. I’m glad we’re going to help our farmers but I don’t see an end to this until we start doing first and foremost what we should have done. If people are selling pot illegally from a storefront, I don’t care if it’s in New York City or it’s in my town or wherever it is, those folks need to go to prison. Fines, seizures, those are just a cost of doing business for these folks. They just add that into the cost. They close, they reopen. Until you really have the spine to put people in prison for selling drugs illegally this isn’t going to end.”