Politicians in New York state have formally agreed in late-night talks on a deal to legalise recreational marijuana use for adults 21 and over, the governor's office announced.

Once the underlying legislation passes - Governor Andrew Cuomo's Democratic party holds strong majorities in both legislative chambers - New York will join 14 other states and the District of Columbia in permitting cannabis use. 

A statement from Mr Cuomo's office said the change could net an additional $350 million in annual tax revenues and create tens of thousands of jobs.

The draft law would allow adults 21 and over to purchase cannabis and grow plants for personal consumption at home, with a plan to divert some funds to drug treatment and education.

"Legalising adult-use cannabis isn't just about creating a new market that will provide jobs and benefit the economy - it's also about justice for long-marginalised communities and ensuring those who've been unfairly penalised in the past will now get a chance to benefit," Mr Cuomo said in the statement.

The law would take immediate effect once passed, but sales could take up to two years to start, as New York creates a proposed cannabis board and gets legal structures in place, a state politician said on Friday.

New York would automatically clear records of people with past convictions of marijuana-related offenses that would no longer be criminalised.

The law would also eliminate penalties for possession of up to three ounces of the drug (85 grams), the new personal possession limit. An existing medical-marijuana program would be expanded.

The state plans to tax marijuana sales at 9%, with revenues from an additional 4% tax divided between local and county government. 

The bill would create loans, grants and programs to foster job creation and industry participation from small farmers, women and disabled veterans, as well as New Yorkers from minority communities.

The decision, reached late Saturday, comes after years of wrangling over legalising recreational cannabis use in New York.

The deal was reached as Governor Cuomo faces investigation from several angles, including for an alleged pattern of sexually harassing and intimidating women employees, as well as for accusations his administration orchestrated a cover-up of nursing home deaths related to Covid-19.

Proponents say the new marijuana legislation will be a step toward addressing decades of injustice affecting minority and impoverished communities, which were disproportionately targeted by decades of harsh drug criminalisation.

"This landmark legislation brings justice to New York State by ending prohibition, expunging conviction records that have curtailed the opportunities of countless predominately young Black and Latinx New Yorkers...", The Legal Aid Society, a social justice law firm, said in a statement.