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New York State Senate Finance Committee and Assembly Ways and Means Committee

2025-02-26 Joint Legislative Hearing on the 2025-2026 Executive Budget: Economic Development/Arts Chair: Sen. Liz Krueger View full transcript → Archive

Wire Brief

New York State's joint legislative budget hearing on economic development and arts on February 26 revealed significant challenges and opportunities across multiple sectors, with agency officials and industry representatives testifying about progress and persistent obstacles. The Office of Cannabis Management reported hitting $1 billion in adult-use sales by year-end 2024 while acknowledging ongoing struggles with illegal market competition and regulatory implementation. Acting Executive Director Felicia Reid highlighted improvements in licensing timelines and staff hiring, but faced pointed questions from legislators about inspection practices, proximity protection waivers, and enforcement gaps. Senators raised concerns about unlicensed operators continuing to operate despite enforcement efforts, with some questioning whether current law provides adequate tools to shut down large-scale illegal operations. Empire State Development Commissioner Hope Knight touted $121 billion in semiconductor investments—more than any other state—and emphasized support for small businesses, with 78% of awards going to firms with 100 or fewer employees. However, senators questioned New York's overall business climate competitiveness, citing rankings showing the state among the worst for business and noting continued outward migration of residents and businesses. The cannabis industry panels—representing retailers, farmers, processors, and medical operators—presented a unified message about market challenges. Retailers reported the illegal market represents 80-85% of cannabis sales, while farmers noted 85% are barely profitable or operating at a loss. Industry representatives requested increased enforcement funding, asset forfeiture authority for large illegal operators, and regulatory clarity on proximity protections. Medical cannabis operators reported declining dispensary counts and patient numbers, requesting tax relief and insurance coverage authorization. Arts and culture advocates made an economic case for increased funding, with testimony showing New York's creative economy contributes $151 billion annually and supports 460,000 jobs. Multiple witnesses urged $200 million in NYSCA funding and a statewide creative economy plan, noting that arts organizations generate significant tax revenue—Western New York arts generate $22.5 million in state taxes, six times what the region receives from NYSCA. The hearing, which lasted over 12 hours, reflected legislative interest in balancing economic development incentives with concerns about business climate competitiveness, cannabis market integrity, and support for creative workers facing affordability and benefits challenges.

Topic Summary

This joint hearing examined Governor Hochul's proposed 2025-2026 budget for economic development and arts agencies, including Empire State Development, the Office of Cannabis Management, the Office of General Services, and the New York State Council on the Arts. Testimony covered semiconductor manufacturing, film tax credits, cannabis market regulation, arts funding, and workforce development initiatives.

Testimony (19)

Hope Knight agency_official informational
Commissioner, New York State Department of Economic Development; President & CEO, Empire State Development
Knight presented ESD's economic development agenda, highlighting strong job growth, semiconductor reshoring ($121 billion in investments), film tax credit programs, and new initiatives like HARMONY AI for small businesses and POWER UP for utility infrastructure. She emphasized 78% of ESD awards went to firms with 100 or fewer employees.
Felicia A.B. Reid agency_official informational
Acting Executive Director, New York State Office of Cannabis Management
Reid reported on OCM's progress since taking office in June 2024, including hiring 50+ new staff, implementing a single point of contact system for licensing, and achieving 193% increase in license approvals. She highlighted $1 billion in adult-use sales and nearly $100 million in medical sales by end of 2024, with 54% of licenses held by social and economic equity operators.
Jeanette Moy agency_official informational
Commissioner, New York State Office of General Services
Moy discussed OGS's role managing 32 million square feet of state real estate, administering $34 billion in centralized contracts, and supporting the Governor's decarbonization and sustainability initiatives. She highlighted the Empire State Plaza decarbonization project and MWBE utilization of 34.86% ($170 million).
Erika Mallin agency_official informational
Executive Director, New York State Council on the Arts
Mallin presented NYSCA's role as the nation's leading state arts funder, highlighting that the creative economy contributes $151 billion annually to New York's economy and supports 460,000 jobs. She noted a 40% surge in operating support applications and emphasized NYSCA's support for over 3,000 artists and nonprofit arts organizations across all 10 regions.
Carolina Rodriguez advocate supportive
Director, Education Debt Consumer Assistance Program, Community Service Society of New York
Rodriguez testified on behalf of EDCAP, which has assisted thousands of New Yorkers with student loan debt since 2019. She reported addressing over $328 million in student debt and saving borrowers over $38 million. She urged full funding of EDCAP at $3.5 million, noting 88% of clients carry federal student loans with average balance of $80,000.
Marc Alessi industry supportive
Executive Director, Business Incubator Association of New York State
Alessi advocated for increased funding for the 10 regional hotspot incubators and expansion of the State Certified Incubator program. He highlighted that START-UP NY generated $1.58 in economic activity for every dollar spent and that incubators collectively house and mentor over 3,000 startups annually.
Dr. Richard Terry academic supportive
Associate Dean of Academic Affairs, Lake Erie College of Osteopathic Medicine (LECOM) at Elmira
Dr. Terry requested $250,000 to create a Center of Excellence in rural health at LECOM Elmira. He highlighted that LECOM graduates 70% as primary care physicians and that the school is the number-one producer of primary care doctors in the country. He noted LECOM has 15 clinical training sites across upstate New York.
Santiago Quiñones industry supportive
Line Producer, New York Film and Television Industry
Quiñones testified on behalf of the film and television production industry, noting a significant slowdown in productions coming to New York. He attributed this to non-competitive tax incentives compared to states like Georgia and increased above-the-line costs (actors, writers) that make New York less attractive for streaming productions.
Corey Aldrich advocate supportive
Executive Director, ACE!-Upstate Alliance for the Creative Economy
Aldrich advocated for a statewide creative economy plan, noting that from 2013 to 2023 there was 137% job growth in independent artists, writers and performers in the Capital Region. He cited that SPAC alone created over $110 million in positive economic impact in a single calendar year.
Jen Swan advocate supportive
Director of Arts Services, Inc., Western New York; President, ArtsNYS
Swan testified on behalf of ArtsNYS, urging $200 million funding for NYSCA. She provided regional data showing arts organizations generate significant tax revenue: Western New York generates $381 million annually and returns $22.5 million in state tax revenue (6x what region receives from NYSCA); Long Island generates $330 million and returns $12.4 million (5x what region receives).
Candace Thompson-Zachery advocate supportive
Co-Executive Director, Dance/NYC
Thompson-Zachery testified on challenges facing the dance and arts industries, noting 64% of NYC dance workers fund their own work from pockets earning 24% below living wage; 40% of dance organizations report weak financial health; 37% of dance workers lack medical coverage; 82% are not unionized. She urged support for S285/A1502 and A2607 bills.
Rafael Espinal advocate supportive
President, Freelancers Union; former State Assemblymember
Espinal advocated for a statewide creative economy plan with portable benefits for freelance workers. He highlighted the historic 'Freelance Isn't Free' Act passed last August and noted that 41% of artists are one medical emergency away from financial ruin. He urged implementation of portable benefits including healthcare, paid leave, and retirement savings.
Sarah Calderon advocate supportive
Executive Director, Creatives Rebuild New York
Calderon testified that Creatives Rebuild New York has provided 2,700 artists with guaranteed income and jobs over three years and surveyed 13,000 artists. She advocated for a statewide creative economy plan with $500,000 in state funding and increased NYSCA budget of $200 million ($150 million for programming, $50 million for capital).
Rachael Lorimer advocate supportive
Artist and Owner, Studio OSYARI, Troy, New York
Lorimer, a painter and printmaker, testified about her experience in CRNY's Artist Employment Program, which addressed housing challenges in a disinvested neighborhood in Troy through community engagement and arts programming. She advocated for a statewide creative economy plan and artist employment programs.
Gully Stanford advocate supportive
New York State Alliance for Arts Education
Stanford testified on behalf of the New York State Alliance for Arts Education, endorsing the $200 million appropriation to NYSCA and supporting a statewide cultural economic plan. He emphasized the importance of arts education in developing the creative workforce pipeline and supporting the Portrait of a Graduate initiative.
Ngiste Abebe industry supportive
President, New York Medical Cannabis Industry Association
Abebe testified on behalf of medical cannabis operators (ROs), noting that dispensary count has shrunk to 31 (down from expected 80+) with 11 closures in last 12 months and patient count down from 150,000 to under 100,000. She requested elimination of the 3% excise tax, legalization of out-of-state reciprocity, pharmacist certification authority, and insurance coverage authorization.
Britni Tantalo industry supportive
President and Cofounder, Flower City Dispensary; President and Cofounder, New York Cannabis Retail Association
Tantalo testified on behalf of NYCRA representing over 350 invested stakeholders. She reported the New York cannabis market is estimated at $5-7 billion with only $1 billion in legal sales (80-85% illegal). She urged increased OCM enforcement funding, limited asset forfeiture for large illegal operators, private right of action, DASNY fund reform, and proximity protection guardrails.
Joseph Calderone industry supportive
President, Cannabis Farmers Alliance; COO, Grateful Valley Farm
Calderone testified on behalf of cannabis farmers, noting supply-side issues including inversion (out-of-state product) and competition from Indigenous Nations and THCA/distillate. He requested transfer of seed-to-sale tracking costs from supply side to OCM, a $5 million revolving fund for farmers, and canopy expansion authority.
John Vavalo industry supportive
President, Association of New York Cannabis Processors
Vavalo testified on behalf of cannabis processors, emphasizing industry unity across the supply chain. He thanked the Legislature for reducing the potency tax from 21% to 9% and advocated for a tax credit rebate for early processors (up to $400,000), canopy cap increases for farmers, proximity protection guardrails, and enforcement across the entire spectrum.

Senator Engagement (13)

Senator Engagement Stance Focus Areas Summary
Sen. Andrew Gounardes neutral Brooklyn Marine Terminal redevelopment unspent economic development funds Sen. Gounardes sought clarification on ESD's involvement with the Brooklyn Marine Terminal project and requested information on cumulative unspent economic development funds that could be repurposed.
Sen. April Baskin skeptical Buffalo East Side economic development CMc construction procurement method MWBE oversight and accountability Sen. Baskin raised concerns about ESD's CMc procurement method potentially removing state oversight, citing the Buffalo Bills stadium experience. She cautioned against sacrificing oversight for efficiency and emphasized need for equitable pathways for small businesses.
Sen. Christopher Ryan supportive ConnectALL broadband program Thruway fiber-optic cable project cannabis education for youth Sen. Ryan requested transparency on ConnectALL funding disbursement and asked about wage rate standards for the Thruway broadband project. He also inquired about youth cannabis education programs.
Sen. Dean Murray skeptical cannabis cultivation licensing and inspections cannabis mail delivery and enforcement Station Yards project support Sen. Murray raised serious concerns about OCM's cannabis licensing inspection practices, citing a specific case where inspections were not conducted despite claims. He also questioned mail delivery enforcement and requested offline discussion of specific cases.
Sen. George Borrello skeptical cannabis compliance and enforcement license revocation for non-compliance Sen. Borrello questioned whether OCM is adequately enforcing regulations against licensed dispensaries that are out of compliance, noting the distinction between the new Trade Practices Bureau and compliance enforcement.
Sen. Jabari Brisport neutral commercial rent costs for small businesses Sen. Brisport asked about rising commercial rent costs as a barrier to small business development in Brooklyn, questioning whether this is a widespread issue.
Sen. Jeremy Cooney supportive cannabis retail proximity protections cannabis supply chain and cultivation MWBE disparity study Empire AI expansion Sen. Cooney expressed concern about cannabis retail proximity protection clarity and supply-side cultivation capacity. He praised OCM's progress and ESD's work on film tax credits and semiconductor industry development, while questioning the MWBE disparity study methodology.
Sen. Liz Krueger skeptical cannabis seed-to-sale inspection contract cannabis CAURD licensing prioritization cannabis proximity protection waivers illegal cannabis store enforcement cannabis mail delivery enforcement DASNY cannabis fund issues Chair Krueger raised extensive concerns about OCM's implementation of cannabis regulations, including lack of post-opening inspections, proximity protection waivers, illegal store enforcement, and the problematic DASNY financing fund. She questioned whether the law needs revision to address enforcement gaps.
Sen. Sean Ryan supportive cannabis licensing improvements OCM staffing and communication ESD programs and return on investment Chair Ryan praised OCM's improvements in licensing and staffing, noting reduced negative phone calls. He also commended ESD's responsiveness to Albany's economic development needs and expressed support for continued dialogue on program effectiveness.
Sen. Stephen Chan skeptical New York business climate competitiveness Amazon headquarters loss business attraction strategy Sen. Chan questioned why New York continues to rank poorly for business climate despite economic development investments, noting the loss of Amazon headquarters and questioning the strategy of attracting casinos.
Sen. Steven Rhoads skeptical New York business climate and tax burden MWBE cross-certification between county and state Sen. Rhoads cited Forbes and IRS data showing New York's poor business climate ranking and questioned why the state is spending additional budget rather than providing tax relief to improve competitiveness.
Sen. Toby Stavisky neutral Creedmoor property redevelopment community input on development projects Sen. Stavisky sought clarification on decision-making authority for the Creedmoor property redevelopment and requested a meeting with ESD leadership to discuss community concerns.
Sen. Tom O'Mara supportive cannabis enforcement and unlicensed operators OCM organizational structure LECOM support for rural healthcare Sen. O'Mara praised OCM's enforcement efforts and LECOM's commitment to rural healthcare, while seeking clarification on OCM's organizational structure for enforcement and compliance functions.