Month: June 2021

What You Need to Know About GASB 84

Ninety-nine percent of counties, cities, towns, villages, and fire districts in New York State use OSC’s electronic filing software for preparing and filing their Annual Update Document (AUD).

However, recently OSC updated the AUD filing software, moving from version 5.95 to 5.96, to assist with the implementation of GASB 84. Now that it has, it’s time to ensure your implementation is complete. As you may be aware, the Government Accounting Standards Board (GASB) has been issuing new standards over the last few years in a bid to improve the financial reporting of U.S. and local governments. The GASB’s goal is to provide better information to financial statement users. OSC has determined that Statement 84 should be implemented for AUD filling purposes. As a refresher, GASB 84 outlines the specific criteria needed to determine which activities are fiduciary. Local governments and school districts must assess which activities are fiduciary under the new standards because there are significant changes in the way items can be reported in the future.

There are three types of fiduciary activities defined in Statement 84:

Fiduciary component units, which include certain pension and other post-employment benefit (OPEB) arrangements and other component units that are fiduciary
Pension and OPEB arrangements that are not component units
Other fiduciary activities

Previously, agency fund activities only required balance sheet entries.

Now, however, activities that are reported in the governmental funds will need to also be included in the results of operation (revenues and expenditures). For example, when recording payroll expenditures in a governmental fund, local governments, and school districts will need to record a liability for withholdings and keep the related cash in the governmental fund until those amounts are cleared. While these concepts are not new from an accounting perspective, local governments and school districts need to be mindful of the differences between how assets were previously recorded in an agency fund and how they will now be recorded in a governmental fund. Should activities currently classified as fiduciary still be considered fiduciary in nature or should these activities now be reported in a governmental fund, as a business-type activity, or not even reported at all? Additionally, consider if any current unrecorded activities would now meet the fiduciary activities definition and need to be reported.

RBT CPA’s wants you to be prepared for crucial financial news that impacts you and your municipality.

We understand keeping up with these complex changes can sometimes be overwhelming. Our goal is to alleviate your stress by breaking down these important changes and making sure you can implement best practices for the most common situations you’re bound to run into. It’s important to start identifying your organization’s fiduciary funds as soon as possible, if you haven’t already done so. While complying with GASB 84 may be complicated initially, don’t worry—we’re here to help. We want to assist you in analyzing various activities and change the way you think about fiduciary activities so you’re never unprepared. You can click here to view our GASB 84 webinar with your team or contact our professional team to schedule an appointment and connect. Additionally, if your local government or school district would like to share examples of how you have implemented these changes successfully, please email me at lhannigan@rbtcpas.com – we would love to hear your insight.

Go Green by Adding Additive Manufacturing

How many times a year does your company use the term optimization?

Likely, you aim to optimize your production, optimize your resources, and most importantly, optimize your profitability. The definition of optimization is the action of making the best or most effective use of a situation or resource. What if we told you that one of the greatest optimization pathways for manufacturing can be found by going green in 2021? We know that the term “going green” can often perpetuate concerns over upfront investment costs and experimental materials. And we get it – change is scary. But if sustainability is a goal for your company, the wonders of additive manufacturing (AM) might be the key you need to unlock new, exciting – and yes, green – business growth. Many are rethinking their manufacturing processes because of the various vulnerabilities this year exposed. For simpler supply chains and more scalable and resilient production, AM is an answer.

In a nutshell, additive manufacturing (also known as 3D printing) is a transformative approach to industrial production that enables the creation of lighter, stronger parts and systems.

It is yet another technological advancement made possible by the transition from analog to digital processes. In recent decades, communications, imaging, architecture, and engineering have all undergone their own digital revolutions. Now, AM can bring digital flexibility and efficiency to manufacturing operations. Additive manufacturing uses data computer-aided-design (CAD) software or 3D object scanners to direct hardware to deposit material, layer upon layer, in precise geometric shapes. As its name implies, additive manufacturing adds material to create an object. By contrast, when you create an object by traditional means, it is often necessary to remove material through milling, machining, carving, shaping, or other means.

The AM manufacturing method can usher in a new era of sustainability.

Additive manufacturing enables eco-friendly products, it provides for end-of-product-life-cycle solutions for eliminating waste and scrap, and it allows for resource-efficient material choices via recycling. Oak Ridge National Laboratory reports that 3D printing cuts down manufacturers’ use of raw materials by 90 percent, transforming manufacturing into a more efficient and less wasteful process. When you consider the various parts that can be built in a single print, significant cost savings can be passed on to re-invest in other innovations. The Fraunhofer Institute in Germany further reports in a recent study that metal fabrication of titanium parts using laser powder-bed additive emits approximately 70 percent less carbon dioxide than equivalent production by traditional milling processes. This finding is further reinforced by the Additive Manufacturer Green Trade Association that highlighted additive-enabled design saved, “so much fuel during flight lifetimes that they were a net environmental benefit” over conventional counterparts.

While the benefits are clear, we understand financial hurdles exist.

According to the Harvard Business Review, even before COVID-19, small businesses were continually facing dual challenges of banks’ reluctance to offer credit and prime contractors delaying payment. These challenges are resulting in cash shortages for upfront purchases manufacturers require to transition to acquire additive systems. Additionally, scaling up adoption will require workforce re-training to ensure U.S. manufacturing keeps pace with technology innovation. For more insight on how to help your business thrive and adapt, contact our Manufacturing Services Group today to schedule a brief conversation. Whatever the size of your venture, we can help you meet your immediate and long-term goals.

Sources: GE, Additive Manufacturing, National Defense Magazine

Does Your School Need a Diversity & Inclusion Task Force?

The past year represented a cultural reckoning across America. From socioeconomic inequality to racial, and gender disparities, it’s clear there’s work to be done to truly embrace diversity and inclusion throughout the country. There’s probably no better place to start than within our school districts and our classrooms. Teachers have a unique responsibility to broaden the minds and hearts of their students. Whether the students they are teaching are in elementary school, or advancing through secondary learning in college and beyond, there’s always more growth to experience. So, what does a diversity and inclusion task force even mean, and is it something your team of professionals should pursue? The decisions your school makes are unique and should reflect the values and voices of the community members you serve. Below, we will explore how providing instruction through a lens of diversity can promote tolerance of people with differing ideals. It can also help your administration to foster cultural respect of ‘the other,’ and even reduce bullying.

A diversity, equity, and inclusion committee is essentially a task force of diverse staff members who are responsible for helping bring about the cultural, and possibly ethical, changes necessary for your learning environment. This group can work with community organizations, businesses, other school districts, and other partners to help develop collaborative relationships within Hudson Valley and the surrounding community, both in and out of the classroom. If you choose to create a diversity and inclusion group, you can structure it in a variety of ways. Some districts get students of different ages involved or create sub-groups to ensure topics are age-appropriate. Some encourage teacher involvement as well as parent participation to keep productive conversations alive within the home. Here are some helpful examples of the initiatives and services some New York school systems have developed with their own diversity and inclusion committees:

serving as a resource for education and training on diversity
providing guest lecturers on diversity topics
promoting student enrollment and retention initiatives
promoting employee recruitment and retention initiatives
promoting student engagement and mentoring initiatives
hosting monthly podcasts with community members

Strong equity and inclusion programs teach educators to value the unique aspects of what makes each student different and helps them embrace those differences in the classroom. An in-depth research review of dozens of other studies on diversity—conducted by The Century Foundation, a New York-based think tank—found that having different and divergent perspectives can create positive learning outcomes. Those outcomes can have benefits that reflect well beyond students’ graduation and can impact their adult lives.

Diversity Improves Cognitive Skills and Critical Thinking

As noted by an article in Scientific American, exposure to diversity alters the way individuals think by promoting creativity and innovation, as well as decision-making and problem-solving skills. As the article summarizes, “Diversity jolts us into cognitive action in ways that homogeneity simply does not.”

Exposure to Diversity Helps Students Enter Adulthood

Companies are taking note of their employees’ ability to handle diversity with grace and maturity; 96 percent of major employers, according to the Century Foundation, say it is vital that employees can work with people from diverse backgrounds.

Diversity Prepares Students for Citizenship

Many educators identify with mission statements that involve building productive members of society. As the U.S. Department of Education notes, students’ experiences with diversity help mold them into more engaged citizens.

It’s important to remember that there is no one-size-fits-all solution with sensitive matters like diversity and inclusion but having a conversation about what will benefit your students is the first step in a positive direction. What works for one school—or one individual class—may be completely different from the requirements of another. Inevitably, schools and local governments will also need to address the barriers that some communities present to various groups of students. At RBT, we are committed to keeping education professionals informed of important updates that may impact your future planning. We extend a no-cost consultation to anyone with further questions or interest in working with our dedicated team of professionals.

Sources: American University, Resilient Educator

Construction Trend Watch Repurposing Hotels, Motels into Multifamily Housing

It’s a tough time to be a contractor or a person searching for housing in New York.

Lumber and material costs are handcuffing builders and contractors all over the country. The National Association of Home Builders estimates that the rising cost could add up to $24,000 to the price of a new build. Additionally, Hudson Valley is now officially a housing hot spot for those leaving New York City in the wake of the pandemic. The average asking price for homes in Kingston sits at $297,500, or $202 per square foot according to Realtor.com. That’s a whopping 32% higher than last year – pricing out a lot of Hudson Valley natives, but comparatively, it’s a steal for city dwellers used to two-bedroom apartments that are four times as pricey. So, this material cost explosion, coupled with a lack of available housing puts construction companies and potential buyers (or renters) in precarious financial positions. One possible trend on the horizon we want you to keep on your radar? Repurposing hotels and motels into coveted multifamily housing. Let us explain.

It probably comes as no shock to you that the hotel industry experienced the most devastating year on record in 2020.

Travel restrictions meant historically low occupancy, massive job loss, and hotel closures across the country. According to a report by the American Hotel and Lodging Association, many industry challenges persist in 2021, so it anticipates that travel will not return to 2019 levels until 2024. And even as the hotel industry begins to slowly recover from the short-term decline in demand during the pandemic, its long-term recovery will likely depend on how the industry will compete with hosts that offer short-term rentals and home-sharing through companies like Airbnb. Locally, Hutton Brickyards in Kingston has recently been transformed from a former brick manufacturing property into a riverfront resort with private cabins, a spa, restaurant, and events space. While this is an example of a hotel expansion rather than multifamily housing conversion, it reflects the growing consumer trend (especially among millennial travelers) toward authentic and localized experiences, through lifestyle hotels and experiences. The Hutton Brickyards project captures the essence of repurposing underutilized spaces in Hudson Valley and providing revitalization, revenue, and value.

The National Association of Realtors recently completed a revealing research study.

It surveyed groups that were already pursuing hotel/motel conversions across the country. According to study findings, in 65% of hotels/motels converted into multifamily housing, the rent was either 100% below market rate or a mix of below-market and market rate. Private investors are the main financiers of hotels/motels being converted into multifamily housing, accounting for 27% of the source of funding of transactions reported by NAR members. Local banks are the next largest source of funding, and government financing accounted for 7%. Affordable housing developers also provide financing. Federal financing is available to developers who convert hotels into below-market-rate units, such as the Low Income Housing Tax Credits (LIHTC) and the Home Investment Partnership Program (HOME).

Ultimately, the redevelopment of properties within Hudson Valley could range from a straightforward to a complex redevelopment with an assortment of public-partnership arrangements or purely private redevelopment.

Of course, zoning can pose a significant challenge when converting a hotel/motel to multifamily housing, but one approach may be to acquire extended-stay hotels/motels as they have more traditional kitchens or kitchenettes. Simply put, you can take advantage of properties that already have good bones. Working with local government and neighborhood residents throughout each phase of a project to meet zoning regulations and address neighborhood concerns would be essential to the success of any future property conversion. Beyond the variety of services we perform for our clients at RBT, we aim to pass along useful, relevant information to help our communities succeed, grow and prosper. As we continue to dedicate time and resources to helping our construction clients achieve success, we look forward to connecting with you and your team.

Sources: NAR, AHLA

Celebrating National Safety Month

Each year, the National Safety Council (NSC) designates June as National Safety Month. This year, safety in and out of the workplace has been top-of-mind for most of the world because of COVID-19. But while your frontline heroes have been working 24/7 to prioritize your patients and the mounting needs of your community throughout the pandemic, has upper management been checking in with staff?

The NSC reminds organizations that part of being safe is taking care of the physical and mental wellbeing of your workers. It is understandable that during increased times of stress (like a pandemic for instance), it can be more difficult to handle day-to-day activities. It is also important to note that increased levels of stress, uncertainty, and anxiety can also potentially lead to an increase in substance misuse or substance use disorders and an increase in absenteeism.

Below is a guideline you can follow from the NSC to break the month into weekly topics for your team. Consider meeting once a week either in-person or via Zoom to review these topics and spark transformative conversations. Remember, the more in tune you are with your team, the higher employee satisfaction is bound to be. The result? A more positive and productive work environment, and invaluable savings in new-hire training thanks to lower burn-out and turn-over rates. Even as New York begins to get infection rates under control, and COVID-19 related hospitalizations dwindle, the healthcare industry continues to face immense pressure and stress. Make it your job to lighten the load for your staff and show some additional compassion.

Week 1 – Prevent Incidents before They Start: Identifying risks and taking proactive safety measures to reduce hazard exposure is crucial to creating a safe workplace.

Week 2 – Address Ongoing COVID-19 Safety Concerns: As the pandemic continues, employers play an important role in expanding operations and returning remote workers to physical workspaces, building trust around vaccines, supporting mental health and so much more.

Week 3 – It’s Vital to Feel Safe on the Job: Being able to be one’s self at work without fear of retaliation is necessary for an inclusive safety culture. Leading organizations focus not only on physical safety but psychological safety as well.

Week 4 – Advance Your Safety Journey: Safety is all about continuous improvement. Whether organizationally or individually, what can your organization do to advance your path forward?

Another way to celebrate the 25^th anniversary of National Safety Month is to select one safety hero per week to highlight within your team. This can be anyone from cafeteria staff to an E.R. doctor or a member of your administration who demonstrates safety at work and inspires others around them. Consider treating them to lunch, offering them a few hours of PTO, or finding another way to express your gratitude to them. Their actions can set a chain reaction for your other team members to model future behavior off of. Bonus? It illustrates to your organization that upper management cares, recognizes, and rewards high standards. At RBT, we pride ourselves on assisting healthcare professionals to build more sustainable organizations with our comprehensive services. But most importantly, we aim to pass along useful, relevant information to help our communities succeed, grow and prosper. As we continue to dedicate time and resources to help our healthcare clients achieve success, we look forward to connecting with you and your team.

Can We Fix Our Drug Supply Chain Problem?

The COVID-19 pandemic highlighted the critical importance of a resilient U.S. healthcare manufacturing sector.

While healthcare leaders have made remarkable scientific strides to combat the pandemic by developing and distributing lifesaving vaccinations, critical issues remain. In fact, some issues existed long before the pandemic, but we have recently been confronted with the gravity of the challenges we face. the United States remains critically dependent on imports for a range of key pharmaceutical products and APIs—the primary ingredients of generic drugs—which represent 90 percent of all prescription medications filled. About 87 percent of API facilities for generic drugs are located overseas which has left U.S. supply chains of essential medicines vulnerable. The lesson? Instead of waiting for the next crisis to strike, leaders should act now to identify strategies and solutions for their organizations.

China and India are estimated to control substantial parts of the supply chain where there have been issues with shortages because of disruptions that have impacted supply as well as quality, and safety.

The drive toward lower costs as well as unfair trade practices has led to a hollowing out of domestic production. The Food and Drug Administration (FDA) has been tracking and reporting to Congress on the drug shortage crisis since 2014, in response to drug shortages that had impacted hospitals for years. In 2019, the FDA created an inter-agency task force to study the problem, determine the root causes and recommend solutions. The report recommends enduring solutions:

Creating a shared understanding of the impact of drug shortages on patients and the contracting practices that may contribute to shortages
Developing a rating system to incentivize drug manufacturers to invest in quality management maturity for their facilities
Promoting sustainable private sector contracts (e.g., with payers, purchasers, and group purchasing organizations) to make sure there is a reliable supply of medically important drugs

Earlier this month, the Biden-Harris Administration announced the first step in a whole-of-government effort to strengthen domestic competitiveness and supply chain resilience.

To address vulnerabilities in the supply chain, the Biden-Harris Administration will immediately support the domestic production of critical medicines. The Department of Health and Human Services (HHS), under the Defense Production Act (DPA) and building on current public-private partnerships, will establish a public-private consortium for advanced manufacturing and onshoring of domestic essential medicines production. The consortium’s first task will be to select 50-100 critical drugs, drawn from the FDA’s essential medicines list, to be the focus of an enhanced onshoring effort. HHS will make an initial commitment of approximately $60 million from the Defense Production Act appropriation in the American Rescue Plan to develop novel platform technologies to increase domestic manufacturing capacity for API. The goal? Greater API production domestically will help reduce reliance on global supply chains for medications that are in shortage, particularly during times of increased public health need.

Many within the healthcare field believe this is the moment to reimagine and rebuild a new American healthcare system, not go back to the way things used to be.

The current system is not sustainable, and to ensure more resilient supply chains we need to develop an approach that includes improving transparency, building emergency capacity, and investing in domestic production. At RBT, we pride ourselves on assisting healthcare professionals to build more sustainable organizations with our comprehensive services. But most importantly, we aim to pass along useful, relevant information to help our communities succeed, grow, and prosper. As we continue to dedicate time and resources to help our healthcare clients achieve success, we look forward to connecting with you and your team.

Sources: The White House, HFMA, FDA

Buying a Business? Avoid this Oversight

Are you considering purchasing an existing construction company? Congratulations, we hope you have your hard hat on and are ready for some (figuratively) heavy lifting. Whether this is part of your long-term plan, or you’re already deep into the process, there are a lot of critical considerations you need to make before you take the plunge. One of the most overlooked factors: unfunded pension liability. Don’t fall into the trap of being unprepared when it’s negotiation time.

Why are unfunded pension liabilities my problem now?

You know the saying once you own it, you own all of it – the good, the bad, and the ugly? You need a clear financial picture of what you’re walking into. There’s no room for surprise costs popping up, and unknown unfunded liabilities can quickly become your responsibility. With nearly 40 percent of all multiemployer defined benefit (DB) plans operating in the construction industry, you probably already know these plans tend to be poorly funded. A 2020 federal study even revealed that the multiemployer insurance program is highly likely to become insolvent by 2025.

Ask yourself, is this an asset or a stock sale?

If it’s an asset sale, successor liability law typically states that the buyer won’t assume the seller’s corporate liabilities. Usually in this type of sale, the withdrawal liability stays with the seller, who can then dissolve. However, in certain cases, courts have found successor liability for the buyer in an asset acquisition.

If it’s a stock sale, a withdrawal from a multiemployer pension plan typically isn’t triggered, as long as there is no interruption to the obligation of the sold entity to contribute to the plan.

What can you anticipate from the seller?

It’s not uncommon for sellers to categorize withdrawal liability as irrelevant to deal pricing. But certain situations arise where liability can be triggered against the wishes of the employer, or without any affirmative action, such as a union decertification, a significant business downturn, or an asset sale. It’s always a best practice to ask the seller to go back to the unions and find out what the withdrawal liability is in advance. Once you have this insight, get to negotiating. Perhaps you suggest that the seller uses some of the sale proceeds to pay off the withdrawal liability so you get a fresh start, or you might suggest a reduced selling price.

How can buyers protect themselves?

Because a company’s financial statements are not required to disclose the amount of pension plan liability in the event of withdrawal, buyers often overlook the amount of any such potential liability when setting the purchase price at the bid stage. This can wind up being a huge mistake. Remember, you want the price of the sale to suitably account for potential liability. If a recent estimate of the company’s potential withdrawal liability is unavailable, collect information so an expert can estimate withdrawal liability exposure. Protect yourself by reviewing the plan’s level of funding, a detailed history of the target company’s contributions to the plan, and information about the company’s contributing plan members. It’s also critical to find out the number of unions the company participates in.

What other steps should I take?

Keep in mind there are certain exceptions for construction employers, and the recent American Rescue Plan Act provided funding for some of the severely underfunded pension plans which may relinquish the liability for some employers. Projections estimate that qualified plans will receive approximately $86 billion in assistance. The regulations are expected in early July, you can stay up to date here. Ultimately, every union contract is different. Consider special purchase agreement provisions: an agreement that sellers will pay withdrawal liability assessments, broad indemnification rights, or purchase price adjustments. It might make sense to establish an escrow account to cover potential liability. Most importantly, always consult with a team of financial professionals and legal representatives to navigate this issue so you set your company up for success.

Source: TaxExecutive, Congressional Research Service, PBGC

Have You Considered this USDA Loan Program?

Looking for loan money? It’s time to consider The United States Department of Agriculture (USDA). Yes, even if you are scratching your head and thinking, “but my manufacturing operation has nothing to do with farming,” you could still be eligible. The USDA is indeed responsible for developing and executing federal laws related to farming, forestry, rural economic development, and food. But your company may still qualify for USDA guaranteed loans regardless. These loans are very similar to Small Business Administration (SBA) loans, but with a focus on promoting small businesses and creating jobs in rural communities. The USDA Rural Development program improves the economic health of rural communities by increasing access to business capital through loan guarantees which enable commercial lenders to provide affordable financing for rural businesses.

Who qualifies for the Business and Industry (B&I) Guaranteed Loan Program?

For-profit or non-profit businesses
Cooperatives
Federally-recognized Tribes
Public bodies
Individuals engaged or proposing to engage in a business

In terms of restrictions: individual borrowers must be citizens of the United States or reside in the U.S. after being legally admitted for permanent residence. Additionally, private-entity borrowers must demonstrate that loan funds will remain in the U.S., and the facility being financed will primarily create new or save existing jobs for rural U.S. residents.

What is considered an eligible area?

Rural areas not in a city or town with a population of more than 50,000 inhabitants
The borrower’s headquarters may be based within a larger city as long as the project is located in an eligible rural area
The lender may be located anywhere in the United States
Projects may be funded in either rural or urban areas under the Local and Regional Food System Initiative
Check eligible addresses for Business Programs

How can my company use these loan funds?

Business conversion, enlargement, repair, modernization or development
The purchase and development of land, buildings and associated infrastructure for commercial or industrial properties
The purchase and installation of machinery and equipment, supplies or inventory
Debt refinancing when such refinancing improves cash flow and creates jobs
Business and industrial acquisitions when the loan will maintain business operations and create or save jobs

What can these loan funds NOT be used for?

Lines of credit
Owner-occupied and rental housing
Golf courses or golf course infrastructure
Racetracks or gambling facilities
Churches or church-controlled organizations
Fraternal organizations
Lending, investment and insurance companies
Agricultural production, with certain exceptions (1)
Distribution or payment to a beneficiary of the borrower or an individual or entity that will retain an ownership interest in the borrower

What is the maximum amount of a loan guarantee?

The loan guarantee percentage is published annually in a Federal Register notice. B&I loans approved in Fiscal Year 2021 will receive an 80 percent guarantee. While there is no minimum loan amount, USDA B&I loans generally do not exceed $10 million (with some exceptions going up to $25 million or more). Most USDA business loans are between $200,000 and $5 million, with the average loan amount around $3 million. There are, however, requirements on the loan-to-value ratio, which are based on how you plan to use the funds. This also means that you’ll need to make a down payment for the loan.

What are the loan terms?

The lender will establish and justify the guaranteed loan term based on the use of guaranteed loan funds, the useful economic life of the assets being financed and those used as collateral, and the borrower’s repayment ability. The loan term will not exceed 40 years. Interest rates are negotiated between the lender and borrower. Rates may be fixed or variable. There is an initial application guarantee fee, currently 3 percent of the guaranteed amount. There is a guarantee retention fee, currently 0.5 percent of the outstanding principal balance, paid annually (2). Reasonable and customary fees for loan origination are negotiated between the borrower and lender. Qualifying projects may receive a reduced fee of 1 percent.

How do I get started?

Applications are accepted from lenders through USDA local offices year-round. Interested borrowers should inquire about the program with their lender, and lenders interested in participating in this program should contact the USDA Rural Development Business Programs Director in the state where the project is located. For more ideas to help your business thrive in these challenging times, contact our Manufacturing Services Group today. Whatever the size of your venture, we can help you meet your goals, now and for the future.

Sources: USDA, Value Penguin

Marijuana Legalization Creates a Haze of Confusion for Local Governments

A recent bill legalizing recreational marijuana makes New York the 16th state to do so, and while advocates are praising the move, some are lost in a cloud of confusion. The bill makes it legal to possess small amounts of marijuana, launches programs to help communities that bore the brunt of the national and state drug war, and will eventually allow marijuana sales to people over the age of 21. So what does this mean for local municipalities, and how can local leaders navigate the complexities that accompany this new legislation? Here’s what you need to know.

New Yorkers can smoke cannabis in public wherever smoking tobacco is allowed, though localities and a new state agency could create regulations to further control public cannabis use.

Counties will not be able to prohibit recreational sales, but cities will. “Cities, towns, and villages would be able to have that discretion, but not counties as a whole,” Sen. Jeremy Cooney explained. “So, if you’re from Rochester or Monroe County, they can’t say that there will be no retail dispensary allowed in Monroe County.” While towns and cities across the state have a Dec. 31 deadline to opt-out of dispensaries and consumption sites, it is important to note that they will not be able to opt-out of legalizing weed altogether. Cannabis use, however, is not permitted in schools, workplaces, or inside a car.

If municipalities decide to allow it, they can regulate it by setting the hours, place, and manner, said John Kolesar, a lawyer with Harris Beach in New York City.

They can put the retail dispensaries or on-site consumption businesses into a certain zone or district. According to Kolesar, the residents of a community can force a binding vote if they disapprove of the government’s decision to opt-out, which allows residents to voice their opinions. Peter Baynes, executive director for the New York Conference of Mayors, which has been studying the rules, says village boards are the only ones who can choose on their own to put the decision to a binding vote of the public. The village would first have to opt-out, then make the public vote part of that law.

Some provisions of the legislation, according to Baynes and Sarah Brancatella, legislative director and counsel for the New York Association of Towns:

Retail outlets selling marijuana can only sell to those 21 and up.
If a government opts in, the retailer still must get a license to sell cannabis or to allow it to be consumed at their business.
Dispensaries and sites allowing public consumption of pot can be limited to specific areas through zoning.
Towns, villages, and cities can set up their own marijuana smoking rules for property owned or controlled by them, such as a park or playground.
Local governments can’t limit the number of dispensaries, but the new state Cannabis Control Board can. When issuing a license, that board can consider factors such as the number of outlets and how close they are to each other, traffic, noise, and more.
Retail dispensaries or on-site consumption sites can’t be located within 500 feet of school grounds or within 200 feet of a house of worship.
Marijuana is subject to the same laws as smoking or vaping tobacco. It can’t be smoked in a workplace, bar or restaurant, an indoor pool area, public transportation, childcare facilities, colleges, hospitals, indoor arenas, zoos, or bingo areas.
It also can’t be smoked with 100 feet of school grounds or on a school bus.

Marijuana sales won’t start until New York sets up regulations and a proposed cannabis board, however, possession and use are now legal.

Assembly Majority Leader Crystal Peoples-Stokes has estimated it could take 18 months to two years for sales to begin. Policymakers can face the uncertainty of marijuana revenue by budgeting it cautiously. They can put the money toward savings, for example, or spend it after it is collected. Local governments considering using the funds for ongoing spending priorities that require sustainable revenue streams should be careful about relying too heavily on marijuana taxes. Understanding the short- and long-term effects of budget-balancing actions such as these can help officials make decisions that put their communities on a sound fiscal footing for years to come. Lawmakers estimate the legislation will generate $1.2 billion in annual sales by 2023. A total sales tax rate of 14% includes 9% allocated for the state, 3% for the municipality where the sale is made, and 1% for the county. From that 9%, 40% has been earmarked for communities disproportionately affected by prior drug laws, 40% for schools and 20% for drug treatment and education. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association.

Still feeling like you’re in a fog of confusion?

You’re not alone. This is a complex issue that requires legal expertise and a lot of consideration from community members. As there are further developments, such as the appointments announcement for the cannabis control board, or as new regulations are drafted, our Firm will continue to inform local government leaders. Please feel free to contact our dedicated RBT team to discuss questions you may have. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, to connect with HR professional Janet Giannetta.

Sources: Spectrum, PEW, Brookings, NYT, LoHud, SHRM, BCNYS