State lawmakers are nearing an agreement and will introduce bills to legalize cannabis in the state Assembly and Senate next week, just before the April 1 deadline for New York's budget, the sources told ABC News. An announcement is expected as early as Wednesday evening, according to the source.
Once approved, New York will be the 15th state to legalize marijuana.
Gov. Andrew Cuomo has already indicated his support for decriminalizing marijuana, noting earlier Wednesday, "We're close, but we've been close three times before."
New York legalized medicinal marijuana in 2014.
Under the agreement, up to 3 ounces of marijuana would be legal and a state regulator would be established, the sources said.
A 13% sales tax structure would be set up with 9% going to the state and 4% going to localities, according to the deal.
Distributors additionally would collect an excise tax of as much as 3 cents per milligram of THC, the sources said.
Residents would be able to cultivate a limited amount of marijuana for personal use and the state will study a new system for determining whether drivers are inebriated if on marijuana, according to the deal.
The agreement also includes a social equity fund to divert some revenue to job placement and after-school programs, the sources said.
A legal cannabis program in the state could bring in around $350 million annually, according to the sources.
Sales might not start until 2022, as the state will take time to establish its regulatory framework, according to the sources.
The push to legalize marijuana during this year's legislative session came after voters in five states, including neighboring New Jersey, approved 2020 ballot measures to change their cannabis laws. In February, Gov. Phil Murphy signed a bill to allow for recreational use.
Earlier this year, the Virginia state legislature passed a bill that would legalize marijuana in the state. Gov. Ralph Northam said he intends to sign it into law.
ABC News' Ivan Pereira contributed to this report.