BILL NUMBER: S159
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the tax law, in relation to making certain technical
corrections to tax on adult-use cannabis pursuant to article 20-C of
such law; to amend the cannabis law, in relation to certain penalties;
and to amend the penal law, in relation to clarifying the definition of
selling cannabis
 
SUMMARY OF PROVISIONS:
Section 1: Amends subdivisions (b) and (f) of section 494 of the Tax Law
to give the Tax department the power to revoke the certificate to
collect the adult use cannabis tax if: An individual has another canna-
bis tax registration suspended or revoked, are convicted of a crime
under the Tax Law, or if they willfully fail to collect tax, fail to
file a required report, or file a false report or other instrument. The
Tax Department is also granted the authority to revoke the certificate
of authority to collect sales taxes from anyone found possessing or
selling illicit cannabis
Section 2: Amends section 496-c of the Tax Law, to double the current
civil penalties for possessing illicit cannabis. This section also gives
the Tax Department and the Office of Cannabis Management (0CM) the power
to seize illicit cannabis from any person engaged in the cultivation,
processing, distribution, storage or sale of adult-use cannabis, or from
any vehicle, or location, or person in control of such vehicle or
location, that is connected to the cultivation, processing, distrib-
ution, storage or sale of adult-use cannabis.
Section 3: Article 20-c of the Tax Law is amended by adding new section
496d, an Enforcement section. This section declares that it is the
intent of the legislature for the adult cannabis industry to be a highly
regulated industry and gives the Tax Department or OCM the power to
conduct regulatory inspections of places or vehicles connected to the
cultivation, processing, distribution, storage or sale of adult-use
cannabis, or inspect the books and records of any person involved in the
cultivation, processing, distribution, storage or sale of adult-use
cannabis.
Section 4: Article 37 of the Tax Law is amended by adding new section
1814-b that makes selling illicit cannabis by someone who is not regis-
tered and should have been registered under the Tax law a class A misde-
meanor. Someone who violates this provision within five years of having
previously been convicted of it would be guilty of an E felony.
Section 5: Amends subdivision 1 of section 16 of the Cannabis Law, to
increase the possible civil penalty allowed for anyone who violates,
disobeys or disregards any portion of the Cannabis Law or a lawful
notice provided to them in a case where another civil or criminal penal-
ty is not already laid out in statute. Currently the civil penalty
cannot exceed $5,000. This would amend that to say such a penalty can be
up to $50,000.
Section 6: Amends Subdivision 3 of section 222.00 of the Penal Law,
changing the definition of what it means to sell cannabis in order to
capture situations in which cannabis is exchanged or bartered for
commodity, object or anything of any type, rent, lease or license to use
or consume conditional or otherwise, in any manner or by any means what-
soever for a consideration or any agreement therefore, or dispose of the
cannabis for compensation, including through a membership program or
through some other indirect means.
 
JUSTIFICATION:
This legislation is necessary to improve the enforcement of prohibitions
against selling untaxed adult-use cannabis, including by entities lack-
ing the appropriate registration necessary from the Department of Tax
and Finance, and to provide the Tax Department and the Office of Canna-
bis Management with the ability to safeguard the upcoming legal adult-
use cannabis market.
 
LEGISLATIVE HISTORY:
2022: S.9452 - Passed Senate
 
FISCAL IMPLICATIONS:
None to the state.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S159: 494 tax law, 496-c tax law, 16 cannabis law, 16(1) cannabis law, 222.00 penal law, 222.00(3) penal law