New York lawmakers decriminalized small amounts of marijuana after failing to agree on a comprehensive package that would have fully legalized the drug and provided revenue for social programs.

The state Senate passed its bill Thursday evening, 39-23, and the Assembly approved it early Friday, though a vote count wasn’t immediately available.

“This is not the final step, but it will lay the groundwork for full decriminalization and legalization,” Assembly Speaker Carl Heastie said in a statement.

The measure allows individuals to avoid criminal penalties for holding less than two ounces (57 grams) of the drug. The law still calls for a $50 fine for holding less than an ounce, and $200 for one to two ounces. It also provides procedures to expunge records of convictions.

A bill to expand the medical use of cannabis was dropped from consideration.

Racial Lines

Heastie and Senate Majority Leader Andrea Stewart-Cousins said the law would end racial disparity in enforcement. But legalization advocates said it wouldn’t prevent continuing patterns of discrimination; they say fines fall most heavily on black, Latino and poor people with the least ability to pay.

Decriminalization represented a compromise after legislative leaders scrapped a legalization bill Wednesday night. It failed to win enough support after some in law enforcement raised questions about its effect on traffic safety, and interest groups bickered over who would benefit from sales-tax revenue.

The debate occurred as a booming black market for marijuana flourishes throughout the state, particularly in New York City, where the drug is so ubiquitous its scent can be detected regularly on city streets. Smoking in public remains a misdemeanor or crime.

Eleven states have legalized sales of the drug, and only two — Vermont and Illinois — through legislative vote rather than a ballot initiative.

Pot Tax

For New York, legalization would have created a new industry and a statewide adult market of at least $3.1 billion, including at least $1.1 billion in sales within New York City, City Comptroller Scott Stringer said in a report backing legalization a year ago. Tax revenue would have exceeded $336 million for the city and $436 million for the state, he said.

To those who had hoped New York would become the 12th state to legalize pot, Heastie said, “in government, people have to realize sometimes you don’t get everything that you want all in one shot.”

Stewart-Cousins, a Westchester Democrat, said she would continue trying to persuade her colleagues to support legalization. She called the decriminalization law “a momentous first step in addressing the racial disparities caused by the war on drugs.”

At the Drug Policy Alliance, which had pushed for legalization, New York State Director Kassandra Frederique said that while the new law would allow deletion of criminal records for about 900,000 low-level marijuana arrests in the past 20 years, it still allowed police to arrest individuals for “wide-ranging instances of marijuana possession.”

Black and Hispanic people “will remain disproportionately in the cross-hairs of harmful enforcement practices,” she said. “Given the extensive, life-changing inequities created by discriminatory and draconian enforcement policies, true justice requires the allocation of tax revenue” to minority communities, which would come through taxation of legal sales, she said.

Although the legalization effort failed, Democrats, who now control both houses of the Legislature, have aggressively and successfully pursued a progressive agenda this session. The lawmakers approved sweeping rental protections over the fierce objections of landlords, and passed a measure allowing undocumented immigrants to obtain drivers licenses. They also strengthened abortion rights and set sharp reductions in the state’s carbon emissions.

Contact us at letters@time.com.