The shift Wednesday was a blow to legalization advocates, who had hoped New York would follow Illinois in becoming the second state to set up a regulated marijuana market by legislative action. Ten states allow recreational marijuana, including California and Massachusetts. Lawmakers in New Jersey were unable to pass a bill this year and are moving forward with a public referendum next year.
“Each state is going to do it their own different way, and sometimes they’re on a different timeline,” said Adam Goers, chairman of the New York Medical Cannabis Industry Association, an alliance of medical-marijuana companies that supported the omnibus bill in New York and is now asking lawmakers to expand the state’s medical program.
New York state Sen. Liz Krueger, a Democrat from Manhattan, had been trying to amend her omnibus legalization bill to win support from Democrats representing suburban areas but said that it couldn’t be completed before lawmakers leave the Capitol this week for a summer recess.
The omnibus marijuana bill would have created a new state agency to regulate cannabis, expunged the records of people previously convicted of marijuana possession and set aside a portion of state tax revenues—which proponents estimated would eventually be $300 million a year—for communities that were disproportionately affected by marijuana arrests.
In a text message on Wednesday morning, Ms. Krueger said her bill was “dead for now.” She said the final sticking points involved the distribution of funds as well as how and whether localities would be able to prohibit marijuana stores.
Dr. Kevin Sabet, a former senior adviser in the Office of National Drug Control Policy, worked with law-enforcement officials and school parents in New York to lobby against Ms. Krueger’s bill.
“It’s just too far, too soon for New York,” said Dr. Sabet, president of a national advocacy group Smart Approaches to Marijuana.
Democratic leaders of the state Assembly and Senate supported the broad parameters of the legalization effort, which was also led by Assembly Majority Leader Crystal Peoples-Stokes, a Democrat from Buffalo. Many Republicans said they opposed marijuana legalization.
But Democratic lawmakers have struggled for months to work out the details of a bill, at times clashing with Gov. Andrew Cuomo, a Democrat, who advanced his own framework for a regulated market along with his proposed state budget. Amid disagreements, lawmakers adopted a $175.5 billion budget on April 1 without addressing marijuana.
Assembly Speaker Carl Heastie, a Democrat from the Bronx, said Wednesday that he would turn his attention to legislation that would provide avenues for people to have previous marijuana convictions expunged. It would also further de-criminalize the drug.
Melissa Moore, deputy New York state director of the advocacy group Drug Policy Alliance, joined around two-dozen people at a protest in the Capitol and faulted Mr. Cuomo and legislative leaders’ approach.
“Comprehensive reform would have been an enormous economic driver for struggling communities across the state. But in a moment when they had a clear avenue for building up marginalized communities, they chose not to act. It’s pathetic,” Ms. Moore said.
Hemp farmers, who were also part of the coalition backing the omnibus bill, are now focusing on a measure to regulate their growing industry. Ms. Krueger said she believed the state Senate would take up both the hemp and medical marijuana bills but Mr. Heastie was less definitive, saying he would have to discuss the issue. Ms. Krueger said the issue of moving forward with decriminalization was fraught.
“Do you go with half a loaf because it will have an impact on some people, or do you then decrease your chances of getting the whole loaf at some later date?” she said.
In a statement, Mr. Cuomo said, “communities of color have been disproportionately impacted by laws governing marijuana for far too long and it has to end.” He said he would waive the required three-day waiting period for a decriminalization bill.
Wednesday was the last scheduled day of the legislative session, but Mr. Heastie said it was possible members of the Senate and Assembly will continue their work on Thursday and perhaps Friday.